A U.S. shareholder has complained that Great Canadian Gaming Corp., Canada's largest casino operator, issued stock at steeply discounted prices to chief executive officer Ross McLeod.
In a letter to the Toronto Stock Exchange, Highfields Capital Management said the proposed sale of units in a recent private placement amounted to what it said is "one of the most extraordinary transfers of wealth to a public company insider that we have ever seen."
Boston-based Highfields Capital is referring to Great Canadian's recent move to avoid a breach of its debt covenants by raising $80-million in a private equity placement that included a $50-million contribution from Mr. McLeod.
Under the terms of the placement, Great Canadian said last week it was going to sell 6.2 million units comprising one share and one warrant for $12.89 each.
Of that amount, 3.8 million units went to Mr. McLeod, who made the purchase through a newly formed corporation.
"We believe that this self-dealing transaction is being undertaken in violation of TSX rules regarding pricing and authorization of private placements and may raise questions regarding TSX rules on related party transactions," Highfields said the letter to the TSX.
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