To: ED BAARTMAN who wrote ( 86) 6/17/1999 10:04:00 AM From: keith schaefer Respond to of 90
Say goodbye to CSI, Canaccord accepts $1.30 Thursday, June 17, 1999 Canaccord makes surprise endorsement of CSI deal John Schreiner Financial Post VANCOUVER - In a surprising turn of events, Canaccord Capital Corp. yesterday decided to endorse Royal Bank of Canada's $1.30-a-share takeover offer for CSI Credit Systems International Inc. of Burnaby, B.C. "We think it's a fair offer, so we're going to recommend tendering to the offer," Peter Brown, Canaccord chairman, said after getting a report from a team of Canaccord analysts who visited CSI earlier this week. With Royal Bank seeking a minimum of 75% of the 14 million shares in the offer mailed yesterday, Canaccord clients could frustrate the takeover because they hold about a third of the shares. John Pryde, a Canaccord broker whose clients account for most of those shares, confirmed some of his clients are disappointed but said he will recommend they take the bank's offer. Christopher Harrop, chairman of Northern Securities Inc. in Toronto, and Steve Ottridge, a Vancouver broker with Nesbitt Burns Inc. -- each believed to represent clients holding close to one million shares -- also said their clients are not happy with the offer. "But I can't fight the Royal Bank and Peter Brown," Mr. Harrop said. CSI is a small firm that has developed and is marketing leading edge software for retailers using customer loyalty cards. CSI's directors have endorsed the takeover and said in their circular they will not solicit other takeover or merger proposals. They have left the door open to unsolicited proposals but will have to pay the Royal Bank a $400,000 fee if they back another bid. There are no known other bidders. The market clearly had expected a competing bid would emerge. Since the offer for CSI was announced on June 4, the Vancouver-listed shares have traded actively and often in large blocks. On Tuesday, when 511,500 shares traded, several trades were done at $1.31 and other blocks were offered briefly at $1.50. Yesterday, 84,400 shares changed hands. They closed at $1.28, off 1¢. Formed in 1992, CSI appears poised to become profitable after several years of losses because it has won software contracts with such major retailers as Nike Canada Inc. The directors' circular said CSI accepted Royal's offer, which is at a modest premium to where the shares were trading, because of the commercial risks faced by CSI "without a strategic partner, the increase in the level of competition in the U.S. market and the need for capital that would be required to achieve CSI's plans of expansion into the United States."