-Active and Robust Strategic Alternatives Process Is Underway-
TORONTO, March 8, 2013 /CNW/ - KEYreit (TSX: KRE.UN) today announced
that its board of trustees (the "Board") unanimously confirmed its
recommendation that unitholders REJECT a revised offer dated March 7, 2013 (the "Revised Offer") from
Huntingdon Capital Corp. ("Huntingdon") at an unchanged and inadequate
price of $7.00 per unit.
"After a thorough consideration of the Revised Offer by the special
committee of the Board and receipt of its recommendation to the Board,
the Board remains unanimous," said Donald Biback, Chairman of the
Board. "The $7.00 per unit being offered is wholly inadequate from a
financial point of view and its terms and timing remain highly
opportunistic. The Board is confident that given sufficient time to
complete the value maximizing process that is underway, unitholders
will benefit from a superior proposal."
KEYreit also wishes to provide unitholders with an update regarding its
value maximizing process. As detailed below, KEYreit is engaged in an
active and robust value maximizing process and is confident that given
the time needed to complete the process, unitholders will be presented
with a proposal that will maximize unitholder value relative to the
Reasons to reject Huntingdon's offer
The special committee of the Board ("Special Committee") has undertaken
a full review of Huntingdon's formal Revised Offer as set out in the
Notice of Variation and Extension dated March 7, 2013. Following the
full review, the Special Committee recommended to the Board that
unitholders reject the Revised Offer. The Board unanimously agreed.
The following is a summary of the reasons for the rejection
recommendation of the Special Committee and the Board.
the Revised Offer remains financially inadequate:
the Special Committee and its advisors are undertaking an active and
robust process to identify strategic alternatives with the objective of
maximizing value for unitholders;
the Revised Offer significantly undervalues KEYreit and fails to
adequately compensate unitholders for KEYreit's assets and growth
KEYreit has successfully stabilized its property portfolio. Strong Q4
2012 results and strong financial outlook provide evidence of the
successful turnaround; and
independent research analysts agree that KEYreit is a turnaround story
and see value well in excess of $7.00 per unit. Dundee Capital Markets,
in a report dated February 4, 2013, said it believes "the takeout value
of KEYreit units is somewhere between $7.50 and $8.00" and that KEYreit
is "worth about $8.00" based on IFRS fair value;
the Revised Offer remains highly conditional and discretionary;
the Revised Offer is not a "permitted bid" under the KEYreit's
unitholder rights plan; and
all of KEYreit's trustees and officers have indicated an intention to REJECT the Revised Offer and NOT TENDER their units.
The recommendation of the Board to reject the Revised Offer confirms the
preliminary view of the Board as disclosed on March 1, 2013, that the
terms of the offer intended to be proposed by Huntingdon were
financially inadequate. The Board's preliminary view preceded the
issuance of Huntingdon's Notice of Variation and Extension and was
based on Huntingdon's announced proposal, which provided for no
increase in the $7.00 per unit takeover price.
KEYreit will in the coming days file and mail a Notice of Change to its
original trustees' circular to unitholders with full details regarding
the Board's recommendation.
Update on the strategic alternatives process
As previously disclosed, the Special Committee was formed following the
announcement of Huntingdon's original partial takeover bid (the
"Original Partial Offer"). The Special Committee's purpose is, among
other things, to consider possible value maximizing alternatives. Given
the determination that the Original Partial Offer was partial, highly
coercive and financially inadequate and that it was not the best time
from a value perspective to sell KEYreit, the Special Committee
determined that it would consider offers for 100% of KEYreit but would
focus its value maximizing process on transactions that would deliver
the most long-term value and the highest total returns to unitholders.
Following the announcement on February 26, 2013 that Huntingdon was
proposing to revise its bid to be for 100% of the units, the Special
Committee re-convened on February 27, 2013 to consider the proposal
even though the full details of the proposal were not yet available.
The Special Committee determined that a bid for 100% of the units was
fundamentally and qualitatively different than the Original Partial
Offer, in the sense that it addressed many of the coercive elements of
the partial bid that concerned the Special Committee and the Board.
Accordingly, the Special Committee determined that it was appropriate
to expand its value maximizing process to actively seek offers for 100%
of the units and directed its financial advisor accordingly.
Based on the results of the value maximizing process to date and the
views of its financial advisor, the Special Committee is confident that
given the time to complete the process, unitholders will benefit from a
superior proposal to the Revised Offer in all material respects.
Huntingdon's baseless, misleading and irresponsible statements
Huntingdon's recent open letter made a number of public statements about
KEYreit that are clearly baseless, misleading and irresponsible, such
as the suggestion that KEYreit is a Ponzi scheme and that the KEYreit
Board adopted a "just say no" defense.
KEYreit urges unitholders not to be distracted by Huntingdon's attempt
to discredit KEYreit's dedicated Board and management team and shift
the focus away from the fact that the Revised Offer is wholly
inadequate and undervalues your investment.
Huntingdon mischaracterizes the Unitholder Rights Plan vote
Huntingdon mischaracterizes the upcoming vote on the Unitholder Rights
Plan (the "Rights Plan") as "an attempt by the board of trustees to
take away your right to choose." This is a false statement. In fact, it
is Huntingdon that wants to take away the right of unitholders to
There was no opportunity for a unitholder vote on February 8, 2013 when
the Board adopted the Rights Plan as an emergency response to
Huntingdon's coercive and undervalued Original Partial Offer. In order
to provide unitholders with a say, the Board determined to call a
special meeting of unitholders for March 26, 2013.
The evidence that Huntingdon does not want unitholders to have their say
is clear. Huntingdon has applied to the Ontario Securities Commission
to end the rights plan after having failed, on jurisdictional grounds,
with a similar and highly inappropriate application to the BC
Securities Commission. Huntingdon's BCSC application squandered KEYreit
resources wastefully and unnecessarily and was initiated with complete
disregard for unitholders' best interests.
KEYreit has previously mailed to unitholders an information circular and
cover letter with regard to the unitholders' meeting and the Rights
Plan vote. These documents are available on KEYreit's website www.keyreittruevalue.com and at www.sedar.com. KEYreit will also be mailing to unitholders a Notice of Change to the
Trustees' Circular outlining the reasons to REJECT the Revised Offer. Unitholders should carefully review the Rights Plan
circular and cover letter as supplemented by the Notice of Change to
the Trustees' Circular which will be mailed shortly and then VOTE FOR the Rights Plan to defend against Huntingdon's Revised Offer.
If you have tendered your units, you should withdraw them immediately
Unitholders who have tendered units and who wish to obtain advice or
assistance in withdrawing their units are urged to contact their broker
or Kingsdale Shareholder Services Inc., the information agent retained
by KEYreit, at 1-888-518-1562. Kingsdale is also available to respond
to enquiries regarding the trustees' circular and the information
KEYreit (TSX: KRE.UN) is Canada's premier small-box retail property
owner with 226 properties in nine provinces across Canada. KEYreit's
properties are well located and geographically diverse across Canada
with the majority of all properties containing long-term quadruple net
To find out more about KEYreit (TSX: KRE.UN), visit our website at www.keyreit.com.
This press release contains certain information or statements that may
constitute forward-looking information within the meaning of securities
laws, which reflect the current view of KEYreit with respect to
KEYreit's objectives, plans, goals, strategies, future growth, results
of financial and operating performance and business prospects and
opportunities. In some cases, forward-looking information can be
identified by the use of terms such as "may", "will", "should",
"expect", "plan", "anticipate", "believe", "intend", "estimate",
"forecast", "predict", "potential", "continue" or other similar
expressions concerning matters that are not historical facts. In
particular, forward-looking information included in this press release
includes, but is not limited to, statements with respect to KEYreit's
strategic alternative process, KEYreit's turnaround including its
ability to lease vacant property units, execute planned acquisitions,
collect minimum rents, diversify its tenant base, undertake land
intensification projects, refinance loans and mortgages at their
maturity, complete accretive acquisitions, and maintain or grow monthly
cash distribution levels, and also with respect to the timing of such
events. Forward-looking information should not be read as guarantees of
future events, performance or results, and will not necessarily be
accurate indications of whether, or the times at which, such events,
performance or results will be achieved. All of the statements and
information in this press release containing forward-looking
information are qualified by these cautionary statements.
Forward-looking statements are based on information available at the
time they are made, underlying estimates and assumptions made by
management and management's good faith belief with respect to future
events, performance and results, and are subject to inherent risks and
uncertainties surrounding future expectations generally which could
cause actual results to differ materially from what is currently
expected. Such risks and uncertainties include, but are not limited to
KEYreit's reliance on key tenants, risks associated with investment in
real property, competition, reliance on key personnel, financing and
refinancing risks, distributions, environmental matters, tenant risks,
risks related to current economic conditions and other risk factors
more particularly described in KEYreit's most recent Annual Information
Form available on SEDAR at www.sedar.com. Additional risks and uncertainties not presently known to KEYreit or
that KEYreit currently believes to be less significant may also
adversely affect KEYreit.
KEYreit cautions readers that the list of factors is not exhaustive and
that should certain risks or uncertainties materialize, or should
underlying estimates or assumptions prove incorrect, actual events,
performance and results may vary significantly from those expected.
There can be no assurance that the actual results, performance, events
or activities anticipated by KEYreit will be realized or, even if
substantially realized, that they will have the expected consequences
to, or effect on, KEYreit. The reader should not place undue importance
on forward-looking information and should not rely upon this
information as of any other date.
KEYreit disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new information,
future events or otherwise, except as required under applicable
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, firstname.lastname@example.org
Olena Lobach 416-649-8009, email@example.com