TORONTO, May 17, 2013 /CNW/ - Edgefront Realty Corp. ("Edgefront", or the "Corporation") (TSXV: ED) announces today that it has filed a management information
circular (the "Information Circular") and notice of special meeting in respect of its previously announced
reorganization under a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement") whereby the Corporation intends to convert into a real estate invest
trust named "Edgefront Real Estate Investment Trust" (the "REIT"), subject to receipt of all necessary approvals, including the
approval of the TSX Venture Exchange ("TSXV") and the shareholders of the Corporation.
Pursuant to the Arrangement, among other things: (i) the issued and
outstanding shares of the Corporation will be exchanged for units of
the REIT on a 40 for 1 basis (1 unit for every 40 shares) (the "Exchange Ratio"), and (ii) the issued and outstanding options to purchase shares will
be exchanged for options to purchase units on terms and conditions
substantially similar to the terms and conditions of the existing
options of the Corporation, subject to adjustments to the number of
units underlying REIT options based upon the Exchange Ratio.
Information about the Meeting
The special meeting (the "Meeting") of shareholders will be held at 9:00 a.m. on June 14, 2013, at 199
Bay Street, Commerce Court West, 40th Floor, Toronto Ontario. Each
person who is a holder of record of shares at the close of business on
May 13, 2013 is entitled to receive notice of, and to attend and vote
at, the Meeting, and any adjournment or postponement thereof.
At the meeting, shareholders will also be asked to consider resolutions
regarding (i) the Arrangement, (ii) the adoption by the REIT of a unit
option plan, (iii) the adoption by the REIT of a unitholder rights
plan, (iv) the entering into of a management agreement with Edgefront
Realty Advisors Inc. pursuant to which Edgefront Realty Advisors Inc.
will be entitled to receive unit compensation for the provision of
advisory services to the REIT (the "Management Agreement Resolution") and (v) the acquisition of the Cambridge and Oakville Properties (as
defined below) from MM Sam Ltd. (the "Acquisition Resolution"). The resolution regarding the Arrangement put forth at the Meeting
will be subject to the approval of two-thirds of votes cast by
shareholders entitled to vote at the Meeting voting in person or by
proxy, and each of the remaining resolutions will be subject to the
approval of a majority of votes cast by disinterested shareholders.
Mario Forgione, the Chairman and a director of Edgefront, is the
President and a director of MM Sam Ltd., which is the sole vendor of
the Cambridge and Oakville Properties. Kelly C. Hanczyk, President and
Chief Executive Officer of Edgefront, Robert P. Chiasson, Chief
Financial Officer and Corporate Secretary of Edgefront, and Mario
Forgione are owners, and directors or officers, of Edgefront Realty
Advisors Inc. As such the acquisition of the Cambridge and Oakville
Properties, and the unit compensation under the management agreement,
will be non-Arm's Length Transactions and subject to Multilateral
Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and TSXV Policy 5.9, and will be subject to all necessary approvals,
including the approval by the affirmative vote of a majority of votes
cast by minority shareholders voting at the Meeting.
Shareholders are urged to read the Information Circular for a full
description of all matters to be considered at the Meeting.
Shareholders are cautioned that, except as disclosed in the Information
Circular, any information released or received with respect to the
Arrangement may not be accurate or complete and should not be relied
upon. The Information Circular is available for review at www.sedar.com.
Registered shareholders unable to attend the Meeting in person are
requested to read the Information Circular and the form of proxy which
accompanies the notice of meeting and to complete, sign, date and
deliver the form of proxy, together with the power of attorney or other
authority, if any, under which it was signed (or a notarially certified
copy thereof) to Equity Financial Trust Company at 200 University
Avenue, Suite 400, Toronto, Ontario M5H 4H1, Attention: Proxy
Department, no later than 48 hours prior to the Meeting, excluding
Saturdays, Sundays and holidays, or any adjournment thereof. Late
proxies may be accepted or rejected by the Chairman of the Meeting in
his discretion, and the Chairman is under no obligation to accept or
reject any particular late proxy.
Registered shareholders have the right to dissent with respect to the
Arrangement and be paid the fair value of their shares in accordance
with the provisions of section 185 of the Business Corporations Act (Ontario) and an interim order of the Ontario Superior Court of Justice
(Commercial List) with respect to the Arrangement dated May 13, 2013,
if the Arrangement becomes effective. This right to dissent is
described in the Information Circular. Failure to strictly comply with
the dissent procedures set out in the Information Circular may result
in the loss or unavailability of any right of dissent.
As previously announced, immediately prior to the conversion into a
REIT, the Corporation intends to complete a private placement of shares
at a price per share equal to $0.15 for an aggregate subscription
amount of approximately $45,000,000, resulting in the issuance of
approximately 300,000,000 shares. The net proceeds from the private
placement will be used to acquire the REIT Properties (as defined
below), fund future acquisitions and for general trust purposes.
As previously announced, in connection with the Arrangement, the
Corporation will acquire the following properties (the "REIT Properties") for a total purchase price of $74,485,000.
a 396,000 square foot portfolio of industrial properties in Ajax,
Ontario which are fully occupied by 11 tenants, with a total weighted
remaining lease term for all tenants of over seven years (the "Ajax Properties") for a total purchase price of $29,500,000 to be satisfied by way of
cash and the delivery to the vendor of the Ajax Properties of
approximately $5,000,000 of REIT units based on an issue price of $6.00
a 150,000 square foot industrial property in Cambridge, Ontario that is
currently 100% occupied with an average remaining lease term of 2.2
years (the "Cambridge Property") for a total purchase price of $7,400,000 to be satisfied by way of
cash and the delivery to MM Sam Ltd. of approximately $1,000,000 of
REIT units based on an issue price of $6.00 per unit;
a 16,200 square foot retail property in Oakville, Ontario that is
currently 100% occupied with an average remaining lease term of 3.25
years (the "Oakville Property") to be satisfied by way of cash and the delivery to MM Sam Ltd. of
approximately $1,000,000 of REIT units based on an issue price of $6.00
a 71,800 square foot retail/office property in Bedford, Nova Scotia that
is currently 100% occupied, with an average remaining lease term of 4.6
years (the "Bedford Property") for a total purchase price of $17,200,000 to be satisfied by way of
a 24,200 square foot retail/office property in Bedford, Nova Scotia that
is currently 100% occupied, with an average remaining lease term of 8.8
years (the "Nova Scotia Property") for a total purchase price of $6,875,000 to be satisfied by way of
a 23,100 square foot single-tenant office property in Halifax, Nova
Scotia that is currently 100% occupied by the Nova Scotia provincial
government with a remaining lease term of seven years and a real estate
management company with a remaining lease term of three years (the "Halifax Property") for a total purchase price of $6,875,000 to be satisfied by way of
cash and the assumption of a mortgage in respect of the property in the
remaining principal amount of approximately $3,050,000, with a fixed
interest rate of 5.49% per annum. On closing of the acquisition of the
Halifax Property the Corporation shall receive a credit in the amount
sufficient to reduce the annual interest rate of such mortgage to 4.1%.
The Corporation retained Atlantic Realty Advisors to provide appraisals
of the Bedford, Nova Scotia and Halifax Properties, and CB Richard
Ellis Limited to provide appraisals of the Cambridge, Oakville and Ajax
Properties. Atlantic Realty Advisors estimated the value of the
Bedford, Nova Scotia and Halifax Properties at $17,200,000, $7,060,000
and $7,160,000, respectively, and CB Richard Ellis Limited estimated
the value of the Cambridge, Oakville and Ajax Properties at $7,500,000,
$6,350,000 and $29,900,000, respectively, for a total appraised value
of $75,170,000 for the REIT Properties. Based on the negotiated
purchase price to be paid for the REIT Properties of $74,485,000, the
appraised value is $685,000 greater than the aggregate purchase price
to be paid for the REIT Properties. It is expected that the REIT will operate with a debt to gross book
value ratio in the range of 50 to 55%, and a 95% adjusted funds from
operations payout ratio.
Edgefront is a growth oriented, diversified real estate company focused
on increasing shareholder value through the acquisition, ownership and
management of commercial real estate assets initially located in
secondary markets. It is the intention of Edgefront to expand its
business of purchasing, owning and operating real estate assets and to
raise funds in the marketplace in order to convert Edgefront into a
real estate investment trust having an external asset management
structure, subject to receipt of all necessary approvals, including
that of the TSXV.
Completion of Arrangement remains subject to TSXV approval. There can
be no assurance that the Arrangement will be completed as proposed or
The TSXV has in no way passed upon the merits of the Arrangement and has
neither approved nor disapproved the contents of this press release.
Neither the TSXV nor its Regulation Services Provider (as that term is
defined in the policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
This press release contains forward-looking information within the
meaning of Canadian securities laws. Such information includes,
without limitation, information regarding the completion of the
Arrangement. Although Edgefront believes that such information is
reasonable, it can give no assurance that such expectations will prove
to be correct. In particular, this news release contains
forward-looking information relating to the expected completion of the
Arrangement and the business strategies of Edgefront.
Forward looking information is typically identified by words such as:
believe, expect, anticipate, intend, estimate, postulate and similar
expressions, or are those, which, by their nature, refer to future
events. Edgefront cautions investors that any forward-looking
information provided by Edgefront is not a guarantee of future results
or performance, and that actual results may differ materially from
those in forward looking information as a result of various factors,
including, but not limited to: Edgefront's ability to complete the
Arrangement; the state of the real estate sector in the event the
Arrangement is completed; recent market volatility; Edgefront's ability
to secure the necessary financing or to be fully able to implement its
business strategies and other risks and factors that Edgefront is
unaware of at this time. The reader is referred to Edgefront's
Information Circular for a more complete discussion of risk factors
relating to Edgefront and their potential effects, a copy of which may
be accessed through Edgefront's page on SEDAR at www.sedar.com.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities nor shall there by any
sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
SOURCE: Edgefront Realty Corp.
For further information:
For further information please contact Kelly C. Hanczyk at (416) 906-2379.