Business
KST Industries Inc. Announces Purchase of Data Group Inc. Convertible Debentures
MISSISSAUGA, ON / ACCESSWIRE / January 15, 2016 / KST Industries Inc. ("KST") announced toda...
About this update from Data Communications Management Corp.
[{"type":"text","content":"KST Industries Inc. Announces Purchase of Data Group Inc. Convertible DebenturesMISSISSAUGA, ON / ACCESSWIRE / January 15, 2016 / KST Industries Inc. (\"KST\") announced today that is has purchased $6,657,000 of aggregate principal amount of 6% convertible unsecured subordinated debentures (the \"Debentures\") of Data Group Ltd. (\"DG\") at a price of $3,328,500. The Debentures are listed for trading on the Toronto Stock Exchange (\"TSX\"), and the purchase was effected through the TSX.\nThe Debentures purchased represent 14.89% of the issued and outstanding Debentures at the date hereof.\nKST currently owns 3,280,500 Common Shares of DG being 13.97% of the issued and outstanding Common Shares on the date hereof.\nOn November 12, 2015, DG announced the redemption of $33,500,000 (or approximately 75%) of the aggregate principal amount of the Debentures and that it has elected to satisfy its obligation to pay the redemption price by issuing and delivering Common Shares in lieu of cash. The number of Common Shares to be issued and delivered will be determined by dividing the redemption price by 95% of the volume --- weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending December 16, 2015.\nAs indicated in the DG announcement, based on the then current trading price of the Common Shares, DG will be required to issue a large number of Common Shares, which will significantly dilute existing shareholders. Based on the current trading price, in the absence of the purchase of the Debentures, KST would following conversion of the Debentures have ceased to be an insider of DG as a result of its shareholdings in DG.\nAs a result of the purchase of the Debentures, it is expected that KST will continue to hold more than 10% of the Common Shares and thus remain an insider of DG. \nTo be exact KST holds currently after the Debenture conversion about 15.55% of the DGI Common Shares.\nIn addition to KST's holding of Common Shares and Debentures, KST has a relationship with Harinder Takhar, who is an insider of KST as a result of his being a member of the Board of Directors of KST.\nMr. Takhar is the Chief Executive Officer of KST and is one of two members of its Board of Directors, and is one of the two individuals who collectively, but not individually, have decision making authority over KST, i...