TORONTO, Oct. 17 /CNW/ - GT Canada Capital Corporation (TSX-V: MOB.P)
(the "Corporation"), a capital pool company listed on the TSX Venture Exchange
(the "Exchange"), announced today that it has agreed to acquire Guelph Medical
Place, a 33,089 square foot medical office building in Guelph, Ontario (the
"QT Property"), as its proposed qualifying transaction (the "Qualifying
Transaction") under Exchange Policy 2.4 Capital Pool Companies (the "CPC
The QT Property
The QT Property is located at 83 Dawson Road on the north side of Guelph,
less than a kilometer from the St. Joseph's Hospital, which is a 254-bed
chronic care facility. The City of Guelph is the fifth fastest growing city in
The QT Property is 100% leased to fourteen tenants with lease expirations
staggered over the next ten years and has extensive parking as well as state
of the art design, construction and technology as a result of ongoing
extensive renovations that are expected to be completed by October 2008.
Tenants of the QT Property include a large "Family Health Team" which,
together with a family medical clinic association, occupies approximately 40%
of the building under a lease that expires in July 2018. Family Health Teams,
an important initiative of the Ontario Ministry of Health and Long Term Care,
are a progressive method for improved medical care through a collaborative,
patient-centered, "one stop shop" model. This growing program is at the
forefront of next-generation healthcare, which the Corporation believes will
become an increasingly significant source of demand for space in medical
office buildings across Canada.
The QT Property is currently subject to a first mortgage in the principal
amount of approximately $4.0 million that bears interest at a rate of 5.47%
per annum and has a term expiring in May 2012 (the "Existing Mortgage"). The
Corporation intends to assume this mortgage as part of its acquisition of the
Revenue and net income for the QT Property were $404,244 and $(61,315)
(six months ended June 30, 2008 - unaudited), $731,942 and $(25,499) (year
ended December 31, 2007 - audited), $683,278 and $(29,758) (year ended
December 31, 2006 - unaudited) and $609,827 and ($40,874) (year ended December
31, 2005 - unaudited). As at June 30, 2008, the QT Property had total assets
of $4,424,926 (unaudited) and total liabilities of $4,424926 (unaudited).
The Corporation retained MacKenzie, Ray, Heron & Edwardh (the
"Appraiser") to provide an independent appraisal (the "Appraisal") of the
market value of the QT Property. The Appraiser estimated the market value of
the QT Property (land and building) as at July 31, 2008 to be $10,500,000.
The Corporation intends to enhance the value of the QT Property through
expert asset and property management and continuing the Vendor's record of
building and maintaining strong tenant relationships. In addition, the QT
Property will showcase the Corporation's vision and commitment for excellence
in medical real estate by highlighting the Family Health Team collaboration as
well as the building's modern design, "paperless" technology and professional
The QT Property is currently managed by CMD Management Limited (the
"Property Manager"), a corporation that is indirectly controlled by Ed
Thornley, a resident of Ontario and director of the Corporation and Darren
Thornley, a resident of British Columbia and officer of the Corporation, and
owned by both Messrs. Thornley. In connection with the Qualifying Transaction,
the Corporation expects to enter into a property management agreement with the
Property Manager (the "Property Management Agreement") pursuant to which the
Property Manager will continue to manage the QT Property following completion
of the Qualifying Transaction.
The current owner of the QT Property is 1626267 Ontario Inc. (the
"Vendor"), an Ontario corporation that is controlled by Thornley Holdings
Limited, a corporation that is indirectly controlled by Edward Thornley and
owned by Mr. Thornley and Darren Thornley. Thornley Holdings Limited and
Edward Thornley currently own 1,512,500 common shares of the Corporation
representing approximately 20% of the outstanding common shares of the
Corporation. In addition, Doug Friars, MD, a resident of Ontario and director
of the Corporation, owns an interest in the Vendor. As a result, the
Qualifying Transaction is a non-arm's length transaction and will be subject
to shareholder approval.
The Qualifying Transaction
The Corporation and the Vendor have entered into a purchase agreement
dated October 16, 2008 (the "Purchase Agreement") pursuant to which the
Corporation has agreed to purchase the QT Property from the Vendor for a
purchase price of $8,610,000 (the "Purchase Price"). The Purchase Price will
be subject to customary adjustments and will be payable as follows:
- the Corporation's assumption of the Existing Mortgage;
- the issuance to the Vendor of 1,844,000 common shares of the
Corporation ("Common Shares") at a price of $0.50 per share; and
- the balance (approximately $3,688,000) in cash.
The cash portion of the purchase price will be funded by the Corporation
using cash on hand and the proceeds from a proposed private placement of
10,000,000 Common Shares at a price of $0.50 per share for gross proceeds of
$5,000,000 (the "Private Placement"). Blackmont Capital Inc. (the "Agent") is
acting as agent to the Corporation, on a commercially reasonable best efforts
basis, in connection with the Private Placement. In consideration for acting
as agent, the Agent will receive a commission equal to 6% of the gross
proceeds raised under the Private Placement and will also receive warrants to
purchase up to 5% of the number of Common Shares issued pursuant to the
Private Placement at $0.50 per share. The shares issued pursuant to the
Private Placement will be subject to a four-month hold period.
Pursuant to the Purchase Agreement, completion of the Qualifying
Transaction is subject to the prior satisfaction or waiver of a number of
conditions, including the receipt of Exchange and shareholder approval,
completion of the Private Placement and execution of the Property Management
Agreement. The Corporation intends to fix a date for a shareholder meeting to
consider approval of the Qualifying Transaction and to mail an information
circular to shareholders in connection therewith following receipt of
conditional approval for the Qualifying Transaction from the Exchange.
The board of directors of the Corporation (the "Board") has unanimously
determined that the Qualifying Transaction is fair to shareholders of the
Corporation and in the best interests of the Corporation. Accordingly, the
Board has approved the Qualifying Transaction and will unanimously recommend
that shareholders vote in favour of the Qualifying Transaction. In connection
with the Board's approval of the Qualifying Transaction, Edward Thornley and
Doug Friars declared their interest in the Qualifying Transaction and
abstained from voting on the Qualifying Transaction.
In order for the Qualifying Transaction to proceed, it must be approved
at a shareholder's meeting by (i) 50% plus one vote of the votes cast by
shareholders present in person or by proxy, and (ii) 50% plus one vote of the
votes cast by "minority" shareholders present in person or by proxy, as
required by Multilateral Instrument 61-101 Protection of Minority Security
Holders in Special Transactions.
In connection with the transaction, the Corporation intends to change its
name to "GT Canada Medical Properties Inc."
The Corporation intends to apply for an exemption from the Exchange's
sponsorship requirement for the Qualifying Transaction.
The Corporation was incorporated under the laws of Canada on March 25,
2008 and completed its initial public offering under the CPC Policy on July
10, 2008. Throughout this time, the Corporation's business has been restricted
to the identification and evaluation of real property in the commercial real
estate sector for the purpose of completing its Qualifying Transaction.
Following the Qualifying Transaction, the Corporation intends to focus
upon achieving its goal of becoming the leading owner and developer of medical
office properties throughout Canada through an aggressive acquisition,
development and management program aimed at creating a geographically
diversified portfolio of high quality properties that will generate stable and
growing rental income and capital appreciation opportunities.
The Corporation has appointed Darren Thornley as Chief Operating Officer
and, subject to the approval of the Exchange, Morris Hurwitz as interim Chief
Financial Officer. In connection with his appointment, Mr. Thornley has been
granted 131,250 options to acquire common shares of the Corporation. The
options have an exercise price of $0.34 (representing a 25% discount to the
closing price of the Corporation's common shares on October 16, 2008) and
expire on October 16, 2013.
Following the Qualifying Transaction, the directors and officers of the
Corporation are expected to be:
- Seymour Temkin - Chairman
- Andrew I. Shapack - Chief Executive Officer
- Morris Hurwitz - Interim Chief Financial officer
- Douglas G. Friars, MD - Director
- Richard Michaeloff - Director
- Richard Shapack - Director
- Stanley Swartzman - Director
- Darren Thornley - Chief Operating Officer
- Edward Thornley - Director
Backgrounds of the existing directors and officers, other than Morris
Hurwitz and Darren Thornley, are contained in the final initial public
offering prospectus of the Corporation dated June 17, 2008 which is available
on the SEDAR website at www.sedar.com. Brief biographies of Mr. Thornley and
Mr. Hurwitz are set out below.
Darren Thornley is the President of the CMD Management Limited and has
over 25 years experience in medical office building construction, leasing and
management. In his capacity as President of the CMD Management Limited, he is
currently responsible for over 200,000 square feet of medical office building
operations in Ontario and British Columbia, including leasing, management,
renovations and financial reporting. Over the course of Mr. Thornley's career,
he has participated in the development of 36 medical office buildings
including primary responsibility for the construction and tenant coordination
of the last ten. Mr. Thornley has also been involved as a principal in the
opening and operating of a physiotherapy clinic, 10 pharmacies, two optical
stores and two cosmetic rejuvenation clinics.
Morris Hurwitz is a consultant. Most recently he served as the Director
of Finance for Multi-Industries Inc. Prior thereto, Mr. Hurwitz was Controller
for Gambles Ontario Produce Inc. from 2004 to 2007. Before then, he held
several financial positions with Jutan International Limited, Tupperware
Canada Inc., Toronto Medical Corp. and Newell Canada. Mr. Hurwitz began his
career with Clarkson Gordon Chartered Accountants and holds a Chartered
Accountant designation. He has a degree in Administrative and Commercial
Studies from the University of Western Ontario.
There will be no changes to the insiders of the Corporation as a result
of the Qualifying Transaction.
Upon completion of the Qualifying Transaction, the Corporation expects
that its Common Shares will be listed on Tier 2 of the Exchange.
The Property Manager
As indicated above, the Property Manager will manage the QT Property on
behalf of the Corporation following completion of the Qualifying Transaction
pursuant to the Property Management Agreement.
The Property Manager is a leading medical office management and
development company based in Toronto, Ontario that currently manages over
200,000 square feet of medical office building space in Ontario and British
Columbia, including several buildings in Ontario that are also owned by it.
Since 1972, the Property Manager has developed and constructed 51 medical
office buildings across Canada and has strong relationships with medical
office building owners, as well as pharmacies, laboratories, doctors and other
participants and stakeholders in the medical community, including the Ontario
Ministry of Health and Long Term Care. As a result of the Property Manager's
existing portfolio of medical office buildings and its relationships and
reputation in the medical office industry, the Corporation expects that the
Property Manager will provide it with exclusive access to a significant
pipeline of acquisition and development opportunities.
The Asset Manager
Geneva-Pacific Capital Management Ltd., an Ontario corporation owned and
controlled by Andrew I. Shapack, the Chief Executive Officer of the
Corporation, will initially provide advisory, asset management and
administrative services (including the services of the officers of the
Corporation) pursuant to an asset management agreement to be entered into upon
completion of the Qualifying Transaction.
This press release contains forward-looking statements. Forward-looking
statements can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "estimates", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could", "would",
"might" or "will" be taken, occur or be achieved. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Corporation to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Examples of such
statements include the intention to complete the Private Placement and the
Qualifying Transaction. Actual results and developments are likely to differ,
and may differ materially, from those expressed or implied by the
forward-looking statements contained in this press release. Accordingly,
readers should not place undue reliance on forward-looking statements. Such
forward-looking statements are based on a number of assumptions which may
prove to be incorrect, including, but not limited to: the ability of the
Corporation to obtain necessary financing; satisfy conditions under the
Purchase Agreement; satisfy the requirements of the Exchange with respect to
the Qualifying Transaction or the Private Placement or the level of activity
in the commercial real estate business and the economy generally; competition;
and anticipated and unanticipated costs. The factors identified above are not
intended to represent a complete list of the factors that could affect the
Corporation. Additional factors are noted under "Risk Factors" in the
Corporation's initial public offering prospectus dated June 17, 2008, a copy
of which may be obtained on the SEDAR website at www.sedar.com.
Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance and majority of the minority
shareholder approval. The transaction cannot close until the required
shareholder approval is obtained. There can be no assurance that the proposed
transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management
information circular to be prepared in connection with the transaction, any
information released or received with respect to the transaction may not be
accurate or complete and should not be relied upon. Trading in the securities
of a capital pool company should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the contents of
this press release. The TSX Venture Exchange does not accept responsibility
for the adequacy or accuracy of this press release.
For further information:
For further information: Andrew I. Shapack, Chief Executive Officer,