Desjardins Analyst: Teranet Income Shares Down after OMERS Offer Reduced

Teranet Income Fund (TNTIF.PK) was down 7% Tuesday morning after Borealis Infrastructure Management, a unit of OMERS, reduced its cash offer for all the outstanding units of Teranet from C$11 to C$10.25 per unit. Borealis also extended its offer, previously slated to close on Oct. 31, until 5pm on November 10.

Teranet units were down C$0.75 to C$9.76 on Tuesday, representing a 5% discount to the new offer.   

Desjardins analyst Eric Bernofsky said:

This could be a risky move for Borealis, given that some of the potential bidders who walked away may be enticed to return to the arena with the lower starting bid.

Recall that Teranet had signed confidentiality and standstill agreements with more than ten interested parties. We expect Teranet's board of trustees will be especially eager to resume negotiations with these parties. Given the current state of credit markets, however, we believe the likelihood of a superior offer surfacing is low.

Mr. Bernofksy said it is unlikely that the deal will fall apart and expects unitholders to tender to the new bid.