DHX MEDIA INSTITUTES PREVIOUSLY ANNOUNCED DUAL SHARE-CLASS STRUCTURE

BOTH DHX.A AND DHX.B SHARES MAY BE PURCHASED BY ANYONE

Halifax, (October 9, 2014) – DHX Media Ltd. (“DHX” or the “Company”) (TSX: DHX.A, DHX.B), a key player internationally in the creation of content for families and children, announces that effective October 6, 2014, all of its issued Common Shares were replaced by Common Voting Shares and Variable Voting Shares, following the Special Meeting of Shareholders held September 30, 2014 at which a new capital structure was approved, as previously announced. The Company has adopted the new share structure to ensure its adherence to the Canadian control requirements of the Broadcasting Act (Canada) (the “Broadcasting Act”) following its acquisition of the Family Channel assets.

Beginning today, shares held by non-Canadians will trade under the ticker DHX.A (Variable Voting Shares), while shares held by Canadians will trade under the ticker DHX.B (Common Voting Shares). Both DHX.A and DHX.B shares may be purchased by anyone. Shareholders may be contacted by their intermediary or the transfer agent to confirm their status as a Canadian or a non-Canadian, otherwise, conversion of shares is automatic and no action by shareholders is required.

Summary of Key Provisions of the New Share Structure

  • Canadian shareholders[1] will receive an equivalent number of Common Voting Shares (“DHX.B” on the TSX) to replace their Common Shares;
  • Non-Canadian[2] shareholders will receive an equivalent number of Variable Voting Shares (“DHX.A” on the TSX) to replace their Common Shares;  and
  • Both Canadian and non-Canadians may purchase either class of share going forwards, as such shares will be deemed to be automatically converted to Common Voting Shares when held by Canadians and to Variable Voting Shares when held by non-Canadians.

Rights of DHX.A and DHX.B Shares – Shares held by non-Canadians, in aggregate, will never hold more than 1/3rd of the votes of DHX.A and DHX.B shares together.

Both classes of shares hold the same rights unless DHX.A shares account for more than one third of the total of DHX.A and DHX.B shares outstanding at any time or in respect of which votes are cast at any meeting of shareholders, at which point the number votes attributable to each DHX.A share will be reduced such that the DHX.A shares in aggregate hold one third of the total votes for all DHX.A and DHX.B shares outstanding at such time or in respect of which votes are cast at such meeting of shareholders.

Background

The Company filed Articles of Amendment on October 6, 2014, converting each outstanding Common Share not owned and controlled by a Canadian into one Variable Voting Share and each outstanding Common Share which is owned and controlled by a Canadian into one Common Voting Share. All unissued Common Shares of the Company have been cancelled.

DHX Media shares will no longer trade under the ticker symbol “DHX” which will be replaced by “DHX.A” (Variable Voting Shares held by non-Canadians) and “DHX.B” (Common Voting Shares held by Canadians).

About DHX Media Ltd.

DHX Media Ltd. (www.dhxmedia.com), a leading creator, producer, marketer and broadcaster of family entertainment, is recognized globally for such brands as Yo Gabba Gabba!, Caillou, Teletubbies, In the Night Garden, Inspector Gadget,Johnny Test, and the multi-award winning Degrassi franchise. DHX Media Ltd. is the owner of Family Channel, the most-viewed children’s television channel in Canada, as well as Disney Junior (English & French) and Disney XD. The Company markets and distributes its library of more than 10,000 half-hours of entertainment programming worldwide, and licenses its owned properties through its dedicated consumer products business. DHX Media Ltd.’s full-service international licensing agency, Copyright Promotions Licensing Group Ltd. (CPLG), represents numerous entertainment, sport and design brands. DHX Media Ltd. has offices in Toronto, Vancouver, Halifax, Los Angeles, London, Paris, Barcelona, Milan, Munich and Amsterdam, and is listed on the Toronto Stock Exchange under the ticker symbols DHX.A and DHX.B.

For more information, please contact:

Investor relations, please contact:
David A. Regan – EVP, Corporate Development & IR, DHX Media Ltd.
david.regan@dhxmedia.com
+1 902-423-0260

Media, please contact:
Shaun Smith – Director, Corporate Communications, DHX Media Ltd. 
shaun.smith@dhxmedia.com
+1 416-977-6071

 


[1] Within the meaning of such term in the Direction to the CRTC (Ineligibility of Non-Canadians), SOR-97-192, made pursuant to the Broadcasting Act (the “Direction”).

[2] Within the meaning of such term in the Direction.


 

FAQ SHEET

DHX Media Institutes Previously Announced Dual Share-Class Structure

Today’s announcement – October 9, 2014

DHX Media Ltd. (“DHX” or the “Company”) has instituted a new share structure which sees each outstanding Common Share which is not owned and controlled by a Canadian converted into one Variable Voting Share, and each outstanding Common Share which is owned and controlled by a Canadian converted into one Common Voting Share. Beginning October 9, 2014, Variable Voting Shares will trade on the Toronto Stock Exchange under the ticker DHX.A, while Common Voting Shares will trade under the ticker DHX.B. The ticker symbol DHX without suffix A (Variable Voting) or B (Common Voting) will no longer appear on the Toronto Stock Exchange.

What is the difference between DHX Media’s Variable Voting Shares (DHX.A) and Common Voting Shares (DHX.B)?

Both Canadians and non-Canadians may buy either DHX.A or DHX.B. Regardless of the class purchased, all shares owned by non-Canadians will be Variable Voting Shares (DHX.A). The voting rights of the Variable Voting Shares can vary according to the number of such shares in the market at any given time. If the number of the issued and outstanding Variable Voting Shares (DHX.A) is less than 33 1/3% of the total issued and outstanding voting shares of the Company, each Variable Voting Share (DHX.A) will carry one vote. Should the number of issued and outstanding Variable Voting Shares (DHX.A) exceed 33 1/3% of the total issued and outstanding voting shares of the Company, or should the number of votes cast by holders of Variable Voting Shares (DHX.A) at any meeting of shareholders exceeds 33 1/3% of the total votes cast at the meeting, however, the voting rights of each Variable Voting Share (DHX.A) will decrease proportionately to ensure that the total voting rights of all Variable Voting Shares (DHX.A) outstanding or voted at such meeting do not represent greater than 33 1/3% of the aggregate voting rights of all issued and outstanding voting shares outstanding or voted at such meeting.

Common Voting Shares (DHX.B) are those owned by Canadians. These shares will always carry one vote each and do not vary in voting rights.

Will Variable Voting Shares (DHX.B) and Common Voting Shares (DHX.A) trade at the same price?

The two classes of shares are listed separately on the TSX, and the prices of the two classes of shares is driven by market demand for the respective shares as is the case for any other listed securities. Dealers can satisfy buy orders from both non-Canadian and Canadian clients by purchasing shares of either class and rely on the automatic conversion to end up with shares of the correct class.

Is it possible to purchase the wrong class of shares?

No. The shares of either class may be purchased by any investor. Those shares would then be automatically converted to shares of the other class as determined by the shareholder’s status as a non-Canadian or Canadian.

Why did DHX institute a dual class share structure?

The dual class share structure was instituted to ensure that DHX is in compliance with the Broadcasting Act (Canada), which requires that ownership and control of a Canadian television broadcaster be not less than 66 2/3% Canadian. DHX became a television broadcaster on July 31, 2014, with the acquisition of the Family Channel assets. The new share structure allows non-Canadians to own an unlimited number of shares while capping the voting rights of those shares at 33 1/3% of the total for DHX.A and DHX.B shares taken together.

Can a non-Canadian purchase Common Voting Shares (DHX.B), and vice-versa?

Yes. Both non-Canadians and Canadians may purchase either class of shares. When a non-Canadian purchases Common Voting Shares (DHX.B), however, those shares will be converted from Common Voting Shares (DHX.B) to Variable Voting Shares (DHX.A), and vice-versa. Dealers should update their holdings to reflect such conversions as they happen, and the Company will periodically request confirmation of Canadian status to ensure that conversions are correctly reflected in shareholders’ accounts.

What actions do I need to take?

 

No action is required. The conversion of shares is automatic based on the shareholder’s status as a non-Canadian or Canadian. Shareholders may be contacted by their intermediary or the transfer agent to confirm their status as a non-Canadian or a Canadian; otherwise, conversion of shares is automatic and no action by shareholders is required.

How is the class of shares owned determined?

The class of shares held depends on whether the owner is non-Canadian or Canadian. All shares owned by non-Canadians are deemed to be Variable Voting Shares (DHX.A) and all shares owned by non-Canadians will be Common Voting Shares (DHX.B). The Variable Voting Shares (DHX.A) automatically convert to Common Voting Shares (DHX.B) if they become owned and controlled by a Canadian, and the Common Voting Shares (DHX.B) automatically convert to Variable Voting Shares (DHX.A) if they become owned or controlled by a non-Canadian. Dealers should update their holdings to reflect such conversions as they happen, and the Company will periodically request confirmation of Canadian status to ensure that conversions are correctly reflected in shareholders’ accounts.

What is a Canadian for this purpose?

The term “Canadian” for the purposes of DHX’s dual class structure is defined in the “Direction to the CRTC regarding the ineligibility of non-Canadians” made pursuant to the Broadcasting Act, SOR-97-192, available at: http://laws-lois.justice.gc.ca/eng/regulations/SOR-97-192/page-1.html. This definition is technical, and for individuals requires that the individuals be Canadian citizens or permanent residents who have not been eligible for Canadian citizenship for more than one year, and for corporations means that at least 80% of the corporation’s voting shares be owned and controlled by Canadians and whose chief executive officer and at least 80% of its directors are Canadians. Please refer to the full definition included in the Direction.

What is a CDS Tender Election?

A CDS Tender Election is a mechanism within the book-entry system maintained by CDS Clearing and Depositary Services Inc. (“CDS”) by which CDS participants (dealers) can certify how much of their holdings are beneficially owned by Canadians and non-Canadians, by tendering the appropriate number of shares to the corresponding option. Prior to October 8, 2014, participants in CDS Clearing and Depositary Services Inc. (“CDS”) were asked by CDS to elect as follows in respect of the initial conversion of Common Shares (DHX) to Variable Voting Shares (DHX.A) and Common Voting Shares (DHX.B):

  • Option #1: if the beneficial share owner is NOT a Canadian citizen, to tender their Common Shares in exchange for Variable Voting Shares (DHX.A). By tendering to this option, the participant is deemed to be certifying that the beneficial owner of the shares tendered is a non-Canadian; or
  • Option #2 (the default option if no election is made): if the beneficial share owner is a Canadian, to tender their Common Shares in exchange for Common Voting Shares (DHX.B). By tendering to this option, the participant is deemed to be certifying that the beneficial owner of the shares tendered is a Canadian.

Similar elections will be put in place in the CDS system to allow participants to easily update their holdings to reflect the automatic conversions that occur when their non-Canadian beneficial holder acquires Common Voting Shares (DHX.A), and vice versa, as described above.