UPDATE: ERDC Settlement and Postmedia Stock. Information for Class Action Claimants

The Electronic Rights Defence Committee saga is almost over! After study, a committee formed of ERDC executive members Tracey Arial, Julia Gedeon and Mary Soderstrom, have determined that 59 claimants in the ERDC’s class action against The Montreal Gazette and its various owners will divide 126,015 shares of Postmedia Canada Network Corp Class C Voting Shares. On August 24, 2015 stock transfer certificate requests were sent to Computershare, which has been holding the stock received in the settlement.

We would like to say that claimants will be able to translate the stock immediately into a lot of money, but unfortunately that isn’t the case.

At the time this is being written, the stock is trading at 37 cents a share, and there is very little activity. What will happen in the future is unclear, but it’s very certain that if everyone tries to unload the stock, its value will plummet. Indeed, it was to avoid surpressing the price that the ERDC decided not to try to sell all the stock it received in the settlement, but to make the pay-out to claimants in stock. To this end we also decided this spring not to sell the stock for less than $1 a share. We are suggesting that claimants consider doing likewise.

Here are things that claimants should know:

1. Since the stock is part of a settlement, they don’t need to pay tax on it.

2. If they realize a capital gain on it when they sell it, however, they will have to pay tax on that amount.

3. To manage this stock, claimants should consult a broker or contact one of the low-cost on-line brokerage firms like Questrade.

4. The claim and distribution process has been accomplished on a shoe string. We had estimates that it would cost $30 per claim, but in the end the total outlay has been about $200 for a post office box and clerical supplies, plus much volunteer work

5. To keep track of the stock’s value, here is a useful link: http://web.tmxmoney.com/quote.php?qm_symbol=PNC.A

Conrad Black also made some interesting criticisms of Postmedia and its recent performance in July:
http://www.theglobeandmail.com/report-on-business/postmedia-reports-wider-loss-as-advertising-circulation-revenues-weaken/article25386520/

And here’s an analysis of the situation from the Globe and Mail:
http://www.theglobeandmail.com/report-on-business/postmedia-faces-pivotal-moment/article26056170/

6. A short summary of the settlement and where it went.
Cash received: $83,210.27

The Fonds d’aide aux recours collectifs, the Quebec agency that provided seed money for the case, was due $85,090.05 for advances over the many years that the case took. The settlement money was used to pay that debt, topped up by $1,879.73 from the ERDC’s small independent bank account.

Under the ERDC’s agreement with its lawyers, they were entitled to $31,011.34. In an attempt to raise this money, 9,000 shares were sold between October 2014 and April 2015, netting $23,664.92. The shortfall was partly met by $252.84 from the ERDC’s small independent account and partly through the lawyers agreeing to accept additonal shares in lieu of cash.

Stock received: 189,479 shares of Postmedia Canada Network Corp Class C Voting Shares.

Of these, as noted above, 9000 were sold to raise cash. Under the ERDC’s agreement with its lawyers, they were entitled to 47,370 shares. They also agreed to accept 7094 additional shares in lieu of cash they were owed, so they will receive 54,464 shares.

This left 126,015 shares for distribution to the claimants.

Note about the ERDC’s independent bank account: this was money raised in fund raising campaigns early in the class action, and which has been spent very sparingly. Among the expenses: web hosting fees over the years and the clerical supplies necessary for the distribution process. If there is any money left when the distribution process if completed, class members will be consulted about what to do with it.

Mary Soderstrom, ERDC Chair
Jack Ruttan, ERDC Secretary

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