Huntingdon Partial Bid Wholly Inadequate and Unitholders Strongly Urged
to TAKE NO ACTION at This Time
TORONTO, Feb. 11, 2013 /CNW/ - KEYreit (TSX : KRE.UN) announced today
that the board of trustees has formed a special committee consisting of
independent trustees John Jakolev, chairman of the special committee,
and Donald Biback and George Schott to consider and evaluate the
unsolicited partial take-over bid launched on January 31, 2013 by
Huntingdon Capital Corp. ("Huntingdon") to purchase up to approximately 45% of the trust units of KEYreit for
cash consideration of $7.00 per unit (the "Huntingdon Partial Bid"). The special committee has retained BMO Capital Markets as its
financial advisors, Norton Rose Canada LLP as its legal counsel and
Kingsdale Shareholder Services Inc. as its unitholder services advisor
to assist in these matters.
The preliminary view of the special committee is that the Huntingdon
Partial Bid is wholly inadequate, coercive, highly opportunistic and
fails to adequately compensate unitholders for the underlying value of
KEYreit's assets and growth opportunities. The Huntingdon Partial Bid
seeks to gain effective control of KEYreit for an inadequate offer
price which represents only a 13% premium to the closing price per unit
of $6.18 on the TSX on January 28, 2013 (the day before the public
announcement of Huntingdon's intent to launch the Huntingdon Partial
Bid). Furthermore, the Huntingdon Partial Bid contains numerous
conditions providing Huntingdon significant discretion as to whether or
not to acquire units tendered to the Huntingdon Partial Bid.
Unitholders should also understand that they may not be able to sell all
of the units that they tender to the Huntingdon Partial Bid. If more
than 6,628,940 units are deposited, the units to be purchased under the
Huntingdon Partial Bid will be taken up and paid for on a pro-rata
basis according to the number of units deposited by each unitholder.
Since Huntingdon offered to purchase only up to 6,628,940 units and
already owns 814,000 units, 7,442,939 units will not be purchased by
Huntingdon. If the Huntingdon Partial Bid is successful and Huntingdon
purchases all 6,628,940 units, Huntingdon will hold a controlling
ownership interest of over 50% while the resulting public float of
units will be diminished to less than 33% of KEYreit's total units
issued and outstanding, thereby potentially having an adverse effect on
the liquidity and future value of units.
Unitholders are strongly urged to TAKE NO ACTION with respect to the Huntingdon Partial Bid until the special committee
has completed its review process, at which time the board will
communicate its recommendation to unitholders by way of press release.
Unitholders who have any questions should contact Kingsdale Shareholder
Services Inc. at 1-888-518-1562 toll-free in North America,
1-416-867-2272 outside of North America (collect calls accepted) or by
email at firstname.lastname@example.org.
The board of trustees also announced today that it has approved the
adoption of a unitholder rights plan, effective immediately. The rights
plan is intended to ensure that, in the context of the Huntingdon
Partial Bid, the board and unitholders have sufficient time to
appropriately evaluate the Huntingdon Partial Bid and, if determined
appropriate, identify, develop and negotiate alternatives to maximizing
unitholder value. The rights plan also seeks to ensure the fair
treatment of all unitholders in connection with any take-over bid and
to protect unitholders from the ability of any person to obtain
effective control of KEYreit through coercive means.
In accordance with the rights plan, the board has authorized the
issuance of one right per unit outstanding at the record time of 5:01
p.m. on February 8, 2013, and the issuance of one right for each
additional unit issued after the record time. The rights will become
exercisable if a person, together with its associates and affiliates
and any others acting jointly or in concert with such person, acquires
beneficial ownership of units which (when aggregated with its current
holdings of units) total 15% or more of the outstanding units, or if a
person announces its intent to commence a take-over bid for units that
is not a "permitted bid" (in each case, a "flip-in event"). A
permitted bid is a take-over bid that is made to all unitholders, is
made for all of the issued and outstanding units, remains open for
acceptance for at least 60 days, and is accepted by at least 50% of the
units held by independent unitholders. The Huntingdon Partial Bid is
not a permitted bid under the rights plan.
Upon the occurrence of a flip-in event, each right would entitle the
holder thereof (other than the person triggering the flip-in event and
its affiliates, associates and joint actors), upon exercise, to
purchase additional units at a significant discount to the market price
of the units at such time. The board, acting in good faith, may waive
the application of the rights plan or defer the time when the rights
The board has determined to defer the "separation time" for rights under
the rights plan in connection with the Huntingdon Partial Bid to a
later date to be determined by the board.
A copy of the rights plan will be available under KEYreit's profile on
SEDAR at www.sedar.com. It will also be filed with the Toronto Stock Exchange and remains
subject to acceptance by the Toronto Stock Exchange.
For further information:
KEYreit unitholders, please contact:
Kingsdale Shareholder Services Inc.
1-888-518-1562 toll-free in North America
1-416-867-2272 outside of North America (collect calls accepted)
Media, please contact:
Longview Communications Inc.
Alan Bayless 604-694-6035, email@example.com
Olena Lobach 416-649-8009, firstname.lastname@example.org