Legal software provider Dye & Durham Corp. has filed to go public on the Toronto Stock Exchange for the second time after a pandemic-related delay to its listing plans.
The acquisitive Toronto company is looking to raise $100-million worth of stock at between $7 and $7.50 a share, of which $90-million would go to the company and $10-million would go to shareholder Seastone Invest Ltd., according to a prospectus filed with regulators on Monday. Its underwriters, led by Canaccord Genuity, Scotia Capital Inc., BMO Nesbitt Burns and Infor Financial Group Inc., have the option to buy another $15-million worth of stock.
D&D had intended to go public in the autumn of 2018, but pulled its plans owing to choppy market conditions. In addition, investors were cool to the fact more than half of the $125-million in proceeds would have gone to existing shareholders, mainly chief executive Matthew Proud and his brother Tyler, the chairman.
The company made moves to address investor concerns as it prepared to retest the markets. Tyler Proud gave up the chairman role to lead director Brian Derksen, former deputy CEO of Deloitte LLP. D&D also negotiated a $200-million credit agreement, using $50-million of the proceeds to pay a dividend to shareholders. D&D made three acquisitions in 2019 for $60-million.
D&D had been eyeing a $150-million IPO for early spring before the pandemic hit Canada, which prompted the company to enact layoffs and cut employee salaries by 20 per cent through September. But with a strong rebound by technology stocks – Canadian-listed Shopify Inc., Kinaxis, Enghouse Systems Ltd., Real Matters Inc. and Docebo Inc., have recently hit record highs – and steady performance by D&D, the market has looked increasingly favorable for a renewed IPO. In March, D&D hired Jae Cornelssen, a former mergers and acquisitions adviser with KPMG Corporate Finance, as chief financial officer. He replaced Ian MacNeily, who was hired for the anticipated 2018 offering and left after it was shelved.
D&D said in its prospectus it earned pro-forma revenue of $60-million in the nine months ended March 31, up from $38.1-million in the same period last year, and posted adjusted operating earnings of $31.4-million and a net loss of $7.4-million. The company, which has 144 full-time employees, is targeting revenues of about $75-million for the year ending June 30, with adjusted operating earnings of around $40-million. It plans to pay an as-yet unspecified dividend and will use $60-million of IPO proceeds to repay debt. Mr. Proud declined to comment.
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Sean Silcoff