Premium Tender offers unitholders $5.00 per unit payable in cash for up
to 10% of the Partners REIT units outstanding prior to the Ontario
Orange Capital intends to nominate new, independent trustees for
election at the upcoming AGM of Partners REIT;
Newly elected trustees will restore credibility to the REIT and take all
measures necessary to hold the parties that approved the Ontario
Property Acquisition accountable for their actions; and
Concurrent proxy solicitation will allow unitholders to assist in Orange
Capital's effort to bring much-needed change to Partners REIT for the
benefit of all unitholders.
TORONTO, May 28, 2014 /CNW/ - Orange Capital, LLC ("Orange Capital") is pleased to announce a premium tender offer (the "Premium Tender") to purchase up to 2,604,956 units of Partners Real Estate Investment
Trust (TSX: PAR.UN) ("Partners REIT" or the "REIT") at a price of $5.00 per unit (the "Purchase Price"), payable in cash.
The Purchase Price is equal to a 7.1% premium to the $4.67 closing price
of the units on the Toronto Stock Exchange (the "TSX") on May 27, 2014 (the last trading day prior to the announcement of
the Premium Tender) and an approximate 15% premium to the
volume-weighted average trading price of $4.38 per unit over the last
30 trading days.
The Premium Tender is for up to 10% of the Partners REIT units
outstanding prior to the closing of the purchase of three (3) Ontario
properties by the REIT from Holyrood Holdings Limited ("Holyrood") on April 23, 2014 (the "Ontario Property Acquisition") and is open for acceptance until 5:00 p.m. (Toronto time) on
Thursday, June 12, 2014 (the "Expiry Time"), unless the Premium Tender is extended, varied or withdrawn. In order
for units to be eligible for take up and payment pursuant to the
Premium Tender, a depositing unitholder will be required to appoint
Orange Capital as its nominee and proxy for the 2014 annual general
meeting of Partners REIT and any adjournments or postponements thereof
(the "Meeting") and must be a holder of such units as of the record date for the
Meeting. Orange Capital intends to mail a proxy circular (the "Circular") to all unitholders, including those whose proxies will be requested
in accordance with the Premium Tender. The Circular will provide
required disclosures to permit unitholders to make an informed
decision, including details on Orange Capital's trustee nominees for
election to the board of Partners REIT. Unitholders tendering to the
Premium Tender shall be required to appoint Orange Capital as such
unitholder's nominee and proxy in respect of the Meeting for all
deposited units, regardless of the number of deposited units actually
taken up and paid for by Orange Capital under the Premium Tender.
Please see "Details of The Premium Tender" at the conclusion of this
press release for additional information.
As will be detailed in its Circular, all proxies solicited by Orange
Capital will be voted in favour of a new slate of independent trustees
to be nominated by Orange Capital at the upcoming Meeting. The
concurrent proxy solicitation will offer fellow disenfranchised
unitholders the ability to vote for the much-needed change that is
required to restore credibility to Partners REIT and to maximize the
value for all unitholders of the REIT.
On closing of the Premium Tender, Orange Capital will remain in full
compliance with the REIT's existing unitholder rights plan (the "Rights Plan") as in all cases it will own less than 20% of the outstanding Partners
Should you have any questions with respect to the Premium Tender or
require any assistance delivering your units, please contact Kingsdale
Shareholder Services, the Depositary for the Premium Tender and Orange
Capital's Information Agent at 1-855-682-9437 (North American Toll Free
Number) or 1-416-867-2272 (collect outside North America). You can also
email Kingsdale at firstname.lastname@example.org.
REASONS TO ACCEPT ORANGE CAPITAL'S PREMIUM TENDER
Unitholders will receive immediate liquidity at a significant premium to
the current trading price of the units at a time when Partners REIT
faces significant financial and legal challenges, including potential
regulatory actions and shareholder litigation against current and
former trustees and management;
Orange Capital believes that it is highly likely that Partners REIT's
distribution will be reduced in the very near future. The REIT has an
unsustainable payout ratio, excessive financial leverage (at
approximately 75% debt to enterprise value), and limited access to low
cost debt and equity capital;
Orange Capital believes that an en-bloc sale of the REIT at a premium
(or any other attractive alternative for unitholders) is highly
unlikely. The current discredited trustees recently announced that
they hired a financial advisor to conduct a strategic review process.
Partners REIT ran a similar strategic review process just six months
ago, led by the same financial advisor, without a successful
It is highly uncertain if the REIT will be able to unwind the
value-destroying Ontario Property Acquisition. Even if unwinding the
transaction is possible, the magnitude of the financial and legal costs
of doing so are unknown at this time; and
Partners REIT's acting trustees have limited flexibility to improve the
condition of the REIT. In a highly unusual step, the TSX recently
advised the REIT that it would not be approving any further
transactions of the REIT until the Compliance and Disclosure department
of the TSX has completed a review of the REIT and is satisfied that the
business of Partners REIT can be conducted in compliance with the rules
and regulations of the TSX, as well as the best interests of the REIT's
security holders and the investing public.
Orange Capital believes that if its Premium Tender is successful, it is
highly likely that its trustee nominees will be elected at the upcoming
Meeting. If more than 2,604,956 units accept the Premium Tender,
unitholders will help facilitate, and have an opportunity to benefit
from, any potential operational and financial turnaround at the REIT in
partnership with a leading shareholder activist.
Orange Capital has a long track record of seeking improved governance
and creating unitholder value in the REIT sector. Daniel Lewis,
Managing Partner of Orange Capital, is currently the lead director of
InnVest Real Estate Investment Trust ("InnVest REIT"). Orange Capital's campaign at InnVest REIT is widely regarded as a
leading example of a successful unitholder-focused campaign.
INDUSTRY-WORST PERFORMANCE & APPALLING GOVERNANCE AT PARTNERS REIT
The trading price of Partners REIT units has declined by over 50% since
January 1, 2013. This loss of unitholder value is the result of
neglectful trustee oversight, industry-worst corporate governance,
repeated management turnover and excessive financial leverage. The
disastrous Ontario Property Acquisition is one of the most egregious
cases of failed governance controls by a group of Canadian trustees in
Since McCowan & Associates Ltd. ("McCowan & Associates") purchased its units in November 2013:
Five independent trustees and two CEOs have resigned;
The disastrous Ontario Property Acquisition was approved and closed by
the current trustees. The Ontario Property Acquisition is an appalling
example of failed governance, board oversight and inadequate due
The three acting trustees that approved the Ontario Property Acquisition
have not been elected by unitholders;
The trustees, with the REIT having nearly run out of cash, elected to
pay the April distribution, we believe, by raising highly dilutive 10%
second mortgage financing from a high-risk lender; and
The TSX recently logged the Ontario Property Acquisition as an incident
of "significant non-compliance" and reported the matter to the Ontario
Securities Commission. Despite having this information since May 6,
2014, the acting trustees failed to disclose this information in a
press release, even going so far as to exclude this information from
the announcement of the REIT's first quarter financial results and
burying the information in the associated MD&A.
TIMELINE OF THE RECENT VALUE DESTROYING ACTIONS AT PARTNERS REIT
October 22, 2013: Partners REIT hires a financial advisor to evaluate strategic
alternatives. No transaction was ultimately consummated.
November 25, 2013: Partners REIT announces the resignation of its Chief Investment
Officer, who also resigns as a trustee, and its Chief Financial Officer
November 28, 2013: McCowan and Associates purchases 14.95% of Partners REIT.
December 4, 2013: All three (3) Partners REIT independent trustees resign and Joseph
Feldman and Allen Weinberg are added as trustees. As of this date, a
majority of the trustees were: (a) not elected by unitholders; and (b)
appointed after McCowan & Associates purchased its 14.95% stake.
December 4, 2013: The REIT terminates its previously announced strategic review process.
December 12, 2013: Laura Philp, the owner of Holyrood, is no longer listed as an officer
of McCowan & Associates.
December 16, 2013: The trustees of Partners REIT approve a transaction whereby McCowan &
Associates acquires the League Asset Corp.'s ("League") existing management contract for $1.5 million, and agrees to
internalize management of the REIT by no later than February 15, 2014.
A termination fee was paid to League despite it being in CCAA.
December 18, 2013: The REIT enters into the Ontario Property Acquisition. As
consideration, the undisclosed vendor would receive approximately 19.9%
of the Partners REIT units outstanding. To facilitate the Ontario
Property Acquisition, the trustees approved an amendment to the Rights
Plan, giving them the discretion to waive its application in order to
issue Partners REIT units as consideration for real estate
February 11, 2014: Ron McCowan, who to our knowledge has never been an officer of a
public company, is appointed CEO of Partners REIT, replacing Patrick
Miniutti. Derrick West is also appointed CFO.
February 11, 2014: Holyrood is finally identified as the vendor of the Ontario Property
Acquisition and the terms of the transaction are amended. The
announcement made no reference to any related party or joint actor
connection between McCowan & Associates and Holyrood.
February 14, 2014: Partners REIT completes its internalization plan and co-locates its
head office with McCowan & Associates in Barrie, Ontario. The trustees
failed to disclose that the REIT's head office is owned by Holyrood.
McCowan & Associates is paid a $1.5 million internalization fee.
February 14, 2014: Marc Charlebois is appointed as a trustee of Partners REIT.
March 24, 2014: Patrick Miniutti resigns as a trustee of Partners REIT. Effective this
date: (i) none of Partners REIT's trustees were elected by unitholders;
and (ii) all Partners REIT trustees were appointed after McCowan &
Associates purchased its units.
April 3, 2014: Lindsay Weiss and Kevin VanAmburg are appointed as trustees. Allen
Weinberg resigns as a trustee after only four months since his
April 23, 2014: Despite analyst reports and media articles suggesting that the Holyrood
transaction was in fact a related party transaction, the trustees
approve the transaction and the REIT closes the Ontario Property
Acquisition. Each of the current trustees of Partners REIT approved the
Ontario Property Acquisition. The REIT announces that an "extensive due
diligence process" was conducted and that two of the existing trustees,
Marc Charlebois and Joseph Feldman, intensively reviewed and assisted
in the negotiation of the transaction.
April 30, 2014: Partners REIT announces a financing commitment for a 10% second
mortgage loan. The trustees make no disclosure as to the REIT's need
for high cost debt financing at this time or the use of proceeds.
May 1, 2014: Orange Capital, a concerned unitholder, issues a press release that:
(i) calls for an independent forensic investigation into the Ontario
Property Acquisition and CEO Ron McCowan; (ii) states that the current
trustees are responsible for the poor due diligence and disclosure
associated with the Ontario Property Acquisition; (iii) asserts that
the Ontario Property Acquisition was a related party transaction and is
a change of control by joint actors that prejudiced and disregarded the
interests of minority unitholders; (iv) offers information which was
widely available in the public domain that Ron McCowan and Laura Philp
have been business associates for over twenty-five years; and (v)
discloses it made an offer to provide voting convertible securities,
payable in cash or units with a cap on Orange Capital's voting rights,
in an effort to protect all unitholders.
May 2, 2014: The REIT announces that Lindsay Weiss resigned as a Partners REIT
trustee only one month after being appointed to the board of trustees.
May 4, 2014: The trustees announce they have obtained material "new" information
revealing that Ron McCowan has a close business relationship with Laura
Philp sufficient that they should be considered as acting together
under applicable regulation and that if the trustees had been aware of
this information, the Ontario Property Acquisition would have been
submitted to unitholders for their approval. The trustees ask Holyrood
to unwind the Ontario Property Acquisition. Ron McCowan resigns as CEO
of Partners REIT.
May 5, 2014: Orange Capital: (i) demands that the trustees of Partners REIT
immediately resign; (ii) rejects the trustees' reckless settlement
offer of one board seat to Orange Capital; and (iii) questions the
independence of Marc Charlebois and Joseph Feldman as well as the
integrity of the trustees.
May 13, 2014: For the second time in approximately 6 months, the same financial
advisor is hired to conduct a strategic review process. Orange Capital
is accused of making an "opportunistic" financing proposal by Partners
May 16, 2014: Partners REIT's first quarter 2014 financial statements disclose that
on May 6, 2014, the TSX indicated to the REIT that until the earlier of
the Ontario Property Acquisition being unwound, or the requisite
unitholder approval being obtained, the TSX requires that the REIT
enter into agreements or arrangements with Holyrood to limit the
voting, conversion, liquidation and distribution rights of the units
issued to Holyrood in connection with the Ontario Property Acquisition.
The TSX further advised the REIT that it would not be approving any
further transactions of the REIT until the Compliance and Disclosure
department of the TSX has completed a review of the REIT and is
satisfied that the business of Partners REIT can be conducted in
compliance with the rules and regulations of the TSX, as well as the
best interests of the REIT's security holders and the investing public.
The TSX also confirmed that the Ontario Property Acquisition has been
logged as an incident of significant non-compliance and will be
reported to the Ontario Securities Commission.
DETAILS OF THE PREMIUM TENDER
The Premium Tender is open for acceptance until 5:00 p.m. (Toronto time)
on Thursday, June 12, 2014, provided however that Orange Capital
reserves the right, in its sole and absolute discretion at any time,
to: (i) extend, vary or withdraw the Premium Tender at any time, and if
withdrawn, it will not be required to take up or pay for units
delivered pursuant to the Premium Tender; or (ii) reduce or extend the
period of time during which the Premium Tender is open, and/or advance
or postpone taking up and paying for any units delivered under the
Premium Tender. If the Premium Tender is withdrawn by Orange Capital,
Orange Capital shall cause all Units delivered pursuant to the Premium
Tender to be returned to the Unitholders.
Full details of the Premium Tender will be included in a letter to
unitholders of the REIT, complete with instructions for the tendering
and delivery of REIT units to Orange Capital. In order to deposit their
Units to the Premium Tender, Unitholders must complete the
documentation and follow the instructions provided by their investment
dealer, broker or other nominee. Investment dealers, brokers and other
nominees may set a deadline for the delivery of deposit instructions
that is earlier than the Expiry Time, and as such Unitholders should
contact their investment dealer, broker or other nominee for assistance
at their earliest convenience. Deposited units may be withdrawn at any
time prior to the time they are taken up by Orange Capital. Unitholders
who wish to withdraw units tendered pursuant to the Premium Tender
should contact their investment dealer, broker or other nominee in
order to take the necessary steps to be able to withdraw such units.
Participants of CDS should contact CDS with respect to the deposit or
withdrawal of units tendered pursuant to the Premium Tender. Tendering
unitholders should consult their own independent professional financial
and legal advisors before tendering any REIT units to the Premium
The Premium Tender will be subject to certain conditions set out in the
letter to unitholders which, unless waived, must be satisfied,
including, but not limited to, that the number of units accepted under
the Premium Tender be greater than or equal to 2,604,956 units. In
order for units to be eligible for take up and payment pursuant to the
Premium Tender, a depositing unitholder will be required to appoint
Orange Capital as its nominee and proxy for the upcoming Meeting and
must be a holder of such units as of the record date for the Meeting.
If more than the maximum number of units for which the Premium Tender is
made are delivered in accordance with the Premium Tender and not
withdrawn at the time of take up of the units, the units to be
purchased from each depositing unitholder will be determined on a pro
rata basis according to the number of units delivered by each
unitholder, disregarding fractions, by rounding down to the nearest
whole number of units.
Orange Capital intends to mail the Circular to all unitholders,
including those whose proxies will be requested pursuant to the Premium
Tender. The Circular will provide required disclosures to permit
unitholders to make an informed decision, including details on Orange
Capital's trustee nominees for election to the board of Partners REIT.
Unitholders tendering to the Premium Tender shall be required to
appoint Orange Capital as such unitholder's nominee and proxy in
respect of the Meeting for all deposited units, regardless of the
number of deposited units actually taken up and paid for by Orange
Capital under the Premium Tender. Unitholders will receive additional
instructions regarding the deposit of proxies from their investment
dealer, broker or other nominee in due course once Partners REIT
confirms the date of the Meeting.
If you have any questions with respect to the Premium Tender, or need
assistance in depositing your units, please contact the Depositary and
Information Agent for the Premium Tender:
Kingsdale Shareholder Services
Toll Free (North America): 1-855-682-9437
Outside North America Call Collect: 1-416-867-2272
ORANGE CAPITAL'S ADVISORS
Orange Capital has engaged Kingsdale Shareholder Services as depositary
and information agent, Trimaven Capital Advisors Inc. as financial
advisor, and Norton Rose Fulbright Canada LLP as legal advisor.
ABOUT ORANGE CAPITAL
Orange Capital is a New York based investment firm. The firm is a
value-oriented investor in event-driven securities. 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.
Orange Capital, LLC
The information contained in this press release does not and is not
meant to constitute a solicitation of a proxy within the meaning of
applicable securities laws. Although Orange Capital is proposing to
nominate trustees to the board of Partners REIT at the Meeting,
unitholders are not being asked at this time to execute a proxy in
favour of any nominees. Orange Capital intends to file the Circular in
due course in compliance with applicable securities laws.
Notwithstanding the foregoing, Orange Capital is voluntarily providing
the disclosure required under section 9.2(4) of National Instrument
51-102 - Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast
This press release and any solicitation made by Orange Capital in
advance of the Meeting is, or will be, as applicable, made by Orange
Capital, on behalf of Orange Capital Master I, Ltd., and not by or on
behalf of the management of Partners REIT. All costs incurred for any
solicitation will be borne by Orange Capital, provided that, subject to
applicable law, Orange Capital may seek reimbursement from Partners
REIT of Orange Capital's out-of-pocket expenses, including proxy
solicitation expenses and legal fees, incurred in connection with any
successful reconstitution of Partners REIT's board of trustees.
Any proxies solicited by Orange Capital will be solicited pursuant to a
Circular sent to unitholders of Partners REIT. Solicitations may be
made by or on behalf of Orange Capital, by mail, telephone, fax, email
or other electronic means, and in person by directors, officers and
employees of the Orange Capital or its proxy advisor or by the
Nominees. Orange Capital has also retained Kingsdale as its proxy
advisors. Kingsdale's responsibilities will principally include
providing strategic advice, liaising with proxy advisory firms,
developing and implementing unitholder communication and engagement
strategies, and advising Orange Capital with respect to the Meeting and
proxy protocol. Kingsdale will receive a proxy solicitation fee of
$100,000 for its services plus disbursements.
Any proxies solicited by Orange Capital in connection with the Meeting
may be revoked by instrument in writing by the unitholder giving the
proxy or by its duly authorized officer or attorney, or in any other
manner permitted by law.
None of Orange Capital and its directors and officers, or, to the
knowledge of Orange Capital, any associates or affiliates of the
foregoing, has any material interest, direct or indirect, in any
transaction since the commencement of Partners REIT's most recently
completed financial year, or in any proposed transaction which has
materially affected or will materially affect Partners REIT or any of
its subsidiaries. None of Orange Capital or, to its knowledge, any of
its associates or affiliates, has any material interest, direct or
indirect, by way of beneficial ownership of securities or otherwise, in
any matter to be acted upon at the Meeting, other than the election of
Partners REIT's principal business office is 158 Dunlop Street East,
Barrie, Ontario, L4M 1B1.
A copy of this press release may be obtained on Partners REIT's SEDAR
profile at www.sedar.com.
SOURCE: Orange Capital, LLC
For further information:
Bayfield Strategy, Inc.