Orange Capital makes binding cash offer to buy League Assets Corp's interest in Partners REIT and the LAPP Global Asset Management Corp. Partners REIT Management Agreement
TORONTO, Nov. 15, 2013 /CNW/ - Orange Capital, LLC ("Orange") announced on November 14, 2013 that it submitted an offer letter to League Assets Corp. ("League") and PricewaterhouseCoopers (the court appointed "Monitor"), to purchase the 3,872,863 units of Partners REIT owned by IGW Public LP, a subsidiary of League. In addition, Orange has also offered to purchase League's right, title and interest in the Partners REIT Management Agreement (collectively, the "Offer").
Highlights of Orange's Offer include:
- $6.00 all-cash purchase price, a 10% premium to Partners REIT current unit price
- Upfront payment of the termination fee owed to League under the Partners REIT management agreement on March 31, 2014
- Intention to offer employment to League's dedicated Partners REIT employees
- Aggregate proceeds of approximately $27 million to the League estate
"We believe our Offer is an attractive one, as it provides immediate substantial liquidity to the League estate and significantly improves the probability of a successful restructuring. Orange is in a position to transact quickly as our Offer is subject only to customary closing conditions", commented Daniel Lewis, Orange's Managing Partner.
Orange's Offer provides significant benefits to League's stakeholders, including:
- Removes all uncertainty surrounding the value of the Partners REIT units
- Eliminates the risk to League from any adverse outcome of the strategic review process by the independent trustees of Partners REIT as advised by National Bank of Canada
- Provides for 100% cash consideration not subject to financing
- Eliminates the need for League to obtain substantial, and expensive, DIP financing
- Addresses concerns by certain League creditors that have the Partners REIT units pledged as collateral
Partners REIT is a highly-levered public company that had been significantly over-distributing relative to its actual adjusted funds from operations. The unit price is down over 30% year to date and there are numerous factors that are likely to further erode the value of League's interest in Partners REIT. Last evening, Partners REIT announced that the distribution would be reduced by approximately 22%. In addition, given Partners REIT excessive financial leverage, unitholders, including League, are likely to be diluted by the issuance of new Partners REIT units. Finally, League, as manager of Partners REIT, is in a highly complex CCAA proceeding that is likely to have a continued negative effect on the equity value of Partners REIT. In light of all these factors we feel that our all-cash Offer is compelling.
Partners REIT is engaged in a strategic review process that is highly unlikely to yield an en-bloc offer at an all-cash premium given the REIT's over-levered structure, the current state of the REIT market, concern over liquidity of secondary market real estate, the recent distribution cut and the aggressive existing valuation at the current unit price. We understand that given this risk, Partners REIT is seeking other "strategic proposals" including vend-in transactions, combination transactions, strategic alliances, new equity issues and recapitalizations, none of which would offer liquidity to the League estate.
Orange has informed both the Monitor and League that it is open to discussing its Offer in detail in order to come to an agreement quickly for the benefit of the League estate and the secured creditors.
Orange has engaged Trimaven Capital Advisors Inc. as its financial advisor and Norton Rose Fulbright Canada LLP as its legal advisor in connection with the Offer.
About Orange Capital LLC
Orange Capital, LLC is a New York based investment firm. The firm is a value oriented investor in event-driven securities. The firm allocates across the capital structure on an opportunistic basis. Orange Capital was co-founded in 2005 by Daniel Lewis and Russell Hoffman. Prior to founding the firm, Orange Capital's portfolio manager, Daniel Lewis, was a director with Citigroup's Global Special Situations Group.
About Trimaven Capital Advisors Inc.
Trimaven Capital Inc. ("Trimaven") is an independently owned real estate investment bank based in Toronto. Trimaven offers clients highly specialized advice in mergers and acquisitions, including hostile and special situations, corporate finance, private equity and real estate asset advisory. Trimaven's clients include public, private and corporate owners of real estate as well as investment management firms and hedge funds. With a reputation and expertise built over 40 years of experience as owners, managers and advisors, Trimaven is known for its deep industry knowledge, quality advice, and transaction execution capabilities. Trimaven's principals are accomplished advisors with significant transactional experience. Prior to forming Trimaven, the principals advised on over $30 billion of transactions during their tenures at other top-tier firms.
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