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Canadian shareholders didn’t find it so easy to sell Maxar Technologies Ltd. earlier this month, even as the stock plummeted.

However, it wasn’t a question of loyalty to the company once known as MacDonald Dettwiler & Associates Ltd., a stalwart of the country’s technology industry.

Instead, thanks to a quirk of a seemingly minor corporate transaction, the company’s Canadian stockholders possessed no shares to sell over two trading days when investors punished Maxar. To place a successful “sell” order those two days, a Canadian Maxar shareholder likely required extra help from their brokerage.

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Before the markets opened on Monday morning, Jan. 7, Maxar said its major image-generating satellite had failed, costing it tens of millions of dollars in revenue. By the end of Tuesday’s trading, as multiple stock analysts reacted with downgrades, the shares had fallen more than 50 per cent.

The stock has continued to tumble; on Monday, its TSX-traded shares hit a new low of $6.32.

“For owners of Maxar’s Canadian shares, it was an unfortunate ‘perfect storm’ to have news of the failed satellite during the time they were waiting for their new shares to arrive,” said Sean Kelly, a spokesman for online brokerage Qtrade.

New shares? Yes.

MacDonald Dettwiler acquired a Colorado company called DigitalGlobe in 2017 and said it would rename itself “Maxar,” using the deal as a springboard to become a U.S. corporation.

The final step came in the waning days of 2018 with a plan to take back what Canadian investors owned – shares in a B.C.-based corporation – and give them new stock in a U.S. corporation legally based in Delaware, where many U.S. businesses incorporate. The resulting company would continue to trade on the Toronto Stock Exchange, as well as the New York Stock Exchange.

Maxar created the new shares and gave orders on Dec. 31 to the New York-based Depository Trust Co. and to the Canadian Depository System (CDS) that it was delivering the shares for a transaction scheduled to close on Jan. 1. These two entities are the clearing houses that settle stock trades in their home countries.

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Maxar had issued a news release on Jan. 2 saying the process was complete: “Each issued and outstanding common share of Maxar Canada has been exchanged for one share of common stock of Maxar.”

To finalize the transaction, there needed to be a “CUSIP” number on the new shares. CUSIPs, an acronym for Committee on Uniform Security Identification Procedures, are like serial numbers for North American stocks and bonds, helping identify one from another.

Shane Quinn, a spokesman for the TSX, which operates CDS, said the clearing house only processes a share transaction involving a CUSIP change on the day after it occurs in order to allow all transactions bearing the old CUSIP number to settle.

Maxar says it gave its CUSIP instructions to the U.S. and Canadian depositories on Dec. 31. The NYSE processed the change before the market opened Jan. 2. But CDS made the CUSIP substitution Jan. 7, Maxar said, in accordance with its standard procedures, which include a period of notice after the TSX issues its formal bulletin regarding the merger closing.

That made Tuesday, Jan. 8 the processing date, and the shares were allocated to brokerage customers’ accounts after the close of business.

Don Kardash of Saskatoon, who contacted The Globe about the problem, says the practical effect of this was that his Canadian shares in Maxar Technologies Ltd. were removed from his Qtrade account Friday, Jan. 4. He got an error message when he tried to sell on Monday, Jan. 7. When he called Qtrade, a customer-service representative told him he could sell shares he didn’t have in his account – effectively short-selling them, the representative said. That made him uncomfortable, so he hoped he’d get the shares deposited soon.

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That finally happened Tuesday night, after Maxar stock had fallen by more than 50 per cent.

“The shares were more than $15 when they took them. The shares I got back were worth $7,” Mr. Kardash said. “This won’t break me, but it hurts.”

Mr. Kelly of Qtrade confirms that his firm told customers they could sell Maxar stock in a phone-based transaction even though they had not yet received the new shares, and were told that technically they would be short-selling. “Some clients proceeded with a sale, and some decided to wait.”

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