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TORONTO, Oct. 20 /CNW/ - Fluid Music Canada, Inc. (TSX: FMN) and Somerset Entertainment Income Fund (TSX: SOM.UN) announced today that they have mailed the take-over bid circular and related offer documents and trustees' circular in respect of Fluid's offer to acquire all of the issued and outstanding Somerset trust units, on a fully diluted basis, in consideration for, at the election of the tendering holder: (a) $2.12 in cash per unit, representing a premium of approximately 23.5% based on the average closing price of the units on the TSX for the 20 trading days ended October 9, 2009; (b) 0.003 of a $1,000 principal amount 8.0% convertible unsecured debenture due 3 years following the date that such debentures are first issued; or (c) 1.1 common shares of Fluid. The offer expires at 6:00 p.m. (Toronto time) on November 25, 2009. Fluid and Somerset have also filed copies of the formal offer documents and trustees' circular with Canadian securities regulatory authorities on SEDAR at www.sedar.com and on their respective websites at www.fluidmusic.com and www.somersetent.com.
Unitholders holding approximately 66% of the issued and outstanding units, on a fully-diluted basis, have entered into lock-up agreements with Fluid pursuant to which they have agreed to tender their units to the offer; including each of Mr. Andy Burgess (President and Chief Executive Officer of Somerset) and Mr. Gordon Gibson (Chief Creative Officer of Somerset) who collectively own or control approximately 20% of the issued and outstanding units on a fully diluted basis.
The Somerset Board of Trustees, after consultation with its financial and legal advisors, has determined that the cash offer is fair and in the best interests of the Fund and its unitholders and, accordingly, unanimously recommends that unitholders accept the cash offer and tender their units to the offer. The Board of Trustees did not consider the share offer or the convertible debenture offer and therefore makes no recommendation with respect to the share offer or convertible debenture offer.
TD Securities Inc., the Fund's financial advisor, has provided an opinion to the Somerset Board of Trustees that the cash consideration is fair, from a financial point of view, to Somerset's unitholders.
About Fluid Music Canada, Inc.
Fluid is a leading private label music aggregation and distribution company, providing music solutions to both business and individual consumers. Fluid has compiled a music library of over five million songs, free of digital rights management restrictions, from a diverse network of producers, including major label, independent and emerging artists. Fluid's revenue model is comprised largely of programming and broadcasting services for retail and hospitality businesses through a wholly-owned subsidiary. Fluid's objective is to grow its business by monetizing its music catalogue through a range of sales channels and partners.
About Somerset Entertainment Income Fund
Somerset is the leading North American producer and distributor of specialty music and DVDs sold internationally through non-traditional music retailers using interactive displays and a distributor of music in digital format. Somerset's extensive distribution network includes mass merchants, specialty chains and independent gift stores in more than 20 countries, including the United States and Canada. Based in Toronto, Canada, Somerset employs over 180 people at offices in Toronto, Ontario (Canada); Buffalo Grove, Illinois, and Minneapolis, Minnesota (U.S.A.); and Essex, England (U.K.).
Certain statements contained in this release, the forthcoming Offer and the Circular, in addition to certain statements contained in this release and elsewhere in the Offer and the Circular concerning Fluid's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of Somerset and Fluid are forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of Somerset and Fluid to meet their respective revenue targets; the ability to achieve cost synergies; the completion of the offer in accordance with its terms; general industry and economic conditions; changes in Somerset's and Fluid's relationships with their customers and suppliers; pricing pressures and other competitive factors; and changes in regulatory requirements affecting the businesses of Somerset and Fluid. Fluid has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While Fluid considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.
Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: failure to satisfy the conditions of the offer; risks related to any inefficiencies with the structure of Somerset and/or Fluid, their respective tax treatments and any costs associated with reorganizing Somerset following closing; Fluid may not have sufficient funds to repay the Convertible Debentures in cash at maturity; general economic and business conditions; financing risk; risks inherent in the business of operating Somerset and Fluid, including the inability to attract and retain qualified employees; competition; disruptions in business operations; interest rate and foreign currency fluctuations; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; and liability and other claims asserted against Somerset or Fluid. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
All of the forward-looking statements made in the offer and the Circular are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Fluid and/or Somerset. Forward-looking statements are given only as at the date hereof and both Fluid and Somerset disclaim any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
Additional information relating to Fluid Music Canada, Inc. is available at www.fluidmusic.com and www.sedar.com. Additional information relating to Somerset Entertainment Income Fund is available at www.somersetent.com and www.sedar.com.
SOURCE FLUID MUSIC CANADA, INC.
For further information: For further information: Fluid Music Canada, Inc., Lorne Abony, President & Chief Executive Officer, (310) 665-9878; Somerset Entertainment Income Fund, Andy Burgess, President & Chief Executive Officer, (416) 510-2800