This is the final article in our mini-tender trilogy. We have
previously discussed mini-tender offers from the perspectives of
offeror, and the
issuer and shareholders. This article considers how
mini-tenders might be strategically used in proxy contests.
As shareholder activism rises, the activists' toolkit keeps
evolving. The strategic use of a mini-tender offer in a recent
proxy contest suggests that such offers may increasingly be
considered as a means of influencing the outcome of proxy
Recall that a mini-tender is an offer to purchase securities
below the threshold that triggers regulatory rules for take-over
bids. These offers are not specifically regulated and have been
used to acquire small but not insignificant positions in public
companies, often at a discount to the prevailing market price.
Making a mini-tender offer in a proxy contest
On June 3, 2014, a mini-tender offer was launched in the midst
of a proxy contest between Orange Capital, LLC and Partners Real
Estate Investment Trust.1 Orange Capital offered to
purchase up to 10% of Partners' units at a 7.1% premium to the
closing price of the units on the day prior to the offer.
Controversially, the offer Orange Capital filed:
was only made to unitholders who held
units on the record date for Partners' upcoming annual
was open for a short timeframe
— just seven business days; and
required that all tendering
unitholders appoint Orange Capital as their nominee and proxy at
the company's annual meeting for all deposited units even
though Orange Capital had no obligation to purchase all of the
units tendered (or for that matter, all the units it voted).
Partners' Trustees recommended that unitholders not tender
to Orange Capital's offer. They also reached out to the Ontario
Securities Commission (OSC) because, in their view, the offer was
"highly coercive". After "constructive
discussions" with the OSC, Orange Capital amended its
mini-tender offer by providing greater procedural protections to
A place for mini-tenders in the future?
The extent to which mini-tender offers will strategically be
used in proxy contests is unclear at this time. However, the
OSC's lack of enforcement action in the Partners/Orange Capital
saga (notwithstanding its "constructive discussions" with
Orange Capital) might provide some comfort to dissidents who wish
to use mini-tender offers during proxy contests to try to influence
the outcome. In our view, dissidents should proceed cautiously
given the current regulatory uncertainty. The OSC's decision to
not commence an enforcement proceeding against Orange Capital was
made in the circumstances of that case and does not establish a
definitive position for the OSC on the use of mini-tenders in proxy
As always, issuers should remain vigilant when following the
market for their securities and be prepared to respond in a timely
manner with their position on any public offer made for their
securities. Directors of issuers should consider applying for
appropriate relief to a court or a securities regulator in order to
curb any actions they view as abusive to shareholders.
 McCarthy Tétrault LLP represented Partners
Real Estate Investment Trust.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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