TransGlobe Apartment REIT Announces its Intention to Solicit Consents to Permit the Early Redemption of its 5.40% Extendible Convertible Unsecured Subordinated Debentures at the Closing of Previously Announced Privatization

TORONTO, May 15, 2012 /CNW/ - TransGlobe Apartment Real Estate Investment Trust (TSX: TGA.UN) (TSX: TGA.DB) (the "REIT") today announced that it plans to commence a consent solicitation (the "Consent Solicitation") to obtain approval for certain proposed amendments (the "Proposed Amendments") to the trust indenture (the "Indenture") governing its 5.40% Extendible Convertible Unsecured Subordinated Debentures due September 30, 2018 (the "Debentures").  The Proposed Amendments, if they become effective, would permit the REIT to redeem any outstanding Debentures for cash at a redemption price equal to 101% of the aggregate principal amount of the Debentures being redeemed, plus accrued interest to, but excluding, the date of redemption, upon the occurrence of a Change of Control (as defined in the Indenture) which shall occur coincident with the closing of the previously announced privatization transaction with Starlight Investments Ltd. and PD Kanco LP (collectively, "Starlight"), and on the other terms and conditions to be set out in the consent solicitation statement relating to the Consent Solicitation (the "Consent Solicitation Statement"), which the REIT intends to file on SEDAR and distribute in due course.

Pursuant to the acquisition agreement entered into on April 26, 2012, (the "Acquisition Agreement") in connection with the previously announced privatization (the "Transaction") of the REIT by Starlight, the REIT has agreed to use commercially reasonable efforts to cooperate with Starlight to effect the Consent Solicitation.  The closing of the Transaction is scheduled to occur on June 29, 2012 and is subject to the satisfaction or waiver of those conditions specified in the Acquisition Agreement.

The Proposed Amendments require the prior approval of the TSX and the valid consent (each such consent, a "Consent") of the holders of not less than 66 ²/₃% of the aggregate principal amount of the outstanding Debentures as of the record date for the Consent Solicitation, which is expected to be 5:00 p.m. (Eastern time) on May 14, 2012 (the "Requisite Consents"). If the Proposed Amendments become effective, it is expected that concurrently with the closing of the Transaction, the REIT will redeem any Debentures that then remain outstanding.

The REIT expects to offer holders of Debentures ("Holders") that deliver a Consent that is accepted by the REIT a consent fee equal to (i) 50 basis points (equivalent to $5 per $1,000 principal amount of Debentures) (the "Early Consent Fee") in the event that such Consent is delivered prior to 5:00 p.m. (Eastern time) on June 1, 2012 or (ii) 25 basis points (equivalent to $2.50 per $1,000 principal amount of Debentures) (the "Regular Consent Fee" and, together with the Early Consent Fee, the "Consent Fees") in the event that such Consent is delivered thereafter, in each case, subject to (a) the Requisite Consents being received, (b) proration as discussed below, (c) the closing of the Transaction and (d) the other terms and conditions to be set out in the Consent Solicitation Statement. The REIT reserves the right (at the direction of Starlight) to extend the date of the Consent Solicitation or amend the terms thereof, all as provided in the Consent Solicitation Statement.

It is expected that the payment of any Consent Fees shall not be made until, and shall be conditional upon the closing of, the Transaction. If Holders collectively deliver Consents that exceed the Requisite Consents, an election may be made by the REIT (at the direction of Starlight) to prorate the acceptance of Consents (subject to rounding at the REIT's discretion).

In order to further facilitate obtaining the Requisite Consents, it is expected that the REIT will also pay a soliciting dealers' fee to any soliciting dealers that are entitled thereto, subject to the terms and conditions set out in the Consent Solicitation Statement, equal to 50 basis points in respect of any Debentures for which an Early Consent Fee is paid or 25 basis points in respect of any Debentures for which a Regular Consent Fee is paid.

In the event that the Requisite Consents are not received and the Debentures are not redeemed concurrently with the closing of the Transaction, the REIT will be required, in accordance with the Acquisition Agreement, in connection with the closing of the Transaction, to defease all outstanding Debentures upon or immediately prior to the closing of the Transaction, pursuant to Section 10.5 of the Indenture.  In that case, (i) no Consent  Fees will be paid; (ii) the REIT expects to delist the Debentures from the TSX, which may significantly and adversely affect the liquidity of the Debentures; (iii) the Debentures shall no longer be convertible into trust units of the REIT; and (iv) except as otherwise provided in the Indenture (including with respect to the REIT's obligation to offer to repurchase Debentures upon certain changes of control at a purchase price equal to 101% of the principal amount thereof plus accrued interest), the sole entitlement of the Holders under the Indenture will be to continue to receive interest until, and the repayment of principal upon, the maturity or redemption date of the Debentures, as applicable.

Holders are advised to consult with their own advisors as to the tax implications to them of the foregoing.

The Consent Solicitation is expected to remain open until the first to occur of: (i) the Early Consent Date, in the event that the Requisite Consents have been received (in which case it shall automatically expire); and (ii) 5:00 (Eastern Time) on June 15, 2012, unless extended or cancelled by the REIT (at the direction of Starlight).

This press release is neither a solicitation of consents, an offer to purchase the Debentures nor a solicitation of an offer to sell securities. The specific terms and conditions of the Consent Solicitation and the Proposed Amendments will be set out in the Consent Solicitation Statement.

Beneficial owners of the Debentures whose Debentures are held in the name of a broker, dealer, commercial bank, trust company or other intermediary, or in the name of a clearing agency of which such intermediary is a participant, should contact such intermediary promptly and obtain and follow their intermediary's instructions with respect to the applicable consent procedures and deadlines, which may be earlier than those deadlines specified in the Consent Solicitation Document.

Kingsdale Shareholder Services Inc. ("Kingsdale") has been retained as Solicitation Agent and Information Agent in connection with the Consent Solicitation.  Debentureholders with questions or requiring assistance in completing the appropriate Consent form should contact Kingsdale at toll-free 1-866-229-8651 or outside North America 1-416-867-2272 (collect calls accepted). Requests for assistance in completing an appropriate Consent form, or requests for copies of the Consent Solicitation Document, an appropriate consent form or other related documents should be directed to Kingsdale by calling the Toll-Free Number 1-866-229-8651(outside North America 1-416-867-2272) or by email at [email protected].

In addition, CIBC World Markets Inc. ("CIBC") has been engaged  to act as the soliciting dealer manager in connection with the Consent Solicitation. Questions concerning the terms of the Consent Solicitation can also be directed to CIBC at 1-866-744-2030.

About TransGlobe Apartment REIT

The REIT is an unincorporated, open-ended real estate investment trust established under the laws of the Province of Ontario. The REIT owns a geographically diverse portfolio of 175 residential rental properties containing approximately 21,735 suites principally located in urban centres in Alberta, Ontario, Québec, New Brunswick and Nova Scotia.

Forward-looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the REIT. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the REIT or the real estate industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms such as "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue", "likely", "schedule", or the negative thereof or other similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to the following: the expected completion of the Transaction and the conditions thereto required to be satisfied or waived by the applicable parties; the treatment of holders of Debentures; the uncertainty of the success of the Consent Solicitation and the effects and consequences of defeasing the Debentures.

Although the forward-looking statements contained in this press release are based upon assumptions that management of the REIT believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the REIT's control, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements.

The forward-looking statements made in this press release relate only to events or information as of the date hereof. Except as required by applicable Canadian law, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Kingsdale Shareholder Services Inc. (1-866-229-8651 or outside North America 1-416-867-2272 (collect calls accepted). 

CIBC World Markets Inc. 1-866-744-2030
Melissa Li ([email protected])
Chase Robinson ([email protected])