VANCOUVER, Aug. 1 /CNW/ - Canadian Hotel Income Properties Real Estate
Investment Trust ("CHIP REIT") announced today that its board of trustees has
entered into a support agreement in favour of a cash takeover offer of $19.10
per unit by British Columbia Investment Management Corporation ("bcIMC").
The offer represents a 34 per cent premium over the closing price of CHIP
REIT units on July 31, 2007, the last trading day prior to this announcement,
and a premium of 22 per cent over the closing price of $15.68 on March 27,
2007, the last trading day prior to CHIP REIT's announcement that it had
established a special committee of trustees to review strategic and structural
alternatives for enhancing unitholder value.
bcIMC has also agreed to acquire all outstanding CHIP REIT six per cent
convertible debentures for a price of $1,625.53 per $1,000 debenture. The
transaction has a total value of approximately $1.2 billion, including debt.
Following a thorough review of strategic and structural alternatives and
the recommendation of the special committee, the transaction is being
unanimously recommended by the CHIP REIT board of trustees and is expected to
close during the fourth quarter of 2007. CHIP REIT's largest unitholder,
affiliates of the Belkorp Group, have entered into a lockup agreement pursuant
to which they have agreed to tender to the offer their 13.3 million units,
representing approximately 27 per cent of CHIP REIT's total units outstanding.
CHIP REIT unitholders will continue to receive their regular monthly
distributions until the transaction is completed.
"As one of Canada's best-run hotel businesses, CHIP REIT will be a strong
complement to our diversified portfolio of assets and contribute to our
ability to help finance the retirement benefits of more than 400,000 residents
of British Columbia," said Doug Pearce, CEO and CIO of bcIMC. "CHIP REIT will
continue to pursue its existing strategy under its current management team
following the successful conclusion of this transaction."
Stuart Belkin, Chairman of CHIP REIT said, "It has been a pleasure for
our Trustees to work with the entire CHIP team over CHIP's 10 years as a
public real estate trust. Management has done a wonderful job building the
company's value during that time, as reflected by the high level of interest
the company received during the strategic review process and by the excellent
value this proposal provides for our unitholders. We are confident bcIMC will
continue this success story and provide industry-leading stewardship to CHIP's
guests, associates and business partners."
The mailing of the bid circular (which is expected to occur in
mid-August) is subject to the satisfaction of certain conditions. The
transaction is conditional upon the receipt of customary regulatory approvals,
66 2/3 per cent of the outstanding units being validly tendered to the offer
and the satisfaction of certain other conditions. The offer is not subject to
a financing condition. The support agreement includes customary
non-solicitation and fiduciary out provisions, including a termination fee of
$25 million, payable to bcIMC in certain circumstances.
CIBC World Markets Inc. has provided CHIP REIT's board of trustees with
its opinion that the consideration to be received by CHIP REIT unitholders and
six per cent convertible debentureholders is fair, from a financial point of
view, to unitholders and six per cent convertible debentureholders of CHIP
Koffman Kalef provided independent legal counsel to the special committee
of trustees. Fraser Milner Casgrain LLP is legal counsel to CHIP REIT.
Avington and Bentall Capital LP acted as financial advisors to bcIMC with
Lawson Lundell LLP and Blake, Cassels & Graydon LLP providing legal advice.
About CHIP REIT
CHIP REIT is an integrated hotel real estate investment trust focused on
mid-market and upscale full-service hotels. Through its large, diversified
portfolio, CHIP REIT provides investors with stable income and growth
potential through acquisitions, repositioning and franchising under banners
that include Delta, Radisson, Marriott and Hilton. CHIP REIT currently owns
and manages 32 hotels with approximately 7,700 guestrooms. In 2006, CHIP REIT
was named "Hotel Company of the Year" by Hotelier Magazine, becoming the first
REIT to win a Pinnacle Award in the hospitality industry's national
recognition program. CHIP REIT units and convertible debentures trade on the
Toronto Stock Exchange under the symbols HOT.un, HOT.db and HOT.db.a.
bcIMC is an investment management corporation based in Victoria, BC. With
over $85 billion in assets under administration with global exposure, and
supported by industry-leading expertise, bcIMC offers fund management services
for all major asset classes, including currency and infrastructure investment.
bcIMC's clients include public sector pension plans, provincial government,
public trusts, and insurance funds. For more information, visit www.bcimc.com.
This news release contains forward-looking information related to, but
not limited to, CHIP REIT operations, anticipated financial performance,
business prospects and strategies. Forward-looking information typically
contains statements with words such as "anticipate", "believe", "expect",
"plan" or similar words suggesting future outcomes. Such forward-looking
statements are subject to risks, uncertainties and other factors, which could
cause actual results to differ materially from future results expressed,
projected or implied by such forward-looking statements. Such factors include,
but are not limited to economic, competitive and lodging industry conditions.
Please refer to CHIP REIT's Annual Information Form, dated March 14, 2007,
which can be found on the Canadian Securities Administrators' System for
Electronic Document Analysis and Retrieval ("SEDAR"), for a list of the risks
inherent in the activities of the Trust. CHIP REIT disclaims any intention or
obligation to update or revise any such forward-looking statements, whether as
a result of new information, future events or otherwise.
For further information:
For further information: Kevin Grayston, Executive Vice President & CFO,
CHIP REIT, Phone: (604) 646-2447, Fax: (604) 646-2404, www.chipreit.com;
Gwen-Ann Chittenden, Manager, Corporate Initiatives, British Columbia
Investment Management Corporation, Phone: (250) 507-0128 or (250) 387-4650,
Fax: (250) 387-7874, firstname.lastname@example.org, www.bcimc.com