TORONTO, Aug. 8, 2014 /CNW/ - Northampton Group Inc. ("Northampton") announced today that it has entered into an arrangement agreement (the "Arrangement Agreement") pursuant to which 2425138 Ontario Inc. (the "Purchaser"), a company controlled by Mr. Deepak Ruparell, will acquire, by way of a court-approved plan of arrangement (the "Arrangement"), all of the outstanding common shares ("Common Shares") and preference shares ("Preference Shares") of Northampton. Based upon the consideration, the total value of 100% of the currently issued and outstanding Common Shares and Preference Shares is approximately $37.7 million. The Purchaser and Mr. Deepak Ruparell currently own 3,922,550 Common Shares representing approximately 15% of the outstanding Common Shares.
Commenting on the proposed transaction, Mr. Vinod Patel, Chairman and CEO of Northampton said, "I am very pleased with this cash offer for Northampton. If the Arrangement is completed, holders of Common Shares will receive a substantial cash premium to Northampton's market price and it will represent a liquidity event that will unlock value for all shareholders. I encourage all Northampton shareholders to vote in favour of this transaction."
About the Arrangement
The Arrangement must be approved by the Ontario Superior Court of Justice (Commercial List) and the affirmative vote of (i) 66 2/3% of Northampton shareholders with holders of Common Shares and Preference Shares voting as one class at the annual and special meeting of shareholders that is expected to be held on September 15, 2014 (the "Meeting"), (ii) 50% plus one vote of the votes cast by holders of Common Shares at the Meeting (excluding 3,922,550 Common Shares held by the Purchaser and Mr. Deepak Ruparell) and (ii) 50% plus one vote of the votes cast by holders of Preference Shares at the Meeting.
The completion of the Arrangement is subject to customary closing conditions, including the receipt of any required regulatory approvals.
The Arrangement Agreement also provides for, among other things, unanimous board support and non-solicitation covenants. In the event of a superior proposal arising, the board of directors of Northampton will, in certain specified circumstances, have the right to change its recommendation that shareholders vote in favour of the Arrangement but Northampton will not have a right to terminate the Arrangement Agreement.
Under the Arrangement, Northampton shareholders will receive cash payments of $1.40 per Common Share and $0.20 per Preference Share from the Purchaser. Outstanding stock options will be cancelled and the holders thereof will receive a cash payment from Northampton equal to the amount by which $1.40 exceeds the respective exercise price.
The $1.40 cash consideration for each Common Share of Northampton represents a 13.4% premium to the average closing trading price of the Common Shares of Northampton on the TSX Venture Exchange of $1.23 for the 20 trading days ended August 7, 2014 and a 55.6% premium to the average closing price of the Common Shares of Northampton on the TSX Venture Exchange of $0.90 for the 20 trading days ended on July 8, 2014 (the date prior to the initial news release announcing this proposed transaction on July 9, 2014).
The Purchaser intends to fund the cash purchase price from existing resources of Mr. Ruparell and affiliated entities of Mr. Ruparell. The Arrangement is not contingent on any financing condition.
The board of directors of Northampton has unanimously approved the Arrangement.
The board of directors of Northampton, after consultation with its financial and legal advisors and based, in part, upon the unanimous recommendation of an independent committee of the board of directors of Northampton, has determined unanimously that the Arrangement is fair to Northampton shareholders and is in the best interest of Northampton. Northampton's board of directors unanimously recommends that the Northampton shareholders vote in favour of the Arrangement. The Commercial Capital Corporation has provided an opinion to the effect that, as of the date of the opinion and based upon and subject to the assumptions, limitations and qualifications stated in the opinion, the consideration proposed to be paid to the holders of Common Shares (other than the Purchaser and its affiliates) pursuant to the Arrangement is fair, from a financial point of view, including in relation to the holders of the Preference Shares. Fasken Martineau DuMoulin LLP is acting as legal counsel to Northampton and Aird & Berlis LLP is acting as legal counsel to the independent committee of the board of directors of Northampton. The Purchaser's legal advisor is Dickinson Wright LLP.
Voting Support Agreements
Holders of approximately 65% of Northampton's issued and outstanding Common Shares and 100% of Northampton's issued and outstanding Preference Shares, including certain of Northampton's directors, officers and a major shareholder, have signed voting support agreements pursuant to which they have agreed to vote in favour of the Arrangement.
Full details of the transaction will be included in an information circular to be filed on SEDAR and mailed to Northampton shareholders in accordance with applicable securities laws. The transaction is expected to close on or about September 25, 2014. All shareholders are urged to read the information circular once it becomes available as it will contain additional important information concerning the transaction.
Northampton Group Inc. is an integrated Canadian hotelier with ownership and management interests in 1,943 rooms in 16 hotels with a selective strategic development program in place. Focused on creating a solid return for all stakeholders, Northampton's proven, market-sensitive strategy is to acquire or build hotels that provide superior overnight accommodation in the mid-price market. Northampton has consistently excelled in this sector, offering services that exceed expectations.
The Purchaser is a corporation controlled by Mr. Deepak Ruparell and was incorporated to complete this transaction. Mr. Ruparell and/or his affiliated entities currently have voting and/or joint venture interests in the following subsidiaries of Northampton: Newbramco Inc., Newcamco Inc., 410613 Ontario Limited, Northampton Inns (Whitby) Inc., Northampton Inns (Oakville) Inc., Northampton Inns (Oakville East) Inc., 1310866 Ontario Limited, 3529495 Canada Inc., 987379 Ontario Limited, Silver Hotel Princeton LP, 1548383 Ontario Limited, 4373375 Canada Inc. and Vaughan Mills Hotel Inc.
Certain of the information contained in this news release constitutes 'forward-looking statements' within the meaning of securities laws. Such forward-looking statements, including but not limited to the completion of the Arrangement and payment of the cash consideration involve risks, uncertainties and other factors which may cause the actual results to be materially different from those expressed or implied by such forward-looking statements. Such factors include, among others, obtaining court, shareholder and regulatory approvals, and meeting other conditions in the Arrangement Agreement. Northampton disclaims any obligation to update such forward-looking statements contained in this news release unless required to do so by required law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Northampton Group Inc.
For further information: Vinod Patel, President and CEO, Northampton Group Inc., 905-629-9992