Aimia Inc. AIM-T is once again in the crosshairs of its largest shareholder.
Six months after the investment holding company’s board of directors narrowly survived an ouster attempt from Mithaq Capital SPC, Aimia found itself before regulatory authorities on Thursday to defend a $32.5-million private placement it hopes to close on Friday.
Mithaq, in its application requesting the Ontario Securities Commission’s Capital Markets Tribunal block the transaction, called it an abusive defensive tactic designed to thwart a hostile takeover bid Mithaq launched this month. Aimia pledged Thursday to reverse the private placement and return the proceeds if the tribunal ultimately rules in favour of Mithaq’s request, with a formal hearing set to take place before the end of November.
Both sides accuse the other of violating securities law. Aimia lawyer Orestes Pasparakis of Norton Rose Fulbright Canada LLP said Mithaq, a family office based in Saudi Arabia that has increased its stake in Aimia from less than 13 per cent in early 2023 to nearly 31 per cent today, was engaging in “invasive interference with the operations of a public company.”
Andrew Gray and Sarah Whitmore of Torys LLP, however, argued on behalf of Mithaq that the private placement serves no legitimate business purpose for Aimia and was issued only to increase the number of shares outstanding to block Mithaq’s bid and entrench its existing board of directors.
Aimia, which sold its flagship Aeroplan loyalty program to Air Canada in 2019 for $516-million to become an investment holding company, has been engaged in a dramatic war of words with its largest shareholder since the days leading up to its April 18 annual meeting.
Mithaq publicly campaigned against the election of the entire board and was partially successful. Chair David Rosenkrantz failed to win majority support and none of the other incumbent directors received more than 52.41 per cent of shareholder support.
In its OCS submission, Mithaq alleged “concerns that the board improperly excluded proxies to manipulate the results of the meeting in its favour.” Both sides have already spent months in litigation over the circumstances surrounding the April 18 shareholder vote and its result.
Aimia, Mr. Pasparakis told the tribunal on Thursday, had been working on the private placement for the past six months and, “This was not something that came up in the last five days.”
“We were on the one yard line of closing the private placement when a press release hit on Oct. 3 announcing, not the bid, but announcing there would be a bid,” he said.
Mithaq launched its takeover bid two days later, offering $3.66 per Aimia share, equating to a roughly 20-per-cent premium compared to the stock’s most recent 20-day average price. Aimia shares have consistently traded below that level since the offer was announced.
“The private placement has already been delayed by virtue of the bid because we were literally on the eve of close when the bid was announced,” Mr. Pasparakis said, adding the investors involved in the transaction “have said that they will walk if this matter is further delayed.”
Mithaq points to Aimia’s $116.9-million in cash reserves as of June 30 as evidence the company doesn’t actually need the extra capital the private placement would provide. The company responded by disclosing the private placement had been independently reviewed by Canaccord Genuity Inc. after Mithaq launched its takeover bid.
Mr. Pasparakis also told the tribunal that Mithaq’s offer had “obvious and immediate concerns given its conditionality” as the offer contains 20 conditions and 27 subconditions that must be satisfied before the transaction can go ahead. One condition in particular, he said, involves Aimia “capitulating its litigation against Mithaq, to the satisfaction of Mithaq.”
Jameson Berkow