HomeIndustryAutomotive IndustryModified Dutch Auction: AutoCanada’s way to issuing substantial bids

Modified Dutch Auction: AutoCanada’s way to issuing substantial bids

AutoCanada is commencing a substantial issue of bids to purchase up to $500,000,000 of its ordinary shares.

They will initiate this substantial bid from November 11, 2022, to December 16, 2022; it is based on customary conditions without limitations on the number of tenders. 

How does the Modified Dutch Auction work?

AutoCanada is a North American automobile multi-location company, operating eighty-one dealerships and handling twenty-eight brands in eight provinces of Canada. The company manages three used vehicle dealerships, an auction business, and twenty-four collision centres. 

AutoCanada successfully sold around eighty-six thousand vehicles and processed over eight hundred thousand services and collision repair orders in several service bays. The group also serves in Illinois, USA, apart from the eight provinces of Canada. Besides, AutoCanada sells the best brands like Acura, Honda, Porsche, and many more to other dealerships through accountable distributors.

The group intends to purchase upto $50,000,000 of its ordinary share from the shareholders at a starting price of $25.00, with the maximum being $28.00 per share. The outstanding share of a $25 purchase price would be around 7.87%, while if the purchase price is $28.00, the outstanding share would be nearly 7.03%.

In Modified Dutch Auction, the shareholders would be quoting a price between $25.00 to $28.00 with a $0.25 increment per share. Moreover, the lowest price will lead to purchasing the maximum number of shares. However, it should stay within an aggregate of $50,000,000 in value.

The other way to bid

The shareholders can proceed with the bid without specifying the price per share while purchasing the tenders. The price for each share will be based on the number of deposited shares and prices specified by the shareholders who made the auction tenders.

Shares are purchased at the determined price and are subject to proration. The remaining shares are returned to shareholders and deposited during the auction at a price higher than the final one.

The company will also purchase the price pro rata, but the “odd lot” will not be subject to proration. Further details are provided in the formal letter, issuer bid circular, and other related documents.


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