Cynapsus Therapeutics Inc. (CYNA)

[Rule_62]

2.4 Share Consolidation

Shareholders will be asked at the Meeting to approve a special resolution to consolidate all of the Corporation’s issued and outstanding Common Shares on the basis of a ratio within the range of one post-consolidation Common Share for every five pre-consolidation Common Shares to one post-consolidation Common Share for every 25 pre-consolidation Common Shares (the “Consolidation”), with the ratio to be selected and implemented by the Corporation’s board of directors, if at all, at any time prior to December 31, 2015. The number of pre-Consolidation shares in the ratio must be a whole number of Common Shares. The Consolidation remains subject to receipt of all necessary regulatory approvals, including approval of the Toronto Stock Exchange (the “TSX” or the “Exchange”).

If the Board decides to implement the Consolidation, upon completion of the Consolidation the number of Common Shares issued and outstanding will be reduced from approximately 110,311,428 Common Shares as of April 3, 2015 to between approximately 22,062,286 and 4,412,457 shares, depending on the ratio selected by the Board. The following table sets out the approximate percentage reduction in the number of outstanding Common Shares and the approximate number of Common Shares that would be outstanding as a result of a Consolidation at the ratios indicated:

(table omitted, you can see it in the original filing)

On April 2, 2015, the closing price of the Common Shares on the TSX was $1.36. Management believes that it is possible that the Common Shares trade at prices that may impact the desirability of purchasing the Common Shares. Accordingly, management believes that a reduction in the number of outstanding Common Shares, warrants and stock options will increase the Corporation’s flexibility and competitiveness in the market place and may make the Corporation’s securities more attractive to potential investors. Management believes that a higher trading price for the Common Shares would be beneficial to the Corporation and its shareholders as it will enable the Corporation to attract interest from a broader range of institutional investors in Canada, the United States and elsewhere.

The Board believes that shareholder approval of the range of potential Consolidation ratios (rather than a single Consolidation ratio) provides the Board with maximum flexibility to achieve the desired results of the Consolidation. If the Share Consolidation Resolution (as defined below) is approved, the Consolidation will be implemented, if at all, only upon a determination by the Board that the Consolidation is in the best interests of the Corporation and the shareholders at that time. In connection with any determination to implement a Consolidation, the Board will set the timing for such a Consolidation and select the specific ratio from within the range of ratios set forth in the Share Consolidation Resolution. The Board’s selection of the specific ratio will be based primarily on the price level of the Common Shares at that time and the expected stability of that price level. In addition, the Board may consider factors such as:

(a) the prevailing trading volume of the Common Shares and the anticipated impact of the Consolidation on the trading market for the Common Shares;
(b) the outlook for the trading price of the Common Shares;
(c) threshold prices of brokerage houses or institutional investors that could impact their ability to invest or recommend investments in the Common Shares;
(d) the greatest overall reduction in the Corporation’s administrative costs; and
(e) prevailing general market and economic conditions.

No further action on the part of shareholders will be required in order for the Board to implement the Consolidation. If the Board does not implement the Consolidation before December 31, 2015, the authority granted by the Share Consolidation Resolution to implement the Consolidation on these terms will lapse and be of no further force or effect. The Share Consolidation Resolution will also authorize the Board to elect not to proceed with, and abandon, the Consolidation at any time if it determines, in its sole discretion, to do so. The Board would exercise this right if it determined that the Consolidation was no longer in the best interests of the Corporation and its shareholders.

No further approval or action by or prior notice to shareholders will be required in order for the Board to abandon the Consolidation.

SEDAR link (hopefully it works