Toronto-based hedge fund firm Donville Kent Asset Management said Reitmans Canada Ltd RET-X would make good use of capital if it eliminated its dual-class share structure and bought back stock, resulting in the Reitman family regaining control, according to a letter seen by Reuters.

The hedge fund also encouraged the 97-year-old retailer to restore its listing on the main Toronto Stock Exchange, Donville Kent Portfolio Manager Jesse Gamble said in the letter dated Oct. 12, which the firm provided to Reuters on Thursday.

Reitmans did not immediately respond to requests for comment.

If the structure of voting and nonvoting shares was eliminated, each current voting share should be converted to the new share class at a 50% premium, which would leave 55.5 million shares, with the Reitman family controlling 21%, Gamble said.

“In order for the Reitman family to regain control, the company would need to buy back 32.4 million shares under this specific example. We think this would be a great use of capital considering the current valuation and strength of the balance sheet and cashflows,” Donville Kent said.

Reitmans had a market value of $121 millionas of Wednesday’s close.

Reitmans, which has 406 stores across Canada, was downgraded from the main TSX to the TSX Ventures board in 2020 during the global pandemic. Reitmans sought bankruptcy protection and closed over 130 stores.

“The stock appears to be undervalued by a factor of 2.5 to 3 times,” the letter said. Donville Kent holds more than 5% of voting shares in Reitmans, Gamble told Reuters.

Converting to a single share class is the first step in relisting on the TSX, the letter added.

“We believe many boards and management teams don’t understand the importance of being on the TSX main board,” Gamble added.