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Press release from CNW Group

KEYreit and Plazacorp Enter into Revised Definitive Support Agreement For the Acquisition of 100% of KEYreit for $8.35 per Unit Representing $325 million Enterprise Value

Thursday, April 04, 2013

KEYreit and Plazacorp Enter into Revised Definitive Support Agreement For the Acquisition of 100% of KEYreit for $8.35 per Unit Representing $325 million Enterprise Value

12:20 EDT Thursday, April 04, 2013

KEYreit reiterates REJECTION of Huntingdon's Amended Offer

TORONTO, April 4, 2013 /CNW/ - KEYreit (TSX: KRE.UN) announced today that it has entered into an amended and restated support agreement (the "Amended Support Agreement") with Plazacorp Retail Properties Ltd. ("Plazacorp") to sell KEYreit for $325million, including assumed debt, pursuant to which Plazacorp will make a take-over bid to acquire 100% of the issued and outstanding units of KEYreit for an increased purchase price, at the option of each unitholder, of $8.35per unit in cash, subject to a maximum aggregate cash amount of approximately $62 million, representing approximately 50% of the consideration, 1.7041Plazacorp shares or any combination thereof, subject to proration ("Plazacorp's Increased Offer"). The transaction values KEYreit's equity at approximately $124million.

The purchase price of $8.35per KEYreit unit to be offered by Plazacorp represents a premium of 35% to the closing price of the KEYreit units on the Toronto Stock Exchange ("TSX") on January 28, 2013, the last trading day before Huntingdon Capital Corp. ("Huntingdon") announced its intention to make an unsolicited partial offer for KEYreit units, and a considerably more attractive offer than Huntingdon's unsolicited amended offer of $8.00 per unit ("Huntingdon's Amended Offer").

In light of Plazacorp's Increased Offer, KEYreit advises unitholders not to tender to Huntingdon's Amended Offer and to withdraw units that have already been tendered. Unitholders holding units through a dealer, broker or other nominee should contact such dealer, broker or nominee to withdraw their KEYreit units. For further details as to why the KEYreit Board of Trustees unanimously recommends that unitholders reject Huntingdon's Amended Offer, KEYreit encourages unitholders to read the notice of change to the trustees' circular, which is expected to be filed shortly.

"When Huntingdon started this process by launching its original unsolicited offer of $7.00 per unit, we maintained that the company is worth significantly more than $8.00 per unit and I want to congratulate the Special Committee on doing an excellent job of managing this process to achieve a value of approximately $325 million for KEYreit" added John Bitove, Chief Executive Officer of KEYreit.

Board unanimously recommends unitholders ACCEPT Plazacorp's Increased Offer

The Board of Trustees of KEYreit, based on the unanimous recommendation of the special committee of the Board (the "Special Committee") and upon consultation with its financial and legal advisors, has unanimously determined that Plazacorp's Increased Offer is fair, from a financial point of view, to KEYreit unitholders and is in the best interests of KEYreit and its unitholders. The Board will therefore unanimously recommend that unitholders accept Plazacorp's Increased Offer.

"We are very pleased that Unitholders will benefit from an increase of $0.35in the revised offer price, making Plazacorp's Increased Offer of $8.35 per unita significant achievement from our value maximization process" said Donald Biback, Chairman of the Board of Trustees of KEYreit.

Details of Plazacorp's Increased Offer

Plazacorp's Increased Offer remains subject to applicable regulatory approvals and the satisfaction of certain closing conditions customary in transactions of this nature, and has a minimum tender condition of 66 2/3% of the outstanding units on a non-diluted basis. In light of the increased offer price, the Amended Support Agreement also provides for an increase in the break fee payable to Plazacorp from $5 million to $6.5million, if the proposed transaction is not completed in certain specified circumstances.  A copy of the Amended Support Agreement will be available on KEYreit's website and on SEDAR at www.sedar.com.

Plazacorp's Increased Offer will be carried out by way of a take-over bid.  It is expected that the offer will be mailed to unitholders early-to-mid April 2013 concurrently with the mailing of KEYreit's trustees' circular recommending acceptance of Plazacorp's Increased Offer. The terms and conditions of the proposed transaction will be included in Plazacorp's take-over bid circular.  It is anticipated that units tendered to Plazacorp's Increased Offer will be taken-up in May 2013.

Advisors

BMO Capital Markets is acting as financial advisor to the Special Committee and the Board of Trustees of KEYreit.  Legal counsel to the KEYreit Special Committee is Norton Rose Canada LLP and Stikeman Elliott LLP is legal counsel to KEYreit.

About KEYreit

KEYreit (TSX: KRE.UN) is Canada's premier small-box retail property owner with 225 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 leases.

To find out more about KEYreit (TSX: KRE.UN), visit our website at www.keyreit.com.

Forward-Looking Statements

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 the benefits of Plazacorp's Increased Offer, KEYreit's 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, Plazacorp's Increased Offer, 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 securities laws.

SOURCE: KEYreit

For further information:

Investor relations, please contact: 
Teresa Neto
Chief Financial Officer
416-361-9953
teresa.neto@keyreit.com

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)
contactus@kingsdaleshareholder.com

Media, please contact: 
Longview Communications Inc.
Alan Bayless 604-694-6035, abayless@longviewcomms.ca
Olena Lobach 416-649-8009, olobach@longviewcomms.ca



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