What is an alternative outcome?
Pursuant to IM-5635-2, an alternative outcome is a change in a transaction that occurs as a result of the outcome of a shareholder vote. For example, a company issues a convertible preferred stock or debt instrument that provides for conversions of up to 20% of the total shares outstanding with any further conversions subject to shareholder approval. However, the terms of the instrument provide that if shareholders reject the transaction, the coupon or conversion ratio will increase or the company will be penalized by a specified monetary payment. Likewise, a transaction may provide for improved terms if shareholder approval is obtained. Generally, any change in the terms of transaction that occurs as a result of a shareholder vote is considered to be an alternative outcome.
