Defiance Robotics Actuators ETF risk analysis
Defiance Robotics Actuators ETF (AT) Risk Analysis
Risk Overview Q1, 2021
Source: the company's latest filing for the period ended Mar 31, 2021, filed May 06, 2021
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1There can be no certainty that all conditions to the Transaction will be satisfied. Failure to complete the Transaction could negatively impact the share price of the common shares or preferred shares or otherwise adversely affect the business of the Company
The completion of the Arrangement is subject to a number of conditions, certain of which are outside our control, including the obtaining of common shareholder approval, the obtaining of preferred shareholder approval, the obtaining of the consents of holders of the MTNs, the obtaining of consents or approvals from holders of convertible debentures, the obtaining of required regulatory approvals, the obtaining of required third-party consents and receipt of a final order from the Supreme Court of British Columbia. There can be no certainty, nor can we provide any assurance, that these conditions will be satisfied or, if satisfied, when. A substantial delay in obtaining satisfactory approvals and/or the imposition of unfavorable terms or conditions in the approvals to be obtained could have an adverse effect on our business, financial condition or results of operations of Atlantic Power or could result in the termination of the Arrangement Agreement. If: (i) common shareholders choose not to approve the Arrangement, (ii) preferred shareholders choose not to approve the continuance of APPEL under the laws of British Columbia and the Arrangement, (iii) holders of the MTNs choose not to amend the MTN indenture (as describe in the Arrangement Agreement), (iv) holders of the convertible debentures choose not to amend the indenture of the convertible debentures (as described in the Arrangement Agreement), (v) we otherwise fail to satisfy, or fail to obtain a waiver of the satisfaction of, the closing conditions to the transaction and the Arrangement is not completed, (vi) a material adverse effect occurs that results in the termination of the Arrangement Agreement, or (vii) any legal proceeding results in enjoining the transactions contemplated by the Arrangement, we could be subject to various adverse consequences, including that we would remain liable for significant costs relating to the Transaction, including, among others, legal, accounting, financial advisory and financial printing expenses. If the Transaction is not completed, the market price of the common shares and preferred shares may decline to the extent that the market price reflects a market assumption that the Transaction will be completed. The US$3.03 per share to be paid for each Common Share exceeds Atlantic Power's 52-week and last five-year-high price, and represents a premium of approximately 48% to the 30-day volume weighted average price per Common Share on the NYSE. If the Transaction is not completed and the Board decides to seek another merger or business combination, there can be no assurance that it will be able to find a party willing to pay an equivalent or more attractive price than the prices offered to holders of common shares and holders of preferred shares to be paid pursuant to the Arrangement. In addition, since the completion of the Transaction is subject to uncertainty, our officers and employees may experience uncertainty about their future roles with the Company. This may adversely affect our ability to attract or to retain key management and personnel in the period until the Arrangement is completed or terminated.
- Share Price & Shareholder Rights - Risk 2While the Arrangement is pending, the Company is restricted from taking certain actions
The Arrangement Agreement restricts us from taking certain specified actions until the Arrangement is completed without the consent of the Purchasers. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement.
- Share Price & Shareholder Rights - Risk 3The pending Transaction may divert the attention of the Company's management
The pendency of the Transaction could cause the attention of our management to be diverted from the day-to-day operations and counterparties or suppliers may seek to modify or terminate their business relationships with us. These disruptions could be exacerbated by a delay in the completion of the Arrangement and could have an adverse effect on our business, operating results or prospects.
- Corporate Activity and Growth - Risk 4The Arrangement Agreement may be terminated in certain circumstances. Even if the Arrangement Agreement is terminated without payment of the termination fee, the Company may, in the future, be required to pay the termination fee in certain circumstances
Each of the parties to the Arrangement Agreement has the right to terminate the Arrangement Agreement in certain circumstances. Accordingly, there is no certainty, nor can we provide any assurance, that the Transaction will not be terminated by any of the parties to the Arrangement Agreement before the completion of the Transaction. Failure to complete the Arrangement could negatively impact the trading price of the common shares or preferred shares or otherwise adversely affect our business. Under the Arrangement Agreement, we are required to pay a termination fee of $12,500,000 in the event the Arrangement Agreement is terminated following the occurrence of certain events. The termination fee may discourage other parties from attempting to acquire the common shares and preferred shares, even if those parties would otherwise be willing to offer greater value than that offered under the Arrangement. Even if the Arrangement Agreement is terminated without payment of the termination fee, we may, in the future, be required to pay the termination fee in certain circumstances. Under the Arrangement Agreement, we may be required to pay the termination fee to the Purchasers at a date subsequent to the termination of the Arrangement Agreement if the Arrangement Agreement is terminated due (i) to common shareholder approval of the Arrangement by at least two-thirds of the votes cast by common shareholders at a special meeting of the common shareholders or preferred shareholder approval of the continuance of APPEL under the laws of British Columbia and the Arrangement by at least two thirds of the votes cast by preferred shareholders at a special meeting of the preferred shareholders not being obtained, (ii) the closing of the Transaction having not occurred prior to July 14, 2021, or (iii) our breaching certain representations and warranties if (A) prior to such termination an acquisition proposal is publicly announced after the date of the Arrangement Agreement and not withdrawn prior to the special meetings of common and preferred shareholders and (B) within twelve months of such termination, (x) an acquisition proposal (whether or not the same acquisition proposal described in clause (A) above) is consummated or (y) we or one or more of our subsidiaries enters into an agreement with respect to an acquisition proposal and such acquisition proposal is later consummated (whether or not within the twelve month period following such termination).
- Corporate Activity and Growth - Risk 5Certain features of the Arrangement Agreement may discourage other parties from attempting to acquire the Company
Under the Arrangement Agreement, as a condition to entering into a definitive agreement in respect of a superior proposal, we and APPEL are required to offer the Purchasers the right to match such superior proposal. This right may discourage other parties from making a superior proposal, even if they would otherwise have been willing to acquire us on more favorable terms than the Transaction. Prior to entering into the Arrangement Agreement, we engaged in exclusive negotiations with I Squared Capital and did not solicit expressions of interest from other potential buyers. A special committee of the Board comprised entirely of independent directors and the Board concluded, after receiving advice from their financial and legal advisors, that the risks of soliciting expressions of interest from other potential buyers outweighed the benefits of doing so, particularly having regard to the financial and other terms of the Arrangement Agreement. However, there can be no assurance that, if we had solicited expressions of interest from other potential buyers, that one or more of such potential buyers would not have been willing to acquire us on more favorable terms than I Squared Capital and the Purchasers.
Risk Highlights Q1, 2021
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 47
- Share Price & Shareholder Rights - Risk 1There can be no certainty that all conditions to the Transaction will be satisfied. Failure to complete the Transaction could negatively impact the share price of the common shares or preferred shares or otherwise adversely affect the business of the Company
The completion of the Arrangement is subject to a number of conditions, certain of which are outside our control, including the obtaining of common shareholder approval, the obtaining of preferred shareholder approval, the obtaining of the consents of holders of the MTNs, the obtaining of consents or approvals from holders of convertible debentures, the obtaining of required regulatory approvals, the obtaining of required third-party consents and receipt of a final order from the Supreme Court of British Columbia. There can be no certainty, nor can we provide any assurance, that these conditions will be satisfied or, if satisfied, when. A substantial delay in obtaining satisfactory approvals and/or the imposition of unfavorable terms or conditions in the approvals to be obtained could have an adverse effect on our business, financial condition or results of operations of Atlantic Power or could result in the termination of the Arrangement Agreement. If: (i) common shareholders choose not to approve the Arrangement, (ii) preferred shareholders choose not to approve the continuance of APPEL under the laws of British Columbia and the Arrangement, (iii) holders of the MTNs choose not to amend the MTN indenture (as describe in the Arrangement Agreement), (iv) holders of the convertible debentures choose not to amend the indenture of the convertible debentures (as described in the Arrangement Agreement), (v) we otherwise fail to satisfy, or fail to obtain a waiver of the satisfaction of, the closing conditions to the transaction and the Arrangement is not completed, (vi) a material adverse effect occurs that results in the termination of the Arrangement Agreement, or (vii) any legal proceeding results in enjoining the transactions contemplated by the Arrangement, we could be subject to various adverse consequences, including that we would remain liable for significant costs relating to the Transaction, including, among others, legal, accounting, financial advisory and financial printing expenses. If the Transaction is not completed, the market price of the common shares and preferred shares may decline to the extent that the market price reflects a market assumption that the Transaction will be completed. The US$3.03 per share to be paid for each Common Share exceeds Atlantic Power's 52-week and last five-year-high price, and represents a premium of approximately 48% to the 30-day volume weighted average price per Common Share on the NYSE. If the Transaction is not completed and the Board decides to seek another merger or business combination, there can be no assurance that it will be able to find a party willing to pay an equivalent or more attractive price than the prices offered to holders of common shares and holders of preferred shares to be paid pursuant to the Arrangement. In addition, since the completion of the Transaction is subject to uncertainty, our officers and employees may experience uncertainty about their future roles with the Company. This may adversely affect our ability to attract or to retain key management and personnel in the period until the Arrangement is completed or terminated.
- Share Price & Shareholder Rights - Risk 2While the Arrangement is pending, the Company is restricted from taking certain actions
The Arrangement Agreement restricts us from taking certain specified actions until the Arrangement is completed without the consent of the Purchasers. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement.
- Share Price & Shareholder Rights - Risk 3The pending Transaction may divert the attention of the Company's management
The pendency of the Transaction could cause the attention of our management to be diverted from the day-to-day operations and counterparties or suppliers may seek to modify or terminate their business relationships with us. These disruptions could be exacerbated by a delay in the completion of the Arrangement and could have an adverse effect on our business, operating results or prospects.
- Share Price & Shareholder Rights - Risk 4Our equity interests in certain projects may be subject to transfer restrictions
The partnership or other agreements governing some of the projects may limit a partner's ability to sell its interest. Specifically, these agreements may prohibit any sale, pledge, transfer, assignment or other conveyance of the interest in a project without the consent of the other partners. In some cases, other partners may have rights of first offer or rights of first refusal in the event of a proposed sale or transfer of our interest. These restrictions may limit or prevent us from managing our interests in these projects in the manner we see fit, and may have an adverse effect on our ability to sell our interests in these projects at the prices we desire.
- Share Price & Shareholder Rights - Risk 5Our common shares may not continue to be qualified investments under Canadian tax laws
There can be no assurance that our common shares will continue to be qualified investments under relevant Canadian tax laws for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax-free savings accounts. Canadian tax laws impose penalties for the acquisition or holding of non-qualified or ineligible investments.
- Share Price & Shareholder Rights - Risk 6Changes in our creditworthiness may affect the value of our common shares
Changes to our perceived creditworthiness and ability to meet our required covenants on an ongoing basis may affect the market price or value and the liquidity of our common shares.
- Share Price & Shareholder Rights - Risk 7The future issuance of additional common shares could dilute existing shareholders
From time to time, we may decide to issue additional common shares, redeem outstanding debt for common shares, repay outstanding principal amounts under existing debt by issuing common shares, or issue equity-related securities such as convertible debt. We may also, from time to time, decide to issue common shares to meet strategic objectives or in connection with acquiring assets or pursuing broader strategic options. The issuance of additional common shares may have a dilutive effect on shareholders and may adversely impact the price of our common shares.
- Share Price & Shareholder Rights - Risk 8We have anti-takeover protections that, in the event that the Transaction does not close, may discourage, delay or prevent a change in control that could benefit our shareholders
The Business Corporations Act (British Columbia) (the "BCBCA") and our Articles of Continuance contain provisions that could make it more difficult for a third party to acquire us without the consent of our Board. These provisions include: - As a notice of meeting is required to include certain particulars in the case where a shareholder meeting is being requisitioned by shareholders, our Board must be given advance notice regarding special business that is to be brought by such requisitioning shareholders before the shareholder meeting. For special business, advance notice describing the special business to be discussed at the meeting must be provided and that notice must include any documents to be approved or ratified as an addendum or state that such document will be available for inspection at our records office or other reasonably accessible location;- Under the BCBCA, shareholders may make proposals for matters to be considered at the annual general meeting of shareholders, provided that such shareholders represent at least 1% of the voting shares of a company or such shares have a fair market value of at least Cdn$2,000. Such proposals must be sent to us in advance of any proposed meeting by delivering a timely written notice in proper form to our registered office. The notice must include information on the business the shareholder intends to bring before the meeting. These provisions could have the effect of delaying until the next shareholder meeting shareholder actions that are favored by the holders of a majority of our outstanding voting securities; and - Casual vacancies on our Board, which occur when a member of the Board vacates his or her position before the end of his or her term, can be approved prior to the next annual meeting of shareholders by the directors of our Board of Directors. If we experience a change of control, unless we elect to make a voluntary prepayment of the Term Loan, the Partnership will be required to offer each electing lender a prepayment of such lender's term loan under the Credit Facilities at a price equal to 101% of par. Additionally, a change in control will permit holders of our convertible debentures to require that we purchase the debentures upon the conditions set forth in the respective indenture governing the debentures, which may discourage, delay or prevent a change of control or the acquisition of a substantial block of our common shares. In addition, some of our PPAs or other commercial agreements may contain change of control provisions. We have a shareholder rights plan in place that may delay or prevent a change of control or the acquisition of a substantial block of our common shares and may make any future unsolicited acquisition attempt more difficult. Under the rights plan: - The rights will generally become exercisable if a person or group acquires 20% or more of Atlantic Power's outstanding common shares (unless such transaction is a "permitted bid" or a transaction to which the application of the shareholders rights plan has been waived pursuant to the terms of the plan) and thus becomes an "acquiring person." A "permitted bid" is an offer pursuant to which, among other things, such person or group agrees to hold the offer open to all shareholders for a period longer than the statutorily required period;- Each right, when exercisable, will entitle the holder, other than the "acquiring person," to acquire shares of Atlantic Power's common shares at a significant discount to the then-prevailing market price; and - As a result, the rights plan may cause substantial dilution to a person or group that becomes an "acquiring person" and may discourage or delay a merger or acquisition that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares.
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