Apr. 6, 2011 (Canada NewsWire Group) --
TSX Symbol: CIX
TORONTO, April 6 /CNW/ - CI Financial Corp. ("CI") today responded to comments made by Rick Waugh, Chief Executive Officer of the Bank of Nova Scotia, which have been widely reported in the press.
The comments made by Mr. Waugh regarding CI's Shareholder Rights Plan are inaccurate. CI is not denying the Bank a fundamental right. Rather, it is complying with the terms of its Shareholder Rights Plan. The Plan was adopted by the shareholders of CI at a meeting held on December 19, 2008 and the Bank voted at that meeting in favour of the Plan. The Plan was also approved by the Toronto Stock Exchange.
CI will vigorously defend the terms of the Plan, said Stephen A. MacPhail, CI Chief Executive Officer.
"We are simply adhering to the terms of an agreement that has been approved by shareholders," Mr. MacPhail said. "Protecting the rights of all of our shareholders is of paramount concern to CI. However, we cannot contemplate a situation in which it would be appropriate to change the terms of the Plan to favour one shareholder over the others."
The CI Shareholder Rights Plan provides for an initial term of three years and requires the CI Board of Directors to submit the Plan to the independent shareholders of CI at the annual meeting in 2011 in order for the Plan to continue for a further three years. The Bank is not an independent shareholder under the terms of the Plan, because it has been exempted from the operation of the Plan. This exemption was given to the Bank even though its ownership interest exceeds the Plan's triggering ownership threshold of 20%, which is the takeover bid threshold under Canadian securities laws. As long as the Bank does not increase its interest by more than 1%, its ownership will not trigger the operative provisions of the Plan. Furthermore, the Bank is able to sell its interest in the context of an offer made to all shareholders. However, the Plan does preclude a private sale by the Bank of a block of 20% or more of the outstanding shares of CI.
The CI Shareholder Rights Plan is not unique. It is substantially the same as shareholder rights plans adopted by many Canadian companies with the exception of the fact that the CI Plan "grandfathers" the Bank of Nova Scotia from the operation of the Plan. The primary objective of the Shareholder Rights Plan is to enhance shareholder value and ensure that, in the context of a bid for control of CI, all shareholders are treated equally. The Shareholder Rights Plan precludes a creeping takeover or any other accumulation of a significant stake in CI without offering a control premium to all shareholders. The Plan does not preclude a takeover of the company as long as the transaction is fair and in the best interests of the company.
The Bank of Nova Scotia has asked the Toronto Stock Exchange to require CI to permit the Bank to vote on the continuation of the Shareholder Rights Plan for a further three-year term. There is no rule of the Toronto Stock Exchange which deals with this type of situation. The Bank is asking the Toronto Stock Exchange to disregard the specific terms of a shareholder-approved plan and, as a result, vary the terms of the Plan to suit the Bank's interest. CI strongly disagrees with the Bank's position and is in discussions with the Toronto Stock Exchange.
The provisions of the Shareholder Rights Plan are designed to protect CI's shareholders. All CI shareholders had the opportunity to vote on the Plan. The Plan was overwhelmingly approved by CI shareholders, including the Bank. Over 97% of the shares voted at the meeting voted in favour of the Plan. The Plan contemplated ratification for continuation by the independent shareholders.
CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth management company with assets of approximately $98.9 billion as of March 31, 2011. CI offers a broad range of investment products and services, including an industry-leading selection of investment funds, and is on the Web at www.ci.com/cix.
Stephen A. MacPhail
President and Chief Executive Officer
CI Financial Corp.