As we announced in our March 16 news release, TAG Oil will be returning C$0.30 per share back to our shareholders on a due bill basis.
TAG Oil CEO Toby Pierce wrote the following message to shareholders to explain the process.
I have had a number of questions on this, so I thought I would try and explain more fully this process and what it means for TAG Oil’s shares/shareholders. Bottom line – you need to hold the shares of TAG Oil through April 14th closing to receive the 30 cent return of capital distribution. If you want to sell prior to this, you will not receive the distribution, but you will receive the value of the shares as you would in a normal share sale.
On the morning of April 15th, the distribution will no longer be reflected in TAG Oil’s shares.
On or about April 16th, the distribution will be deposited into shareholders’ accounts by Computershare.
Here is a quick blurb as to how the TSX characterizes the due bill:
All the securities from trades on or before the payable date receive the entitlement. Purchasers of the securities during the due bill period—that is, the period beginning one trading day prior to the record date up until and including the payment date—pay full value for the securities, including the value of the distribution. During the due bill period, purchasers do not become holders of record entitled to receive the distribution directly from the listed issuer. Therefore, the seller, who is the holder on the record date and the prospective recipient of the distribution, assigns the right to the distribution to the purchaser. Such assignment is made through due bills.
So, for example, if I held 10,000 TAG Oil shares on the record date, and then sold them on April 7, the purchaser of those shares will be entitled to the return of capital of C$0.30/share or C$3,000 if they held them on the payment date, not the seller, correct?
Practically, yes. The seller has assigned the dividend entitlement to the purchaser via the due bill process.
All the best and kind regards,