TransGlobe Apartment REIT Announces the Outcome of its Consent Solicitation and its Expectation to Defease its 5.40% Extendible Convertible Unsecured Subordinated Debentures

TORONTO, June 15, 2012 /CNW/ - TransGlobe Apartment Real Estate Investment Trust (TSX: TGA.UN, TGA.DB) (the "REIT") today announced that its previously announced 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") has expired in accordance with its terms and that the valid consent of the Debentureholders necessary to authorize the Proposed Amendments was not obtained.

As a result, the Proposed Amendments will not become effective.  In accordance with 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 Investments Ltd. and PD Kanco LP (collectively, "Starlight"), the REIT will be required, 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.

The closing of the Transaction would constitute a Change of Control under the Indenture.  The Indenture provides that upon the occurrence of such a Change of Control, the REIT must offer to repurchase Convertible Debentures at a purchase price equal to 101% of the principal amount thereof plus accrued interest and on the other terms and conditions set out in the Indenture.

Upon the closing of the Transaction and the defeasance of the Debentures:  (i) no consent fees or soliciting dealers' fees pursuant to the Consent Solicitation will be paid; (ii) the REIT expects to delist the Convertible Debentures from the TSX, which may significantly and adversely affect the liquidity of the Convertible Debentures and their use as margin security; (iii) the Convertible 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 TransGlobe's obligation to offer to repurchase Convertible Debentures upon certain changes of control), the sole entitlement of the Debentureholders under the Indenture will be to continue to receive interest, payable semi-annually in arrears, at a rate of 5.40% per annum until, and to receive the repayment of principal upon, the maturity or redemption date of the Convertible Debentures, as applicable.

In connection with any defeasance, the REIT expects to irrevocably authorize the trustee under the Indenture to deliver a notice of redemption on its behalf in order to redeem the Debentures on October 1, 2016 in accordance with the terms of the Indenture.

Debentureholders are advised to consult with their own tax, legal and financial advisors as to the implications to them of the foregoing.

The closing of the Transaction is subject to the satisfaction or waiver of those conditions specified in the Acquisition Agreement.

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; and the expected defeasance and related redemption of 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])