What about minority?

Welcome to Canada, where it seems the rules as practised f avour issuers, insiders and the agents who service them. The rights of shareholders, the other group required for capital formation, seem a long way down the list — and further down when minority shareholders are the spotlight.

The latest example of that process is being played out now. The transaction concerns Opta Minerals Inc., a small TSX- listed company that has agreed to be acquired by Speyside Equity Fund, a U. S. private- equity group that has teamed up with Opta’s interim chief executive.

The transaction, blessed by the financial adviser and the board, seems assured of success: SunOpta Inc., Opta Minerals’ l argest shareholder ( with a 65.8- percent stake) has signed an “irrevocable support and voting agreement” with the buyer. And those agreements “cannot be terminated in the event of a superior proposal.” ( The secondlargest shareholder didn’t provide such an agreement.)

In other words, the largest shareholder, which has no board representation, wanted out and it set the price. For Mississauga, Ont.- based SunOpta, the proceeds received are a rounding error — which may lead to a question at its annual meeting: Did you maximize value on the sale?

At t he t i me, SunOpta ( market cap, $ 700 million) said the sale of its Opta interest “represents a significant milestone, and we are pleased to be concluding this chapter of our company’s history as it paves t he way f or SunOpta to truly become a pure- play healthy and organic foods company.” Reached Monday, SunOpta said: “We aren’t going to expand what we said.”

The transaction has upset one minority shareholder who has written to Opta indicating its displeasure with the offer.

So what are t he concerns? ❚ The low price: Opta shareholders are being offered 52 cents a share. At that level, the consideration is below the recent trading price: A month back, for example, the shares were changing hands at $ 1.10. On Monday Opta was trading at 75 cents.

Not only is the offer low in relation to the trading price — meaning shareholders aren’t getting a premium — it’s also low in relation to net asset value. At Sept. 30, Ontario- based Opta, which produces more than US$ 100 million in revenue, determined i ts “tangible net worth” to be US$ 17.16 million. With 18.129 million shares outstanding, that’s 95 U.S. cents a share. At the current exchange rate, the offer price is about 40 per cent of Opta’s tangible net worth.

Using another measure — the multiple of EBITDA — the offer is less than three times. In some countries there’s capital punishment for lesser offences. ❚ The timing: The deal was announced the day after the Opta shares were to be delisted. News of that delisting was indicated last September and firmed up in mid- January. The deal came following a strategic review that started in June, 2014. Back then the shares traded at $ 1.80. It also came after certain agreements had been reached with its bankers and after restructuring efforts “were substantially complete.” Those conditions could signify better times at Opta — which will now be enjoyed by the new owner. ❚ The approval process: As with such transactions, approval from two- thirds of those who vote and from the majority of the minority is required. But given the “irrevocable” support and voting agreement entered into by SunOpta ( and some insiders) it seems pointless to hold a meeting. Why? The transaction has enough votes already “to satisfy all shareholder approval requirements required.” How come? SunOpta’s stake is counted as part of the minority because it’s a “disinterested party.”