The Stars Group Inc has been served with a notice of application filed by Polar Multi-Strategy Master Fund (and certain affiliated funds) and Verition Canada Master Fund Ltd (together, the “applicants”) in the Ontario Superior Court of Justice in respect of the pending mandatory conversion of all of its outstanding convertible preferred shares pursuant to their terms.

The notice of application seeks, among other things, a declaration of the Court that the liquidity condition (as defined in the preferred share terms) required for the mandatory conversion be based on the trading volume of The Stars Group’s common shares solely on the Toronto Stock Exchange, as opposed to including trading volume from the Nasdaq Stock Market or any other exchange or trading platform.

The company said that it disputes these claims on the grounds that the liquidity condition has been met. “The liquidity condition requires the average daily volume on any 20 trading days (as defined in the preferred share terms) (whether or not consecutive) in a 30-consecutive trading day period to be at least 1.75 million common shares,” said a statement from the firm. “The Stars Group’s common shares are cross-listed on Nasdaq as a result of a requirement in the preferred share terms to, within 15 months from the date of issuance of the preferred shares in August 2014, obtain and maintain a second listing on either Nasdaq, the New York Stock Exchange or London Stock Exchange.”

The group announced on June 5, 2018 its intention to convert the preferred shares into common shares of The Stars Group effective at the close of business on July 18, 2018 (the “conversion date”) as a result of meeting the applicable price and liquidity conditions required by the preferred share terms. The applicants have indicated that they hold in the aggregate 221,724 (or approximately 11.7 million common shares upon conversion on the conversion date) of the 1,138,978 currently issued and outstanding preferred shares.

The company anticipates that the notice of application will be heard by the Court on July 13, prior to the conversion date.