- Special Meeting was called promptly and delayed by baseless litigation brought by OneMove in which Engine participated as an intervenor
- Engine’s advice and demands over the past several months have been demonstrably wrong and would have been potentially value destructive if followed
- Engine weaponized private, good faith engagement regarding important legal and regulatory matters to score points
TORONTO, Sept. 25, 2024 /CNW/ – Dye & Durham Limited (“Dye & Durham” or the “Company“) (TSX: DND), one of the world’s largest providers of cloud-based legal practice management software, today responded to Engine Capital LP’s (together with its affiliates “Engine“) latest attempt to advance a rapidly-shifting and misleading narrative.
Dye & Durham wishes to set the record straight for the benefit of all shareholders:
The Special Meeting
Engine requisitioned a special meeting of shareholders, and the Company promptly set a meeting for August 20, 2024 (the “Special Meeting”). The Special Meeting was then postponed by way of a court order on July 17, 2024, after OneMove Capital Ltd. (“OneMove“), another activist shareholder, commenced baseless litigation against the Company. OneMove’s litigation, which Engine participated in as an intervenor, was subsequently dismissed on September 17, 2024.
If not for OneMove’s baseless litigation, the Special Meeting would have occurred over a month ago. Following the dismissal of OneMove’s litigation, the Company again promptly set a new date for the Special Meeting for December 10, 2024. The Board set the rescheduled Special Meeting date considering several factors including: the time required to prepare, file and mail proxy materials; minimizing the distraction for the Board and management team as they prepare to close the quarter and report financial results; and the overall needs of the business.
Engine Has Been Proven Wrong at Every Turn
Engine fundamentally does not understand the Company or its business. If the Board had acceded to Engine’s demands over the past several months, it would have been value destructive for shareholders.
Against Engine’s “advice” to not attempt a debt refinancing, and its hyperbolic posturing, the Company refinanced its debt on more favourable terms that materially reduced its debt service cashflows, staggered and extended its maturities, and saved the Company approximately CAD $20 million annualized in net interest costs. Dye & Durham also completed two small tuck-in acquisitions, which are expected to exceed the Company’s historical returns target without adding any funded debt. These acquisitions have created significant opportunities for product enhancements and strengthened Dye & Durham’s competitive position.
Engine, as recently as this month, claimed that the Company’s level of debt had increased. This is patently false. Since December 31, 2023, Dye & Durham’s net debt has decreased by approximately CAD $88 million as of June 30, 2024. The Company remains committed to further reducing both its debt and leverage ratios—achieving this without sacrificing its growth prospects, which would have been compromised under Engine’s advice. In addition to the Company’s recent refinancing transactions, it made a CAD $20.3 million early repayment on its term loan facility. The early debt repayment is approximately four times the minimum annual prepayment requirement under the terms of the facility.
Private Engagement with the Activists on Important Regulatory Matters
Dye & Durham and its subsidiaries operate within a complex global regulatory framework that includes substantial government oversight, restriction and control. The applicable regulatory framework includes national security, foreign investment, among other regulations.
Based on advice from independent legal counsel, there are serious concerns that certain shareholders of the Company, including Engine and others (collectively, ‘the Activist Shareholders’), may be in breach of the UK’s National Security & Investment Act 2021 (NSIA) and Australia’s Foreign Acquisitions and Takeovers Act 1975 (FATA).
The Company recognizes the severe legal implications for the Activist Shareholders, including potential criminal penalties, associated with failing to obtain necessary government approvals. To the extent that the Activist Shareholders lack of necessary approvals could expose Dye & Durham to knowledge-based liabilities or offenses and given a significant portion of the Company’s revenues depends on holding certain regulatory approvals, any noncompliance could lead to serious breaches and negatively impact the Company’s operations. Consequently, Dye & Durham made efforts to engage privately and constructively with the Activist Shareholders to determine their compliance with applicable national security and foreign investment laws.
The Company is very disappointed that Engine has chosen to mischaracterize Dye & Durham’s genuine efforts to engage with them privately regarding their compliance with various laws. The Company’s good faith attempts were aimed at understanding their position and helping them potentially avoid serious consequences. Instead of fostering constructive dialogue, Engine appears focused on scoring cheap points in its relentless pursuit of control over the Company, regardless of the implications of the investment of all stakeholders involved. Dye & Durham encourages the Activist Shareholders to take the steps necessary to ensure their compliance with applicable national security and foreign investment laws.
About Dye & Durham
Dye & Durham Limited provides premier practice management solutions empowering legal professionals every day, delivers vital data insights to support critical corporate and property transactions and enables the essential payments infrastructure trusted by government and financial institutions. The company has operations in Canada, the United Kingdom, Ireland, Australia and South Africa.
Additional information can be found at www.dyedurham.com.
Forward-looking Statements
This press release may contain forward-looking information and forward-looking statements within the meaning of applicable securities laws, which reflects the Company’s current expectations regarding future events, including with respect to the timing and completion of the Offer, the intentions of the Company’s directors and officers and debenture holders with respect to tendering to the Offer, and the Company’s financial outlook and business strategy, including its debt reduction strategy and products and services. In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management’s current beliefs, expectations, estimates and projections regarding future events and operating performance.
Specifically, statements regarding Dye & Durham’s expectations of future results, performance, prospects, the markets in which we operate, or about any future intention with regard to its business, acquisition strategies and debt reduction strategy are forward-looking information. The foregoing demonstrates Dye & Durham’s objectives, which are not forecasts or estimates of its financial position, but are based on the implementation of its strategic goals, growth prospectus, and growth initiatives. The forward-looking information is based on management’s opinions, estimates and assumptions, including, but not limited to: (i) Dye & Durham’s results of operations continuing as expected, (ii) the Company continuing to effectively execute against its key strategic growth priorities, (iii) the Company continuing to retain and grow its existing customer base and market share, (iv) the Company being able to take advantage of future prospects and opportunities, and realize on synergies, including with respect of acquisitions, (v) there being no changes in legislative or regulatory matters that negatively impact the Company’s business, (vi) current tax laws remaining in effect and not being materially changed, (vii) economic conditions remaining relatively stable throughout the period, (vii) the industries Dye & Durham operates in continuing to grow consistent with past experience, (ix) the seasonal trends in real estate transaction volume continuing as expected, * the Company’s expectations regarding its debt reduction strategy being met and * those assumptions described under the heading “Caution Regarding Forward-Looking Information” in the Company’s Management’s Discussion and Analysis for the period ended June 30, 2024. While these opinions, estimates and assumptions are considered by Dye & Durham to be appropriate and reasonable in the circumstances as of the date of this press release, they are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking information.
The forward looking information is subject to significant risks including, without limitation: that the Company will be unable to effectively execute against its key strategic growth priorities, including in respect of acquisitions; the Company will be unable to continue to retain and grow its existing customer base and market share; risks related to the Company’s business and financial position; that Dye & Durham may not be able to accurately predict its rate of growth and profitability; risks related to economic and political uncertainty; income tax related risks; and those risk factors discussed in greater detail under the “Risk Factors” section of the Company’s most recent annual information form and under the heading “Risks and Uncertainties” in the Company’s most recent Management’s Discussion and Analysis, which are available under Dye & Durham’s profile on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the Company’s control.
If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information.
Although the Company bases these forward-looking statements on assumptions that it believes are reasonable when made, the Company cautions investors that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which it operates are consistent with the forward-looking statements contained in this press release, those results of developments may not be indicative of results or developments in subsequent periods.
There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents Dye & Durham’s expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information or to publicly announce the results of any revisions to any of those statements, whether as a result of new information, future events or otherwise, except as required under applicable securities laws. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.
All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.
SOURCE Dye & Durham Limited
For Further Information: Huss Hirji, Vice President Investor Relations, Phone: (647) 323-7193, E-mail: [email protected]
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