MONTREAL, April 29, 2014 /CNW Telbec/ - OneCap Investment Corporation, a Capital Pool Company, ("OneCap") (TSXV: OIC.P) is pleased to announce that it has accepted on April 24, 2014 an offer to buy all the outstanding Class A shares (the "Class A Shares") of 8432155 Canada Inc. ("Canada Inc.") which are indirectly controlled by Messrs. Daniel Dorey, Pierre Setlakwe, Jean-Guy Lambert and Pierre Bonin, who are all directors of OneCap (the "Vendors"), subject to certain conditions (the "Offer"). All the redeemable Class F shares of Canada Inc. are indirectly controlled by Messrs. Jean-Guy Lambert, Daniel Dorey, Pierre Albert Jean and Jean Desmarais who are directors of OneCap.
Subject to minority shareholder approval, the ability of OneCap to raise sufficient equity capital and the approval of the TSX Ventures Exchange (the "Exchange") acquisition by OneCap from the Vendors of all the Class A Shares pursuant to the terms of the Offer would constitute the Qualifying Transaction (the "Qualifying Transaction") of OneCap pursuant to Policy 2.4 - Capital Pool Companies ("Policy 2.4").
Terms not otherwise defined herein will have the meanings set out in the Corporate Finance Manual of the Exchange.
OneCap has identified a development opportunity for its Qualifying Transaction in a potential data centre in Winnipeg for Manitoba Telecom Services Inc. ("MTS") in the beginning of 2013.
Considering that OneCap was not allowed under Policy 2.4 of the Exchange to make a deposit on a second potential property, Mr. Daniel Dorey, Chairman of the Board of Directors of OneCap, has offered to incubate that potential project with MTS in OneCap Financial Corporation ("Financial"), a corporation controlled by Mr. Dorey.
Financial signed a Memorandum of Undertaking on March 7, 2013 (the "March 7, 2013 MOU") with MTS for the purpose of acquiring land in Winnipeg, build a data center and rent it to MTS.
Financial, pursuant to the terms of the March 7, 2013 MOU made a purchase offer dated May 21, 2013 with respect to undeveloped land located in Winnipeg, Manitoba (the "Data Centre Property"), which offer was amended on June 21, July 24, August 13 and November 28, 2013 (the "Purchase Offer").
On August 19, 2013, Financial assigned its rights in the Purchase Offer and the March 17, 2013 MOU to Canada Inc.
Canada Inc. was incorporated on August 19, 2013 by some of the directors of OneCap in order to conclude, and has concluded with MTS as of December 20, 2013, a construction memorandum of undertaking and offer to lease for new turnkey data center on the Data Centre Property (the "Construction and Lease Offer").
Pursuant to the Construction and Lease Offer, Canada Inc. must raise about $53 million in equity and debt financing in order to finance the purchase of the land and the construction of a data center on the Data Centre Property (the "MTS Data Centre").
- The MTS Data Centre is being designed to meet Uptime Institute's Tier III certification, along with other reliability enhancements.
- The total building space will be approximately 64,000 sf, inclusive of approximately 25,000 sf of raised floor to accommodate server racks, with an initial critical power load of 3 MW and connected power up to 7.5 MW.
- The MTS Data Centre location is a 6.3 acre site that has sufficient land to expand the data centre up to twice the initial size and connected power. OneCap has not assigned any value to the potential development of Phase II expansion.
On December 20, 2013, Canada Inc., as owner, has signed an agreement with a design-builder, with respect to the building of the MTS Data Centre on the Data Centre Property (the "Building Agreement") on a fixed price basis. Such design-builder has over 20 years of experience specializing in the design and construction of data centres. The Building Agreement is bonded as to 50% for performance and 50% for labour and materials.
On January 2, 2014, Canada Inc. incorporated 6844244 Manitoba Ltd as a wholly owned subsidiary ("Manitoba Ltd") to hold title to the Data Centre Property.
Canada Inc., as landlord, has signed on January 16, 2014 with 6842811 Manitoba Inc., a wholly owned subsidiary of MTS, as tenant, and MTS, as indemnitor, a fifteen year lease with respect to the MTS Data Centre (the "Lease").
On January 28, 2014, all the shareholders of Canada Inc. have given OneCap a written commitment that they will provide their best commercially reasonable efforts to enable OneCap to acquire a 50% in the MTS Data Centre through the acquisition of all the outstanding shares of the share capital of Canada Inc.
OneCap must acquire an interest of at least 50% in the MTS Data Centre in order that such acquisition qualifies as a "Qualifying Transaction" pursuant to Policy 2.4.
On February 10, 2014, Manitoba Ltd closed the purchase of the Data Centre Property.
On February 10, 2014, Manitoba Ltd borrowed $3,000,0000 from FAM Management Limited Partnership ("FAM LP") secured by a first mortgage for the same amount on the Data Centre Property (the "Mortgage").
On March 27, 2014, Canada Inc. and FAM LP have executed a letter agreement (the "Letter Agreement") confirming the terms of the $3,000,000 loan to Manitoba Ltd, establishing the required budget for the purchase of the land, the construction of the building and other improvements for the data center and related soft costs and applicable taxes at approximately $53,000,000, providing for the creation of FAM–OneCap Data Centre Limited Partnership ("Data LP") and FAM–OneCap Data Centre GP Inc., as general partner, in which Canada Inc. and FAM LP shall each have a 50% interest. Furthermore, the Letter Agreement provides, in particular: (i) for the discharge of the Mortgage; (ii) for FAM LP providing to Canada Inc. a loan in the maximum amount of $6,500,000 (the "Loan facility"), $3,000,000 having been already advanced; (iii) for a capital contribution of $9,491,750 to Data LP by FAM LP to maintain its ownership proportion of 49.95% as a limited partner; (iv) for a capital contribution to Data LP by Canada Inc. of $3,491,750 and all its interest in the MTS Data Centre, including the Data Centre Property, the Lease, the Building Agreement, the shares of Manitoba Ltd and the Construction and Lease Offer, as well as all the goodwill and rights related thereto (collectively, the ("Non-Cash Assets") to maintain its ownership proportion of 49.95% as a limited partner. FAM LP acknowledged that the fair market value of the Non-Cash Assets was evaluated at $6,000,000.
As at April 3, 2014, Manitoba Ltd signed a loan offer with Desjardins Group with respect to a construction loan and long term financing of $39,000,000 (the "Desjardins Financing Agreement").
Altus Group Limited has issued on April 7, 2014 a valuation for the MTS Data Centre based on the Lease at $63,000,000, before any construction change orders (which have already been provided for through the current equity contribution) initiated by MTS, which could increase the Base Rent and therefore increase proportionally said valuation.
On April 22, 2014, FAM Real Estate Investment Trust issued a press release describing its participation in the MTS Data Centre through FAM LP.
At a 50% ownership interest, Canada Inc.'s equity investment is projected to generate $2.9 million of Net Operating Income, $2.0 million of Adjusted Funds From Operation, and $1.2 million of free cash flow after deducting mortgage principal repayments in the first full year following rent commencement in mid-2015.
The Construction and Lease Offer, the Building Agreement, the Lease, the Desjardins Financing Agreement and the Letter Agreement provide for the assignment of the shares of Canada Inc.
The acquisition by OneCap of all the outstanding shares of Canada Inc. would constitute a "related party" transaction pursuant to Policy 2.4 and Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI – 61-101") requiring minority shareholder approval.
Pursuant to the terms of the Offer, OneCap will, for a total consideration of $12 million payable on October 16, 2014, at the latest:
- Reimburse the Loan facility in full;
- Redeem all the outstanding Class F shares of Canada Inc.; and
- Purchase all the outstanding Class A Shares fully in cash or partly in cash and up to $1 million in common shares of OneCap.
After closing of the Qualifying Transaction, the only security on the Data Centre Property will be the Desjardins Financing Agreement.
Upon completion of the Qualifying Transaction, the Resulting Issuer is expected to meet the minimum requirements of the Exchange for issuers in the real estate sector.
The current directors of OneCap, Messrs. Daniel Dorey, Pierre Albert Jean, Pierre Bonin, Pierre Setlakwe, Jean Desmarais and Jean-Guy Lambert will be insiders of the Resulting Issuer.
Daniel Dorey – Chairman of the Board
Daniel Dorey possesses over 20 years of experience in real estate acquisition, integration of real estate assets and real estate corporations as well as asset management and real estate financial structuring. Mr. Dorey is Senior Vice President (Real Estate) Canada Lands Company since July 2013 and also President of OneCap Financial Corp., a financial services company involved in real estate investments and services since 2003. Previously, he was President of Oxford Quebec from 1995 to 2003. Prior to Oxford, Mr. Dorey founded Koral Properties in 1991, which was acquired by Oxford Properties Group in 1996. He has also worked for Trust General's Institutional-Commercial-Industrial property brokerage division, for Edgecombe Realty Advisors and for Mercantile Bank-National Bank. Mr. Dorey sits on the board of the Youth Protection Agency Foundation (Fondation CJM). He is past chairman, Urban Development Institute; past member of the board of the Montréal Economic Institute; member of the Quebec Board of Directors, World Presidents' Organization (WPO); and previous member of the Quebec Board of Directors of the Young Presidents' Organization (YPO). He holds an MBA from McGill University (1985), a Bachelor's degree in Business Administration from Bishop's University (1983) as well as a real estate brokerage licence.
Pierre Albert Jean - Chief Financial Officer and Director
Pierre Albert Jean is the President of Construction Albert Jean Ltd., a family business established since 1927 working in the construction industry. In 1991 he graduated from Concordia University with a Bachelor's Degree in Civil Engineering and became a member of the Ordre des ingénieurs du Québec in 2001. On his arrival in the family business in 1991, Mr. Jean acted as a Project Manager. In 1994, he was then appointed as Vice-President of Operations and since 2000, he is the President and Chief Operating Officer of Construction Albert Jean Ltd. He is also past Chairman of the Board of Directors of the « Club Richelieu Montreal ». During 8 years, he was a dedicated member of the Board of Directors of the « Young President Organisation – Quebec Chapter » and became its President in 2010. Presently, he is vice-president of the Board of Directors of « Accueil Bonneau ».
Pierre Setlakwe - Secretary and Director
Pierre Setlakwe obtained a B.C.L. and LL.B (Law) from McGill University in 1986 and a Bachelor of Science (Political Science) from University of Montreal in 1982. Mr. Setlakwe participates to various real estate law seminars, including the 2005 Continuing Education course on Commercial Leasing at Georgetown University, Faculty of Law. Since obtaining the Quebec Bar in 1987, he has continuously practiced commercial law within private law firms, and since 2012 joined De Grandpré Chait LLP. Mr. Setlakwe is featured as a recommended lawyer in real estate since the 2011 edition of Chambers Global's The World's Leading Lawyers for Business. Mr. Setlakwe is specialized in real estate law and urban development. He was a member of the Board and President of the Caisse Populaire de Rivière-des Prairies from 1987 to 1994. Mr. Setlakwe is a founding member in 1994 of the Société de développement économique Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est and is up-to-date still a member of its Board. From 2007 to 2011, Mr. Setlakwe was a Board member of the Urban Development Institute of Quebec.
Jean Desmarais – Vice President and Director
Jean Desmarais is the President and Chief Executive Officer of Amseco Exploration Ltd. Previously, he was Vice President at Desjardins Securities and an investment advisor at Nesbitt Burns. Mr. Desmarais has worked 18 years in the financial sector.
Pierre Bonin – Vice President and Director
Pierre Bonin is currently Chief Information Officer at Videotron since March 3, 2014 and has been actively involved for the past nine years in the Data Center industry through various investments and ventures. Prior to 2005, Mr. Bonin held various executive positions in the Telecommunication Industry such as Executive Vice-President and CIO at Microcell Telecommunications Inc. (FIDO) (from January 2001 to May 2005), Vice-President Information Technology as well as Vice-President Finance and Administration at Bell Canada. Mr. Bonin is a member of the Board of Directors and chairman of the audit committee of TelcoBridges, a telecom equipment manufacturer, and member of the advisory Board of iMetrik, a Machine to Machine solution provider. Mr. Bonin graduated in Mathematics and Computer Science from the Université de Sherbrooke (1987) and subsequently received an MBA from HEC Montréal (1997). He holds the designation of Chartered Director (C. Dir.) from the Collège des administrateurs de sociétés, Université Laval and The Directors College of McMaster University.
Jean-Guy Lambert –, Director
Jean-Guy Lambert, MBA, served as Chief Executive Officer and President of Dacha Capital Inc, an investment company, from September 1996 until March 2010. Mr. Lambert has more than thirty-five years of business experience in the areas of corporate management, investment banking and financial consulting. Mr. Lambert is currently director and was director and officer of several reporting issuers in Canada. He has listed a number of private companies on Canadian and US Exchanges through IPO or RTO. Mr. Lambert holds a Master's degree in Business Administration from the University of Sherbrooke.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Caution Concerning Forward-Looking Statements
This press release may contain forward-looking statements with respect to OneCap. These statements generally can be identified by use of forward looking words such as "projected to", "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of OneCap 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, competition, changes in government regulation and the factors described from time to time in the documents filed by OneCap with the securities regulators in Canada. The cautionary statements qualify all forward looking statements attributable to OneCap and persons acting on their behalf. Unless otherwise stated or required by applicable law, all forward-looking statements speak only as of the date of this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: OneCap Investment Corporation
For further information: Mr. Daniel Dorey, Chairman of the Board, Tel: 514-839-7801