Current Price –C$3.77
Offer Price – C$4
Upside – 6% (C$23 for odd lot holders)
Expiration Date – 20th of Jan 2017 (extended to 3rd of Feb, 2017)
No proration for Odd Lot Holders (99 shares and less)
This is a tiny (only C$23 gain for odd lots) risk free opportunity in Canada. Northern Blizzard Resources Inc. offers to purchase for cancellation from holders of common shares of Northern Blizzard for cash up to $75.0 million of its Shares at a price per Share of C$4.00, for a maximum of 18,750,000 Shares. As of December 9, 2016, there were 122,539,239 Shares issued and outstanding, and accordingly, the Offer is for up to approximately 15.3% of the total number of issued and outstanding Shares.
No proration for odd lot holders
If the number of Deposited Shares is greater than 18,750,000, such Deposited Shares will be purchased on a pro rata basis according to the number of Shares deposited, except that Odd Lot deposits will not be subject to pro-ration. For the purposes of the foregoing, an Odd Lot deposit is a deposit by a Shareholder who beneficially owns in the aggregate fewer than 100 Shares as of the close of business on the Expiry Date;
Source and Amount of Funds
Northern Blizzard has adequate freely available cash on hand to fund the purchase of the maximum number of Shares that could be purchased under the Offer. The Offer is not conditional upon the receipt of financing.
Often distributions received from Canadian tenders are treated as dividends and in turn cause withholding tax burden on foreign shareholders. As per below, distributions received from tendering Norther Blizzard shares will be treated as sale of shares and thus there should be no additional taxes (as compared to US tenders).
A Non-Resident Shareholder who sells Shares to Northern Blizzard pursuant to the Offer will be deemed to receive a dividend equal to the excess, if any, of the amount paid by Northern Blizzard for the Shares over their paidup capital for Canadian income tax purposes. Northern Blizzard estimates that the paid-up capital per Share on the date of take-up under the Offer will be approximately $6.65. As a result, the Corporation expects that Non-Resident Shareholders who sell Shares under the Offer will not be deemed to receive a taxable dividend on the sale since the Offer contemplates that Northern Blizzard will purchase each Share at a price of $4.00. Accordingly, the amount paid by Northern Blizzard for the Shares will be treated as proceeds of disposition of the Shares.