SCHEDULE 13D: Caisse de dépôt et placement du Québec Secures Board Nomination Right at CAE Inc. with 9.7% Stake

Caisse de dépôt et placement du Québec (CDPQ), a major institutional investor, has filed a Schedule 13D disclosing its 9.7% beneficial ownership in CAE Inc. and a new Nomination Agreement granting it the right to nominate a director.

Summary

• Caisse de dépôt et placement du Québec (CDPQ) beneficially owns 30,917,402 Common Shares of CAE Inc., representing approximately 9.7% of the issuer's outstanding shares as of September 30, 2024.
• CDPQ acquired these shares through a combination of private placements and open market transactions dating back to 2001.
• Key acquisitions include 5,025,016 shares at CAD$29.85 per share on November 16, 2020, and 15,200,000 subscription receipts (converted to shares) at CAD$31.25 per receipt on March 4, 2021.
• Recent open market purchases between November 13, 2024, and December 31, 2024, involved 6,313,165 Common Shares at prices ranging from CAD$29.24 to CAD$36.46 per share.
• On February 13, 2025, CDPQ entered into a Nomination Agreement with CAE Inc., granting CDPQ the right to nominate a candidate for election to the board of directors, provided its ownership remains at least 5% of outstanding Common Shares.
• CDPQ intends to nominate Louis Tetu for election as a director at CAE Inc.'s 2025 annual general meeting of shareholders.
• The Nomination Agreement also includes a consultation right for CDPQ regarding a replacement director if Katherine A. Lehman ceases to act as director before February 13, 2026.

Sentiment

Score: 7

Explanation: The filing indicates a significant institutional investor (CDPQ) is solidifying its long-term commitment to CAE Inc. by securing board representation rights. This suggests confidence in the company and provides a mechanism for investor oversight, which is generally positive for corporate governance.

Positives

• CDPQ, a significant institutional investor, has secured a board nomination right, indicating a deeper, long-term commitment to CAE Inc.
• The Nomination Agreement provides CDPQ with direct influence over corporate governance, aligning its investment interests with strategic oversight.
• The continued accumulation of shares by CDPQ, including recent open market purchases, demonstrates ongoing confidence in CAE Inc.

Risks

• The Nomination Agreement specifies conditions for the CDPQ Candidate, including eligibility under applicable laws, no material relationship with the Company or CDPQ, Canadian residency, recommendation by the Governance Committee, and completion of background checks, which could limit candidate options.
• CDPQ's right to nominate a director automatically and irrevocably terminates if its ownership falls below 5% of the outstanding Common Shares, requiring the elected or appointed CDPQ Candidate to resign.

Future Outlook

Caisse de dépôt et placement du Québec (CDPQ) intends to nominate Louis Tetu for election as a director at CAE Inc.'s 2025 annual general meeting of shareholders, leveraging its newly secured board nomination right.

Industry Context

NA

Management Changes

Corporate Governance

Legal Proceedings

• During the last five years, the Reporting Person (CDPQ) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
• During the last five years, to the best of CDPQ's knowledge, none of its executive officers or directors have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
• During the last five years, the Reporting Person (CDPQ) has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
• During the last five years, to the best of CDPQ's knowledge, none of its executive officers or directors have been a party to such civil proceedings.

Related Party Transactions

• The Nomination Agreement entered into on February 13, 2025, between CAE Inc. and Caisse de dépôt et placement du Québec, granting CDPQ board nomination rights, is a disclosed related party dealing.

Stakeholder Impact

• Shareholders: Potential for enhanced corporate governance through direct board representation by a significant institutional investor (CDPQ), which could lead to more aligned long-term strategic decisions.
• Management: The addition of a director nominated by a major shareholder may introduce new perspectives and oversight, potentially influencing strategic direction and operational decisions.

Next Steps

• CAE Inc.'s 2025 annual general meeting of shareholders, where CDPQ intends to nominate Louis Tetu for election as a director.
• The Company must notify CDPQ of its intention to hold an annual meeting at least 45 days before proxy statement approval.
• CDPQ must notify the Company of its candidate at least 15 days before proxy statement approval.

Key Dates

Keywords

Schedule 13D, CAE Inc., Caisse de dépôt et placement du Québec, CDPQ, beneficial ownership, board nomination, corporate governance, institutional investment, equity stake, private placement, open market transactions