TORONTO, Feb. 15, 2013 /CNW/ - KEYreit (TSX: KRE.UN) announced today its
board of trustees, on the recommendation of its special committee,
unanimously recommends that unitholders REJECT the unsolicited partial offer by Huntingdon Capital Corp. If
successful, the unsolicited partial offer would give Huntingdon
effective control of KEYreit.
"The board strongly believes the unsolicited partial offer is wholly
inadequate, coercive, highly opportunistic and does not represent fair
value for your units," said Donald Biback, Chairman of the board of
trustees. "The partial offer fails to provide unitholders with an
appropriate control premium for the units purchased, and provides no
premium for units not purchased. It significantly undervalues KEYreit's
assets and businesses, which have a proven track record of creating
value for unitholders. We urge unitholders to reject Huntingdon's
wholly inadequate partial offer."
The board of trustees and management, representing 17% of KEYreit's
issued and outstanding units, have stated that they will not tender to
Huntingdon's coercive unsolicited partial offer.
The basis for the board's recommendation is contained in a trustees'
circular which is available on KEYreit's website
www.keyreittruevalue.com and at www.sedar.com. The trustees' circular
is also being mailed to unitholders. KEYreit urges unitholders to
carefully review the trustees' circular and cover letter. KEYreit also
urges unitholders to REJECT the Huntingdon partial offer and NOT TENDER their units.
KEYreit also announced today that it will hold a special meeting of
unitholders to approve the unitholder rights plan adopted by the board
of trustees on February 8, 2013 and other matters. The special meeting
of unitholders is expected to occur on March 26, 2013.
Letter to unitholders
The complete cover letter to unitholders from the Chairman of the board
of trustees follows:
Dear Fellow KEYreit Unitholder:
You recently received an unsolicited partial offer (the "Huntingdon Partial Offer") from Huntingdon Capital Corp. ("Huntingdon"), which already owns approximately 5.5% of KEYreit's units. The
Huntingdon Partial Offer is for approximately 45% of KEYreit's units,
and if successful, would result in Huntingdon having effective control
of KEYreit with more than 50% of the outstanding KEYreit units.
The board of trustees of KEYreit unanimously recommends that you REJECT the Huntingdon Partial Offer and NOT TENDER your units.
KEYreit is the premier small-box retail property owner in Canada
KEYreit is the premier small-box retail property owner with 226
properties in nine provinces across Canada and is the largest
quadruple-net lease landlord in Canada. Our specialized niche business
model, portfolio of attractive long-term leases and well-located
properties, national name brand tenants and outstanding record of
growth set us apart from our competitors.
Based on the closing price of KEYreit units on January 28, 2013 (the day
before the public announcement of Huntingdon's intent to launch the
Huntingdon Partial Offer), we have earned our unitholders returns of
47.6% since going public in October 2005, 72.2% over the past five
years and 7.6% over the past twelve months to January 28, 2013.
Our monthly distribution is reliable, and we expect to maintain and grow
our monthly distribution through active management of our existing
properties and disciplined management of our balance sheet as well as
accretive acquisitions and development opportunities. We are in an
excellent position to capitalize on our unique strategy and we are
excited about the future of KEYreit.
The Huntingdon Partial Offer is wholly inadequate
The board of trustees and a special committee comprised of independent
trustees John Jakolev, Donald Biback and George Schott, together with
financial and legal advisors, carefully considered the terms and
conditions of the Huntingdon Partial Offer and unanimously determined
that the Huntingdon Partial Offer is wholly inadequate and does not
represent fair value for your units. In reaching our conclusion that
the Huntingdon Partial Offer is not in the best interests of KEYreit
and unitholders, we considered the following:
the Huntingdon Partial Offer is financially inadequate:
the Huntingdon Partial Offer fails to adequately compensate unitholders
for the underlying value of KEYreit's assets and its future growth
the Huntingdon Partial Offer seeks to provide Huntingdon with effective
control of KEYreit, without offering an appropriate control premium for
the units purchased and without offering any premium for the units not
the $7.00 offer price represents only a 13% premium to the closing price
per unit of $6.18 on the TSX on January 28, 2013 (the day before the
public announcement of Huntingdon's intent to launch the Huntingdon
Partial Offer), but more importantly, an effective premium of only 5.9% when pro-rated over all of KEYreit's outstanding units (after taking
into account that, if Huntingdon purchases 6,628,940 units pursuant to
the Huntingdon Partial Offer, 7,442,939 units would not be purchased by
Huntingdon and would therefore receive no premium at all);
the opinion of equity research analysts has suggested that the
Huntingdon Partial Offer does not fully value KEYreit;
the Huntingdon Partial Offer is opportunistic and capitalizes on
KEYreit's temporarily depressed unit price; and
in the written opinion of BMO Capital Markets, the financial advisor to
the special committee, the consideration offered pursuant to the
Huntingdon Partial Offer is inadequate, from a financial point of view,
to unitholders (other than Huntingdon and its affiliates);
the Huntingdon Partial Offer is coercive;
Huntingdon will have the power to reduce or entirely eliminate
distributions to unitholders (and has a track record of doing so);
Huntingdon's plans for KEYreit are vague and may have a potentially
adverse impact on unitholders;
if successful, the Huntingdon Partial Offer would likely have an adverse
effect on the liquidity and future value of the units;
the Huntingdon Partial Offer is highly conditional and discretionary;
the Huntingdon Partial Offer is not a "permitted bid" under KEYreit's
unitholder rights plan;
the Huntingdon Partial Offer will adversely impact unitholders' future
the Huntingdon Partial Offer may trigger a deemed termination of
KEYreit's management arrangements;
the unanimous recommendation of the special committee of independent
trustees to REJECT the Huntingdon Partial Offer; and
all of KEYreit's trustees and officers have indicated an intention to REJECT the Huntingdon Partial Offer and NOT TENDER their units.
BMO Capital Markets, the financial advisor to the special committee, has
provided a written opinion dated February 12, 2013 to the special
committee stating that the consideration offered pursuant to the
Huntingdon Partial Offer is inadequate, from a financial point of view,
to unitholders (other than Huntingdon and its affiliates). The full
text of the inadequacy opinion, setting out the scope of review,
assumptions and limitations in connection with the opinion, is attached
as Appendix "B" to the accompanying trustees' circular and should be
reviewed and considered in its entirety in conjunction with the review
of the circular.
Further, unitholders should be aware that tendering to the Huntingdon
Partial Offer may be a taxable disposition and may result in the
payment of taxes by a unitholder. Unitholders should seek tax advice
to address their specific circumstances.
For the reasons set out above and for other reasons, as more
particularly described in the accompanying trustees' circular, your
board of trustees unanimously recommends that you REJECT the Huntingdon Partial Offer and NOT TENDER your units.
Please take the time to review the trustees' circular accompanying this
letter as it sets out the recommendation of your board of trustees with
respect to the Huntingdon Partial Offer. We are confident that you
will conclude, as we have, that the Huntingdon Partial Offer fails to
provide full value for the KEYreit units and does not adequately
reflect the underlying value of KEYreit's assets or growth
opportunities within our portfolio and business plan.
If you have tendered your units, you should withdraw them immediately
Unitholders who have tendered units to the Huntingdon Partial Offer and
who wish to obtain advice or assistance in withdrawing their units are
urged to contact their broker or Kingsdale Shareholder Services Inc.,
the information agent retained by KEYreit, at 1-888-518-1562. Kingsdale
is also available to respond to other enquiries regarding the
information in the accompanying trustees' circular.
On behalf of the board of trustees, we thank you for your continued
(signed) "Donald M. Biback"
Donald M. Biback
Trustee and Chair of the Board
KEYreit (TSX: KRE.UN) is Canada's premier small-box retail property
owner with 227 properties in nine provinces across Canada. KEYreit's
properties are well located and geographically diverse across Canada
with the majority of all properties containing long-term quadruple net
To find out more about KEYreit (TSX: KRE.UN), visit our website at www.keyreit.com.
This news release contains certain forward looking statements that may
constitute "forward-looking information" within the meaning
of applicable securities legislation. In some cases, forward-looking
information can be identified by the use of terms such as "anticipate",
"could", "expect", "seek", "may", "likely", "intend", "will", "believe"
or other similar expressions concerning matters that are not historical
facts. Forward-looking statements may relate to management's future
outlook and anticipated events or results. Forward-looking
statements are subject to certain factors, including risks and
uncertainties, which could cause actual results to differ materially
from what is currently expected. Such factors include risks relating to
KEYreit's reliance on key tenants, risks associated with investment in
real property, competition, reliance on key personnel, financing and
refinancing risks, distributions, environmental matters, tenant risks,
risks related to current economic conditions and other risk factors
more particularly described in KEYreit's Annual Information Form for
the year ended December 31, 2011. You should not place undue importance
on forward-looking information and should not rely upon this
information as of any other date. Other than as required by applicable
Canadian securities law, KEYreit does not undertake to update this
information at any particular time. Additional information identifying
risks and uncertainties is contained in KEYreit's filings with the
Canadian securities regulators, available at www.sedar.com.
For further information:
KEYreit unitholders, please contact:
Kingsdale Shareholder Services Inc.
1-888-518-1562 toll-free in North America
1-416-867-2272 outside of North America (collect calls accepted)
Media, please contact:
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Alan Bayless 604-694-6035, email@example.com
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