TORONTO, Aug. 24 /CNW/ - Q9 Networks Inc. (TSX:Q) ("Q9") announced today
that it has entered into a definitive acquisition agreement (the "Agreement")
with CDC Acquisition Corp. ("ABRY"), an affiliate of ABRY Partners, LLC ("ABRY
Partners") to purchase all of the outstanding common shares of Q9. Under the
terms of the Agreement, Q9 shareholders will receive $17.05 per common share
in cash, representing a premium of 38% to the 30-trading day volume weighted
average closing price on the Toronto Stock Exchange. The transaction, which
values Q9 at approximately $361 million, will be implemented by way of a
court-approved plan of arrangement under the laws of Ontario.
"ABRY is one of the most experienced private equity firms in the media,
communications, and information industry." said Osama Arafat, CEO and Paul
Sharpe, President and COO of Q9. "We believe they are the right partner to
continue our aggressive growth plans while providing outstanding service to
our valued customers. We are very proud of what the Q9 team has achieved to
date and we look forward to leading them through our next phase of growth."
"We are strong believers in the Canadian data centre infrastructure
market and are excited to be participating in it through our acquisition of
Q9." said C.J. Brucato, Partner at ABRY Partners. "Q9, with its talented
management team, has achieved a leading market position and a diversified blue
chip customer base. We look forward to helping Q9 accelerate their growth and
extend their leadership position."
The completion of this transaction is subject to the approval of Q9's
shareholders at a special meeting which is expected to be held in October
2008. In addition, the arrangement will require approval by the Ontario
Superior Court of Justice. The transaction has been approved unanimously by
the Board of Directors of Q9 (with interested directors abstaining) following
the unanimous recommendation of a Special Committee of independent directors
comprised of Timothy Jackson, John Albright, Timothy Price, John Turner and
Timothy Aubrey. In doing so, the Q9 Board determined that the arrangement is
in the best interests of Q9 and authorized the submission of the arrangement
to shareholders of Q9 for their approval at the special meeting. The Q9 Board
has also determined unanimously (with interested directors abstaining) to
recommend to Q9 shareholders that they vote in favour of the transaction.
The transaction must be approved by the holders of common shares
representing at least 66 2/3% of votes represented at the meeting and by the
holders of more than 50% of the votes, other than votes in respect of shares
held by certain members of senior management of Q9, represented at the
Q9's financial advisor, Jefferies & Company, Inc. has provided an opinion
to the Q9 Board that the consideration to be received by the shareholders
under the arrangement is fair, from a financial point of view, to the
shareholders of Q9. TD Securities is acting as financial advisor to ABRY.
The Agreement contains a "go-shop" provision pursuant to which Q9 has the
right to solicit and engage in discussions and negotiations with respect to
potential competing proposals through the go-shop period, which ends on
October 3, 2008.
After October 3, 2008, Q9 is subject to a "no-shop" restriction on its
ability to solicit third party proposals, provide information and engage in
discussions with third parties, other than parties with whom discussions
commenced prior to the expiration of the go-shop (each, an "Excluded Party").
The no-shop provision is subject to a fiduciary out that allows Q9, subject to
certain conditions, to provide information and participate in discussions with
respect to any unsolicited acquisition proposal received after October 3, 2008
which the Q9 Board has determined in good faith constitutes or is reasonably
likely to result in a superior acquisition proposal.
Q9 may terminate the Agreement under certain circumstances, including if
the Q9 Board determines in good faith it has received a superior acquisition
proposal. Q9 has agreed to provide ABRY with notice of any superior
acquisition proposal and to negotiate with ABRY for a period of four business
days prior to accepting a superior acquisition proposal. If Q9 terminates the
Agreement in order to accept a superior acquisition proposal it must pay a fee
of approximately $6.3 million to ABRY Partners if such termination occurs
during the go-shop period or following the go-shop period where the superior
proposal is from an Excluded Party, or approximately $10.8 million if such
termination occurs following the go-shop period with anyone other than an
Completion of the transaction is subject to various customary conditions
precedent. The closing of the transaction will take place after satisfaction
or waiver of all conditions. While the timing associated with satisfying these
conditions is not certain, Q9 currently expects the transaction to close in
the fourth calendar quarter of 2008, subject to the terms of the Agreement.
The transaction is not subject to any financing condition. The
transaction will be financed through a combination of equity which has been
committed by ABRY Partners VI, L.P. (the "ABRY Fund") and debt financing that
has been committed by TD Securities, TD Capital Mezzanine Partners, and
affiliates, in each case subject to the terms of those commitments. The
Agreement provides that in certain circumstances where the purchaser fails to
complete the transaction as required, the purchaser would be required to pay
to Q9 a "reverse break fee" of approximately $18 million provided that in
certain other circumstances such fee will be approximately $10.8 million. The
ABRY Fund has guaranteed the payment of the reverse break fee.
Q9 has been advised that certain shareholders (including Osama Arafat,
Chief Executive Officer and Paul Sharpe, President and Chief Operating
Officer) holding approximately 28% of the outstanding common shares of Q9 have
entered into an agreement with ABRY to vote the shares of Q9 owned by such
shareholders in favour of the transaction, subject to the terms and conditions
of such agreement. The voting agreements terminate if the Q9 Board terminates
the Agreement in certain circumstances, including in order to accept a
superior acquisition proposal.
Copies of the Agreement and certain documents will be filed with the
Canadian securities regulators and will be available at the Canadian SEDAR
website at www.sedar.com. The management information circular in connection
with the special meeting of shareholders to consider the arrangement is
expected to be mailed to shareholders over the coming weeks. The circular will
also be available as part of Q9's public filings at www.sedar.com.
Q9 is being represented by McCarthy Tétrault LLP while ABRY is being
represented by McMillan LLP and Kirkland & Ellis LLP.
Forward Looking Statements
This media release includes certain forward-looking statements within the
meaning of applicable securities laws relating to the proposal to acquire all
of the outstanding shares of Q9. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking statements.
The completion of the proposed transaction is subject to a number of terms and
conditions, including, without limitation: (i) required Q9 shareholder
approval, (ii) necessary court approvals, and (iii) certain termination rights
available to the parties under the arrangement agreement. These approvals may
not be obtained, the other conditions to the transaction may not be satisfied
in accordance with their terms, and/or the parties to the arrangement
agreement may exercise their termination rights, in which case the proposed
transaction could be modified, restructured or terminated, as applicable.
Readers are cautioned not to place undue reliance on forward-looking
statements. Actual results and developments may differ materially from those
contemplated by these statements depending on, among other things, the risks
that the parties will not proceed with a transaction, that the ultimate terms
of the transaction will differ from those that are currently contemplated, and
that the transaction will not be successfully completed for any reason
(including the failure to obtain any required approvals). Q9 does not intend,
and disclaims any obligation, except as required by law, to update or revise
any forward looking statements whether as a result of new information, future
events or otherwise.
About Q9 Networks
Q9 Networks is a leading Canadian provider of outsourced data centre
infrastructure for organizations with mission-critical IT operations. Q9's
data centres and network are backed by an industry leading SLA which
guarantees 100 per cent network and power availability. Q9 managed services,
including: bandwidth, dedicated servers, firewalls, load balancing, virtual
private networking (VPN) and back-up/restore, enable the rapid provisioning
and scalability of client infrastructure.
Based in Boston, Massachusetts, ABRY Partners enjoys a position as one of
the most experienced and successful media and communications focused private
equity investment firms in North America. Since 1989, ABRY Partners has
completed over $21 billion of leveraged transactions and other private equity
and mezzanine investments, representing investments in more than 500 media and
communications properties. Extensive and long-standing relationships with many
different stakeholders in the media, communications and finance businesses
allow ABRY Partners to contribute significant value to operating partners and
portfolio companies. ABRY Partners has extensive experience in data centre
space through its existing U.S. data centre portfolio companies CyrusOne and
Hosted Solutions. More information is available at www.abry.com.
For further information:
For further information: Kevin Spikes, Director of Corporate & Investor
Relations, Q9 Networks, Toronto: (416) 848-3311, Toll Free: 1-888-696-2266,