Vermilion’s Dividend Reinvestment Plan (“The Plan”) is comprised of two different components, the Dividend Reinvestment Component and the Premium Dividend™ Component.
The Dividend Reinvestment Component allows eligible shareholders to reinvest their dividends in common shares at the prevailing Average Market Price (with no broker commissions or trading costs).
On October 31, 2019 we announced our intention to phase out our Dividend Reinvestment Plan ("DRIP"), prorating the available DRIP shares by 25% each quarter starting in Q1 2020, until completely eliminated in Q4 2020. The DRIP has been a shareholder service that we have provided since our first income distribution in 2003, with discounted share purchases offered until 2018.
The Premium Dividend™ Component was introduced in early 2015 as a temporary measure to help maintain our financial strength by providing Vermilion with access to a very low cost source of equity capital. Eligible Shareholders that elected to participate in the Premium Dividend™ Component, reinvested their dividends in new common shares which were exchanged for a premium cash payment equal to 101.5% of the reinvested dividends. Under the Premium Dividend™ Component, shares were issued at a 3.5% discount to the Average Market Price. The shares were then presold at prevailing market prices by the Plan Broker (Canaccord Genuity Corporation), who then provided participating Shareholders with a premium cash payment equal to 101.5% of their dividends, while the Plan Broker retained the balance of the discount as its fee.
Effective with the July 2017 dividend payment, Vermilion has discontinued the Premium Dividend™ component, such that there would be no further equity issuance under the Premium Dividend™ Component of our Dividend Reinvestment Plan.
Eligible Shareholders are not required to participate in the Plan.
Eligible Shareholders who have not elected to participate, or who were previously enrolled in the Premium DividendTM component of the Plan will continue to receive their regular cash dividends in the usual manner.
The Plan is subject to eligibility restrictions, applicable withholding taxes, prorating as provided for in the Plan, and other limitations on the availability of common shares to be issued or purchased in certain events. The Dividend Reinvestment Plan is available to Canadian residents and non-U.S. resident foreign Shareholders who meet certain eligibility criteria as set forth in the Plan. U.S. resident Shareholders are not currently permitted to participate in either component of the Plan. This is due to the requirement, under U.S. securities regulations, to maintain a continuous shelf registration for issuance of new equity to U.S. Shareholders. At this time, Vermilion has not put in place the required shelf registration due to the high cost of establishing and maintaining such a shelf registration. We will continue to monitor the relative cost-benefit of such a registration as we go forward.
For more information on the Plan, defined meanings for capitalized terms above, eligibility restrictions, enrollment and withdrawal information among other details of the Plan, please refer to the following documents:
™ denotes trademark of Canaccord Genuity Capital Corporation.
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