RICHMOND, BC, Aug, 12, 2014 /CNW/ - Huntingdon Capital Corp. (the "Corporation" or "Huntingdon") (TSX: HNT) (TSX: HNT.DB) (TSX: HNT.WT) announced today that the Corporation has entered into an arrangement agreement (the "Arrangement Agreement") with Slate Capital Corporation, an affiliate of Slate Properties Inc. ("Slate"), at an effective price of CDN$13.40 per share in cash.
Pursuant to the Arrangement Agreement, Slate will acquire all of the issued and outstanding common shares (the "Common Shares") of Huntingdon by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement") for consideration of CDN$13.25 in cash per Common Share and a one-time CDN$0.15 per Common Share special dividend to be paid following the announcement of the Arrangement.
As part of the Arrangement, Slate will also acquire all unexercised common share purchase warrants of Huntingdon that are subject to Huntingdon's existing warrant indenture (the "Huntingdon Warrants") for consideration equal to CDN$13.25 in cash less the exercise price for such Huntingdon Warrants.
Based on the consideration being paid, the transaction values Huntingdon at approximately $210 million. The effective consideration per Common Share represents an approximate 13% premium to the CDN$11.85 closing price of Huntingdon's Common Shares on the Toronto Stock Exchange on August 11, 2014, the last trading day prior to this announcement, and a premium of approximately 13% to the closing price of CDN$11.88 on February 18, 2014, the last trading day prior to Huntingdon's announcement that it had established a special committee to review all available strategic alternatives to enhance shareholder value.
The proposed sale of Huntingdon to Slate follows a full review of all the strategic alternatives available to the Corporation including a robust sale process. "After an exhaustive strategic review aimed at optimizing shareholder value for Huntingdon's unique platform and highly-skilled management team, we believe that the proposed transaction with Slate results in the best risk-adjusted outcome for our shareholders," said Matt Goldfarb, chair of the special committee. Mr. Goldfarb also added: "The Company's primary objective since the 2009 merger of IAT Air Cargo Facilities Income Fund and Huntingdon Real Estate Investment Trust has been to deliver superior risk-adjusted returns to our shareholders. Today's announcement represents the culmination of a series of value enhancing actions taken by our best-in-class management team since 2009 which has resulted in a total return of approximately 217% and an IRR of 29.3% to shareholders since the merger."
The Boards of Directors of both Huntingdon and Slate have unanimously approved the transaction. The Board of Directors of Huntingdon, after consultation with its financial and legal advisors and based, in part, upon the unanimous recommendation of an independent special committee of the Board of Directors of Huntingdon, has determined unanimously that the Arrangement is fair to, and in the best interest of Huntingdon and its securityholders. Trimaven Capital Advisors Inc. has provided an opinion that the transaction is fair, from a financial point of view, to Huntingdon's shareholders and Huntingdon's Board of Directors unanimously recommends that the Huntingdon securityholders vote in favour of the Arrangement.
The Arrangement Agreement provides for, among other things, (i) a non-solicitation covenant on the part of Huntingdon, subject to customary "fiduciary out" provisions that entitle Huntingdon to consider and accept a superior proposal, (ii) a right in favour of Slate to match any superior proposal, and (iii) the payment to Slate or to Huntingdon of a termination payment of CDN$4.5 million in certain circumstances. Closing of the transaction is subject to customary conditions, including approval by greater than two-thirds of the holders of Huntingdon Common Shares and Huntingdon Warrants, voting together as a class, and the receipt of court and necessary regulatory approvals.
Holders of approximately 24.9% of outstanding Huntingdon Common Shares and approximately 2.8% of outstanding Huntingdon Warrants, including all of Huntingdon's directors, officers, and certain other major shareholders, have signed voting support agreements pursuant to which they have agreed to vote in favour of the Arrangement.
Full details of the transaction will be included in an information circular to be mailed to Huntingdon securityholders in accordance with applicable securities laws. The transaction is expected to close on or before October 22, 2014. Huntingdon also announced that it has declared a special cash distribution of CDN$0.15 per Huntingdon Common Share. The record date for this special dividend will be August 22, 2014, with a payment date of August 29, 2014. The dividend will be considered an eligible dividend for tax purposes. Upon payment of the CDN$0.15 per Common Share special cash distribution, Huntingdon's regular monthly dividend payments will cease.
Trimaven Capital Advisors Inc. and Evercore Partners Canada Ltd. acted as financial advisors to Huntingdon with regards to the strategic review process. Borden Ladner Gervais LLP is acting as legal counsel to Huntingdon. BMO Capital Markets acted as financial advisor to Slate and McCarthy Tétrault LLP served as a Slate's legal counsel.
Sale of Vancouver Air Cargo Portfolio
Huntingdon is also pleased to announce that it has entered into a binding agreement to sell its interests in the Vancouver Air Cargo Portfolio to the Vancouver Airport Authority ("VAA"). Based on the terms of the agreements, gross sale proceeds will be CDN$39.5 million, and Huntingdon will realize net cash proceeds of CDN$16.2 million. The Air Cargo Portfolio is comprised of eleven (11) properties representing 0.7 million sf of gross leasable area located at the Vancouver International Airport. One of the properties is a joint venture in which Huntingdon maintained a 50% managing interest. The properties are subject to ground-leases with VAA with expiries ranging from 2016 to 2029. The weighted average ground-lease term remaining is 8.2 years.
The gross sale proceeds to Huntingdon amount to CDN$37.3 million after accounting for the joint venture property. This transaction will also involve the repayment of CDN$19.9 million of mortgage debt that has a weighted average annual cost of 5.60%. Total transaction costs including defeasance and legal fees amount to CDN$1.2 million. As part of the transaction, Huntingdon will be released from the site restoration obligations associated with the ground-leases. Accordingly, CDN$2.6 million of asset retirement obligations will be credited to shareholders' equity. The transaction is expected to close on August 12, 2014. Following closing of the transaction, Huntingdon will be retained as a manager of the Air Cargo Portfolio on a transitionary basis to assist VAA with internalizing management.
Sandeep Manak, President and CEO commented, "We are very pleased to announce a transaction that recognizes the value for the Vancouver Air Cargo Portfolio – unique assets in the aviation infrastructure market. I would like to thank Huntingdon's employees who have helped make the Vancouver air cargo portfolio a success".
About Huntingdon Capital Corp.
Huntingdon is a real estate operating company listed on the TSX (Common Shares: HNT; Debentures: HNT.DB; Warrants: HNT.WT). Huntingdon owns and manages a portfolio of 35 industrial, office, retail and aviation-related properties throughout Canada that have a total gross leasable area of 2.7 million square feet. In addition, Huntingdon owns a 30.0% interest in FAM REIT (TSX: F.UN, F.WT) and manages, on behalf of FAM REIT, a portfolio of 28 industrial, office, and retail properties throughout Canada that have a gross leasable area of 1.8 million square feet.
About Slate Properties Inc.
Slate Properties Inc. is a Toronto-based commercial real estate investor and asset manager. Slate's founding partners have nearly two decades of experience in the industry managing complex real estate transactions in domestic and international markets. Since 2005, Slate Properties and its affiliates have acquired over C$2.5 billion of commercial real estate assets across North America. Slate Properties Inc. and its affiliates currently co-invest in and manage various investment vehicles, including Slate Retail REIT (TSX: SRT.UN/SRT.U), an open-ended investment trust that is listed on the Toronto Stock Exchange. Slate and its affiliates also own and manages a portfolio of Canadian office properties with domestic institutional equity. For more information, visit www.slateproperties.ca
Certain statements contained in this press release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and costs to Huntingdon if the Arrangement is not completed, including the adverse effects on Huntingdon's ability to execute another transaction or stand-alone business strategy; Huntingdon's obligation to pay a break fee if the Arrangement is terminated under certain circumstances, which might deter other parties from making a competing offer to acquire Huntingdon; the investment of executive management time to the Arrangement, which may delay or prevent Huntingdon from exploiting business opportunities that may arise pending completion of the Arrangement; the restrictions on the conduct of Huntingdon's business prior to completion of the Arrangement, which may delay or prevent Huntingdon from exploiting business opportunities that may arise pending completion of Arrangement; the interests of management and other related parties in the Arrangement, which may differ from those of Huntingdon shareholders in certain respects; the risks related to the approval of applicable governmental authorities; risks related to necessary court and stock exchange approvals; risks related to the satisfaction or waiver of certain other conditions contemplated by the Arrangement; general and local economic and business conditions; the financial condition of our tenants; our ability to refinance maturing debt; leasing risks, including those associated with the ability to lease vacant space; and interest rate fluctuations. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations including, but not limited to, the risks detailed from time to time in Huntingdon's filings with Canadian provincial securities regulators, including its most recent annual information form and management's discussion and analysis. Huntingdon cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and Huntingdon does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by applicable law.
The Toronto Stock Exchange has not reviewed nor approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.
SOURCE: Huntingdon Capital Corp.
For further information: Sandeep Manak, President and Chief Executive Officer, Tel: (604) 249-5113, Fax: (604) 249-5101, Email: [email protected]