Q: I am having difficulty understanding what benefits will accrue to a) Tomson or b) shareholders as a result of the return of capital being proposed by Tomson together with the corresponding share consolidation. I have never considered a reverse split to be a positive sign for a company's future. Why is deal any different?
5i Research Answer:
The share consolidation is a part of providing this return of capital on a tax-free basis so we would view the reverse split as a bit different in its nature. Typically they are bad when a company shares are getting close to 'penny stock' status and they do it to try to make the shares more attractive or to stay in an index. This is not the case for TRI. Overall, the transaction looks like a way to reward shareholders during a bit of a volatile period.