Callidus to Explore Going Private; Says Shares Still Undervalued

  • CEO says company will hire financial advisers to take private
  • ‘Shares continue to trade at a significant discount,’ CEO Says

Callidus Capital Corp., the lending subsidiary of Canada’s Catalyst Capital Group Inc., said Friday it plans to hire a financial adviser to explore going private, arguing the company’s shares are undervalued in the public market.

“Callidus shares continue to trade at a significant discount,” said Newton Glassman, Toronto-based Callidus’s chief executive officer, in a statement. “Accordingly, our board has determined to explore the possibility of a privatization of the company with a view to maximizing value for all shareholders.”

Glassman has been battling short-sellers at Callidus for much of 2016 after reports were published questioning the quality of its loan book. The company, which denied the claims, launched a legal battled against the authors of the reports, raised its dividend and implemented a share-buyback program at C$16.50 a share, which was extended Friday to Oct. 31. Callidus also released a fair-value estimate from National Bank Financial that pegs the value of its shares at C$18 to $22 a share.

The short positions in the company have fallen to 4.6 percent from a peak in January of nearly 19 percent, according to Markit data.

Callidus shares rose 1.5 percent to C$16.61 at 9:33 a.m. in Toronto and are up 89 percent this year.

Catalyst Capital said in the statement it holds about 65 percent of the issued and outstanding shares in Callidus and doesn’t plan to sell any it holds itself or in its funds, nor does it plan to bid on any shares it doesn’t own.  

Catalyst, Canada’s second-biggest private equity firm, is also run by Glassman.

Before it's here, it's on the Bloomberg Terminal.