Cominar and CANMARC agree to a board-supported transaction
Cominar to amend its offer to $16.50 in cash per CANMARC Unit, not
subject to proration, or 0.7607 Cominar units per CANMARC Unit, subject
Creates a national champion with a leading position in Québec, enhanced
geographical diversification and a significantly improved capital
Accelerates strategic plan to grow outside Québec
Transaction financially attractive to Cominar unitholders
QUÉBEC CITY AND MONTREAL, Jan. 16, 2012 /CNW Telbec/ - Cominar Real Estate Investment Trust (TSX: CUF.UN) and CANMARC Real
Estate Investment Trust (TSX: CMQ.UN) are pleased to announce that they
have entered into a support agreement for the acquisition by Cominar's
wholly-owned subsidiaries (collectively, the "Cominar Acquisition Group") of all of the outstanding units of CANMARC.
Under its amended offer, Cominar will offer to acquire all of the
CANMARC Units for, at the option of Unitholders of CANMARC, either
$16.50 in cash per CANMARC Unit (the "Cash Alternative") or 0.7607
trust units of Cominar per CANMARC Unit (the "Unit Alternative"), with
an aggregate maximum of 16 million Cominar units available pursuant to
this option, subject to proration (the "Amended Offer").
Creation of a national champion
The acquisition of CANMARC will increase Cominar's asset base by
approximately 45% to over 30 million square feet, with an enhanced
footprint in the province of Québec and an ideal position to further
accelerate growth outside of Québec. Combined with Cominar's existing
properties, the addition of CANMARC's assets will create a unique
portfolio of high-quality properties including a number of landmark
buildings. Furthermore, Cominar's portfolio will benefit from enhanced
diversification among the office, retail and industrial asset classes.
The transaction will also significantly improve Cominar's capital
markets profile, making it the second-largest diversified REIT in
Canada. Accordingly, Cominar will benefit from increased liquidity and
stronger access to capital.
Given the scale of its existing operations in Québec, Cominar expects to
realize significant synergies from the combination of the two
entities. Cominar's knowledge of the key markets in which CANMARC
operates is expected to result in lower operating costs and improved
operating efficiencies, creating further synergies for Cominar.
The transaction is financially attractive to Cominar unitholders,
including through expected accretion to distributable income, funds
from operations and adjusted funds from operations. This accretion is
in turn expected to accelerate Cominar's plan to reduce its payout
ratio over time to 90%.
While the Amended Offer will require Cominar to temporarily increase its
leverage, Cominar intends to align its capital structure with its
long-term objectives over time.
"We are delighted to have achieved our objective of reaching a
negotiated transaction with the board of CANMARC," said Michel
Dallaire, Cominar's President and Chief Executive Officer. "The result
of our friendly and professional discussions is a win for unitholders
of both entities. Cominar's acquisition of CANMARC will create a true
national champion with a leading position in Québec, a significantly
improved capital markets profile and an ideal position for further
"We are pleased to support Cominar's Amended Offer and we recommend it
to our Unitholders," said Jim Beckerleg, President and Chief Executive
Officer of CANMARC. "Our primary objectives when we took CANMARC public
in May 2010 were to grow the REIT through acquisition and strong
organic growth, and to do so within the context of strong governance.
We believe that we accomplished those objectives. Our Unitholders have
benefited from our exceptional growth and we are proud of our track
record. We urge our Unitholders to accept Cominar's improved offer."
"I want to thank our employees who through their hard work and
dedication transformed CANMARC into a leading real estate player that
has delivered tremendous value to our Unitholders. Upon completion of
the transaction I will be supporting Cominar's management team during
the integration, and I know I can count on all of our employees to
continue to work hard and remain focused as the two REITs come
together," Mr. Beckerleg concluded.
Key Terms of the Amended Offer
The Cash Alternative
The all-cash purchase price under the Cash Alternative of the Amended
Offer now represents a premium of approximately 24% over the closing
price of $13.28 per CANMARC Unit on the TSX on November 25, 2011, the
last trading day prior to Cominar's announcement of its intention to
make the offer.
The consideration under the Cash Alternative provides CANMARC
Unitholders with certainty of value and immediate liquidity.
The Amended Offer is not subject to any financing condition.
The Unit Alternative
The Unit Alternative of the Amended Offer is available as an option for
CANMARC Unitholders who wish to elect not to receive cash consideration
and prefer the opportunity to participate in the future upside of
Cominar. Based on the exchange ratio offered under the Unit
Alternative and before any potential proration of the Unit
consideration, the monthly cash distributions to CANMARC Unitholders
electing the Unit Alternative are expected to increase by over 15%.
Conditions and expiry date
The Amended Offer is subject to customary closing conditions, including
the tender of that number of CANMARC Units which, together with the
CANMARC Units held by Cominar and the Cominar Acquisition Group,
represent at least 662/3% of the outstanding CANMARC Units, calculated on a fully-diluted basis.
No approval of the unitholders of Cominar is required in connection with
the proposed transaction. Terms of the Support Agreement were
unanimously approved by the trustees of both Cominar and CANMARC.
Furthermore, the Amended Offer is now open for acceptance until 3:00
p.m. (Toronto time) on January 27, 2012, unless the Amended Offer is
further extended or withdrawn.
CANMARC's support of the transaction
The Board of Trustees of CANMARC, after receiving fairness opinions from
its financial advisors, TD Securities and Canaccord Genuity Corp, and
in consultation with its legal advisors, has unanimously determined
(Messrs. James F. Miles and Frank W. Matheson recused themselves from
any deliberations of the CANMARC Board of Trustees concerning the
Amended Offer) that the consideration to be received by the CANMARC
Unitholders pursuant to the Amended Offer is fair, from a financial
point of view, to the CANMARC Unitholders (other than the Acquiring
Parties and their respective Affiliates), that it would be in the best
interests of CANMARC to support and facilitate the Amended Offer and
enter into the Support Agreement and recommend that CANMARC Unitholders
deposit their CANMARC Units to the Amended Offer.
The Support Agreement contains, among other things, a $30 million break
fee payable by CANMARC to the Cominar Acquisition Group, in certain
circumstances, including the acceptance of an unsolicited superior
proposal from a third party. Cominar has also been granted a right to
match period in respect of any superior proposal that may arise.
Under the terms of the support agreement, each of Cominar and CANMARC
agreed to set the record date for distributions on their respective
units for the month of January 2012 to January 31.
Details of the Amended Offer
Cominar has provided the depositary under the Amended Offer with the
required notification of variation and extension. Further details on
the Amended Offer will be included in a notice of variation and
extension, which will promptly be mailed to CANMARC Unitholders and
made available on SEDAR at www.sedar.com. The Board of Trustees of CANMARC will also send a notice of change to
its trustees' circular in the near future that will recommend that
CANMARC Unitholders tender their CANMARC Units to the Amended Offer and
will include the fairness opinions provided by CANMARC's financial
Tendering CANMARC Units to the Amended Offer
Tendering to the Amended Offer is straightforward and CANMARC
Unitholders should act now. Instructions on how to tender CANMARC Units
are included in the offering circular which was previously sent to
CANMARC Unitholders and is available on SEDAR.
CANMARC Unitholders with questions about the Amended Offer or how to
tender their CANMARC Units should contact Kingsdale Shareholder
Services Inc. ("Kingsdale"), as information agent under the Amended Offer. Kingsdale may be
contacted toll-free in North America at 1-877-657-5857, or collect from
outside North America at 416-867-2272, or by email at firstname.lastname@example.org.
Cominar will host a conference call on Monday, January 16, 2012 at 11:00
a.m. EST to discuss the details of the transaction. To access the
call, please dial 1-800-731-5319 (toll-free). An electronic copy of a
presentation summarizing the highlights of the transaction will be
available on Cominar's website in advance of the conference call. For
those unable to participate, a recorded version of the conference will
be available from Monday, January 16, 2012 at 2:00 p.m. to Monday,
January 23, 2012 by dialing 1-877-289-8525 followed by the code
Advisors and Lenders
BMO Capital Markets acted as Cominar's financial advisor and legal
counsel to Cominar was provided by Davies Ward Phillips & Vineberg
LLP. Osler, Hoskin & Harcourt LLP acted as legal counsel to CANMARC
and Fasken Martineau DuMoulin LLP provided legal counsel to CANMARC's
Special Committee.. TD Securities Inc. and Canaccord Genuity Corp.
acted as financial advisors to CANMARC's Special Committee.
National Bank of Canada, Bank of Montreal and Caisse Centrale Desjardins
have provided Cominar with a commitment to fund the entire
consideration payable for the CANMARC Units and back-stop post-closing
refinancing and liquidity requirement.
COMINAR PROFILE as at January 16, 2012
Cominar is the largest commercial property owner in the Province of
Québec. Cominar owns a real estate portfolio of 269 high-quality
properties, consisting of 53 office, 55 retail and 161 industrial and
mixed-use buildings that cover a total area of 21.0 million square feet
in the Greater Québec City, Montréal and Ottawa-Gatineau areas, as well
as in the Atlantic Provinces. Cominar's objectives are to deliver
growing cash distributions payable monthly to its unitholders and to
maximize unitholder value by way of integrated management and the
expansion of its portfolio.
CANMARC PROFILE as at January 16, 2012
CANMARC (www.canmarc.ca) is an unincorporated open-ended real estate investment trust
established pursuant to a declaration of trust under the laws of the
Province of Québec. Managed internally, CANMARC owns a portfolio of
Canadian income-producing commercial properties, consisting of retail
and office properties with certain industrial properties. In total,
CANMARC properties comprise approximately 8.8 million square feet of
commercial gross leasable area (approximately
9.4 million square feet including acquisitions which have been announced but have not yet closed)
and 464 multi-family residential units located in Québec, Atlantic
Canada, Western Canada and Ontario.
This press release may contain forward-looking statements with respect
to Cominar and CANMARC and their respective operations, strategy,
financial performance and financial condition. These statements
generally can be identified by the use of forward-looking words such as
"may", "will", "expect", "estimate", "anticipate", "intend", "believe"
or "continue" or the negative thereof or similar variations. The
actual results and performance of Cominar and CANMARC discussed herein
could differ materially from those expressed or implied by such
statements. Such statements are qualified in their entirety by the
inherent risks and uncertainties surrounding future expectations. Some
important factors that could cause actual results to differ materially
from expectations include, among other things, general economic and
market factors, increased indebtedness associated to the Amended Offer,
competition, changes in government regulation and the factors described
under "Risk Factors" in the Annual Information Form of Cominar and of
CANMARC, as applicable. The cautionary statements qualify all
forward-looking statements attributable to Cominar or CANMARC and
persons acting on its behalf. Unless otherwise stated, all
forward-looking statements speak only as of the date of this press
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST
For further information:
| For Cominar: |
| Mr. Michel Dallaire, P.Eng. |
President and Chief Executive Officer
Cominar Real Estate Investment Trust
| Mr. Michel Berthelot |
Executive Vice President and Chief Financial Officer
Cominar Real Estate Investment Trust
(418) 681-6300 ext. 2266
| For CANMARC: |
| James W. Beckerleg |
President and Chief Executive Officer
CANMARC Real Estate Investment Trust
| Gordon G. Lawlor, CA |
Executive Vice President, Chief Financial Officer
CANMARC Real Estate Investment Trust