Dundee Sustainable enters definitive go-private deal

Executive Summary

• Dundee Sustainable Technologies Inc. (DST) has entered into a definitive merger agreement to be privatized by its controlling shareholder, Dundee Corp., via a wholly owned subsidiary (17799799 Canada Inc.).
• The transaction involves acquiring all outstanding subordinate voting shares not owned by Dundee for $0.03 per share in cash, representing an aggregate value of approximately $440,000.
• The deal is driven by DST's severe financial distress, including $25.7 million in matured loans and debentures, with Dundee refusing to extend maturity or provide further support as a public entity, making bankruptcy the likely alternative.

Key Details

• Transaction Structure: Amalgamation under Section 181 of the Canada Business Corporations Act. Shareholders (excluding Dundee and dissenters) will receive one redeemable preferred share of the new entity (Amalco), which is immediately redeemed for $0.03 cash per share.
• Consideration: $0.03 cash per subordinate voting share.
• Aggregate Value: Approximately $440,000.
• Closing Conditions: Requires shareholder approval (special meeting) and customary closing conditions. Expected to close in the first half of 2026.
• Voting Requirements:
  • Approval by at least 66-2/3% of votes cast by all shareholders present (multiple and subordinate voting shares combined).
  • Approval by a simple majority of the "majority of the minority" (excluding Dundee and purchaser votes).
• Voting Support:
  • DPM Metals Inc., Inotel Inc. (holding company of Chairman Emeritus Dr. Jean-Marc Lalancette), and senior management/directors (holding ~7.2% of shares) have signed voting support agreements.
  • Shareholders holding ~31.3% of eligible subordinate voting shares have agreed to vote in favor.
• Financial Context & Rationale:
  • DST has indebtedness exceeding $20 million to creditors, including $23.7 million in unpaid loans to Dundee and $25.7 million in matured loans/convertible debentures (as of May 15, 2025).
  • Dundee has indicated it will not extend loan maturities or provide further financial support to DST as a public company.
  • The Special Committee determined that the status quo would result in bankruptcy/restructuring with no value for shareholders.
  • An independent fairness opinion was obtained from DNA Advisors Inc., stating the consideration is fair to minority shareholders.
• Fees:
  • Termination Fee: Up to $25,000 payable by DST if a superior proposal is accepted.
  • Reverse Termination Fee: Up to $25,000 payable by Dundee if the transaction fails under certain circumstances.
• Post-Transaction Status: DST will become a privately held company, cease to be a reporting issuer, and voluntarily delist from the Canadian Securities Exchange (CSE).

Notable Quotes

• Jean-Philippe Mai, President and CEO of DST: "The special committee and management team are pleased with the outcome of the constructive discussions with Dundee on our financial situation and unpaid loans. This transaction provides a beneficial resolution that avoids a formal default, delivers some value to shareholders and supports long-term business stability."
• Jonathan Goodman, President and CEO of Dundee: "This transaction represents a pragmatic and forward-looking solution that preserves the going concern where alternatives are limited. By bringing DST fully in-house, we can streamline both the operation and the capital structure and position the business for a more sustainable future."