Press release from CNW Group
Crombie REIT announces closing of $225 million subscription receipts offering and $75 million extendible convertible debentures offering
Wednesday, August 14, 2013
Crombie REIT announces closing of $225 million subscription receipts offering and $75 million extendible convertible debentures offering09:30 EDT Wednesday, August 14, 2013
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STELLARTON, NS, Aug. 14, 2013 /CNW/ - Crombie Real Estate Investment Trust ("Crombie") (TSX: CRR.UN) announced today that it has closed the previously announced offering to the public, on a bought-deal basis, of 17,720,000 subscription receipts (the "Subscription Receipts") at $12.70 per Subscription Receipt for gross proceeds of approximately $225 million and $75 million aggregate principal amount of 5.25% convertible extendible unsecured subordinated debentures (the "Debentures").
On the closing, targeted for the Fall of 2013, of Crombie's previously announced acquisition agreement to purchase a portfolio of sixty-eight (68) retail properties from a wholly-owned subsidiary of Sobeys Inc. (the "Acquisition"), each Subscription Receipt will be exchanged for one trust unit of Crombie (the "Units"). If the Acquisition does not close by March 12, 2014, the subscription price will be returned to holders together with any interest earned thereon.
The Debentures have an initial maturity date of March 12, 2014, which will be extended to March 31, 2021 upon Acquisition Closing. The Debentures have a coupon of 5.25% per annum and will pay interest semi-annually in arrears on September 30 and March 31 in each year commencing on September 30, 2013. Each $1,000 principal amount of Debentures is convertible into approximately 58.309 Units of Crombie at any time, at the option of the holder, representing a conversion price of $17.15 per Unit.
In addition to the issuance of Subscription Receipts and Debentures to the public, ECL Developments Limited, a wholly-owned subsidiary of Empire Company Limited (TSX: EMP.A), will purchase, concurrently with the exchange of the Subscription Receipts for Units, on a private placement basis, 11,811,024 Class B LP Units of Crombie Limited Partnership together with the attached Special Voting Units of Crombie at a purchase price of $12.70 per Class B LP Unit, identical to the offering price of the Subscription Receipts, for gross proceeds of approximately $150 million.
Each Class B LP Unit is exchangeable for one Unit of Crombie at the option of the holder. Upon exchange of a Class B LP Unit, the associated Special Voting Unit is cancelled. All securities issued under the private placement are subject to a four month hold period from the closing date of the private placement. Prior to the closing of the public offering, Empire Company Limited indirectly holds a 42.7% economic and voting interest in Crombie. After the closing of the public offering and the Acquisition, the exchange of the Subscription Receipts for Units and the closing of the private placement, Empire Company Limited is expected to hold a 42.1% economic and voting interest in Crombie.
The combined gross proceeds from the Subscription Receipts, Debentures and Class B LP Unit issuance total approximately $450 million.
Crombie intends to use the net proceeds to finance a portion of the acquisition price for the Acquisition. The Acquisition is subject to receipt of approvals under the Competition Act (Canada) and Unitholder approval by Crombie's Unitholders at a Special Meeting to take place on September 19, 2013 in New Glasgow, Nova Scotia. The Acquisition is expected to close in the Fall of 2013.
The underwriting syndicate was co-led by CIBC World Markets Inc., TD Securities Inc. and Scotia Capital Inc. and also includes BMO Nesbitt Burns Inc., National Bank Financial Inc., Canaccord Genuity Corp., Macquarie Capital Markets Canada Ltd., Raymond James Ltd. and Desjardins Securities Inc.
Crombie Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established under, and governed by, the laws of the Province of Ontario. The trust invests in income-producing retail, office and mixed-use properties in Canada, with a future growth strategy focused primarily on the acquisition of retail properties. Crombie currently owns a portfolio of 176 commercial properties in nine provinces, comprising approximately 14.5 million square feet of gross leasable area. More information about Crombie can be found at www.crombiereit.com.
This news release may contain forward-looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "continue", "may", "will", "estimate", "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward-looking statements. These statements reflect current beliefs and are based on information currently available to management of Crombie, and include, without limitation, statements regarding the expected future economic and voting interest of Empire Company Limited in Crombie, the intended use of proceeds of the Offering and the expected closing date for the Acquisition.
Readers are cautioned that such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Crombie can give no assurance that actual results will be consistent with these forward-looking statements. A number of factors, including those discussed in the 2012 annual Management Discussion and Analysis under "Risk Management", could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward-looking statements. There can be no assurance that the expectations of management of Crombie will prove to be correct.
Additional information relating to Crombie can be found on Crombie's web site at www.crombiereit.com or on the SEDAR web site for Canadian regulatory filings at www.sedar.com.
SOURCE: Crombie REIT
For further information:
Mr. Glenn Hynes, FCA
Chief Financial Officer and Secretary