Lindsey Morden launches rights offering

In an attempt to strengthen its capital, adjusters Lindsey Morden Group (TSE: LM) is making a rights offering to holders of outstanding subordinate voting shares. Lindsey Morden expects proceeds of approximately $20,350,000 to result from the offering, which would be used for “general corporate purposes”. However, a company press release states, “pending such use, the proceeds will be used to repay indebtedness”.

Through the offering, each share would be equal to one right, with four rights entitling the holder to subscribe for an additional voting share valued at $8.50. Fairfax Financial Holdings Ltd., which owns approximately 51% of the company’s outstanding subordinate shares and all of its multiple voting shares, will purchase all subordinate voting shares that remain unissued following the offering.

Lindsey Morden recently reported second quarter losses of 43 per share (net loss $5.1 million), largely the result of slow claims activity, according to company directors.