An activist hedge fund pushing for governance changes at Dye & Durham Ltd. has ripped into the heavily indebted company after it made two acquisitions, calling it “the laughingstock of Canadian capital markets.”
Last week the Toronto legal software company said it had purchased two Australian companies after its June 30 fiscal year-end for $69.3-million. D&D is paying $21-million up front and $43.7-million in deferred consideration. They were its first two purchases in more than nine months. While sell-side analysts asked D&D about the deals during an earnings call last week, they expressed little to no concern about them in subsequent research reports. Dye & Durham’s net debt stood at $1.
Those documents surfaced in a court battle touched off by Engine. The New York hedge fund earlier this year requested the removal of D&D directors Brian Derksen, Ms. Moorehead and Leslie O’Donoghue at a special meeting and proposed three of its own nominees. D&D said Mr. Derksen, who resigned as chairman this year, would not stand for re-election, and Ms. O’Donoghue quit in July. Another hedge fund, Blacksheep Master Fund, also wants to nominate a director.
D&D agreed to put forward Mr. Shahinian’s name but not the proposal to vote off Mr. Prittie, calling the move invalid because it. OneMove sued and D&D sued back, delaying the special meeting. An Ontario Superior Court judge heard the case last month but hasn’t ruled yet.