(December 1 – 09:30 ET) – C.I. Fund Management Inc. responded today to the circular Mackenzie Financial Corp. issued today.

Mackenzie issued a the directors’ circular in response to the offer by C.I. to acquire all of the common shares of Mackenzie. C.I. publicly announced its intention to make the offer on Nov. 6, 2000 and mailed it to Mackenzie shareholders on Nov. 17, 2000. In the Mackenzie circular, Mackenzie’s directors recommended rejection of the offer.

C.I. says the offer fully and fairly rewards Mackenzie’s shareholders. The company wants to address a number of issues raised in the Mackenzie Circular “which obscure the relative performance of the companies and, as a result, the merits of the offer.”

There are two key factors to consider in valuing a mutual fund company: current assets under management, and prospects for future growth, says C.I. “These two factors drive both future revenue and earnings. Compared to Mackenzie, CI’s asset growth has been exceptionally strong, fueled by industry leading net sales.”

“The Mackenzie Circular focuses on historical financial results, which are driven by historical assets under management. This approach significantly understates the revenue and cash flow potential of a rapidly growing company such as C.I.” By focusing on current assets under management and current growth rates, the offer is much more attractive than portrayed in the Mackenzie circular, says C.I.

The Mackenzie circular asserts that Mackenzie’s shareholders will receive proportionately less ownership in C.I. than Mackenzie’s contribution to the combined company, says C.I. “In making this assertion, Mackenzie used the revenues, EBITDA, cash flow and cash earnings of each of Mackenzie and C.I for the 12 months ended Sept. 30, 2000 for Mackenzie and Aug. 31, 2000 for C.I. C.I. believes that a more appropriate analysis is based on annualized data based on the 3 months ended September 30, 2000 for Mackenzie and August 31, 2000 for C.I., the most recent financial periods for both companies, as this approach reflects the very strong growth in assets experienced by C.I.”

“The interests of C.I.’s management team and board of directors are aligned with those of its shareholders. The management team and directors of C.I. ollectively own 24% of C.I. and have no employment contracts or guaranteed severance entitlements,” says C.I.

“In contrast, C.I. estimates that senior management and the directors of Mackenzie own approximately 3% of Mackenzie. Mackenzie has also put in place, and MIMI is contemplating introducing, retention plans for all employees and senior officers.”

“Based on C.I.’s closing price of $14.00 on November 30, 2000, the price per Mackenzie share under the Offer, assuming all shareholders elect the cash option will be $24.49, a premium of 32% over the pre-rumour price of Mackenzie’s share price of $18.60. This premium is particularly compelling in light of the over 26% decline in the values of the international mutual fund companies since the Offer was announced.”
-IE Staff