| TORONTO, July 2
TORONTO, July 2 Tuckamore Capital Management Inc
, which invests in early- and mid-stage private
companies, said on Wednesday it believes a leading proxy
advisory firm's recommendation against a proposed management-led
buyout of Tuckamore is flawed.
The buyout plan, backed by private equity firm Birch Hill
Equity Partners, has already faced significant public opposition
from shareholders that control close to 30 percent of
Tuckamore's shares. Earlier this week proxy advisory firm ISS,
or Institutional Shareholder Services, advised its clients not
to back the proposal.
ISS said in a report the Tuckamore board's decision to forgo
an auction process was a cause for concern, as investors lack
"market-based evidence that the deal presented in fact
represents the best available alternative."
The firm described the termination fee tied to the deal as
unusually high, arguing it may have deterred other potential
bidders from offering investors a meaningful premium above the
Tuckamore argued the ISS argument against its buyout plan
"In our view, the ISS report confuses the concept of equity
value with enterprise value, uses inappropriate metrics, and
ignores the depth and breadth of the value maximization process
undertaken by the board," Tuckamore said in a statement.
Tuckamore announced in early May that senior management,
with the support of Birch Hill, agreed to acquire the firm in a
deal that valued the holding company at about C$60 million ($56
million). Birch Hill does not currently own any significant
stake in Tuckamore, according to Thomson Reuters data.
Since then, shareholders that control a significant chunk of
Tuckamore's stock, including JC Clark Ltd, Access Holdings and
Canso Investment Counsel, have publicly decried the deal.
Access, which plans to launch a proxy battle to unseat the
Tuckahoe board if the buyout fails, has filed a complaint with
the Ontario Securities Commission, alleging the proposal runs
afoul of capital market rules and that the terms are abusive to
Tuckamore has alleged Access had tried to seize control of
the company without paying a premium to all shareholders.
Ahead of the Canada Day holiday, shares in Tuckamore closed
at 79 Canadian cents a share, above the proposed offer price of
75 Canadian cents a share.
Shareholders were set to vote on the proposed offer on July
($1 = 1.0636 Canadian dollars)
(Reporting by Euan Rocha; Editing by Jeffrey Benkoe)