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Press release from Marketwire

Tuckamore Enters into an Agreement to be Acquired by Senior Management and Birch Hill Equity Partners for Cash Consideration of $0.75 per Common Share

Monday, May 05, 2014

Tuckamore Enters into an Agreement to be Acquired by Senior Management and Birch Hill Equity Partners for Cash Consideration of $0.75 per Common Share

08:36 EDT Monday, May 05, 2014

TORONTO, ONTARIO--(Marketwired - May 5, 2014) - Tuckamore Capital Management Inc. (TSX:TX)(TSX:TX.DB.B) ("Tuckamore" or "Company") today announced that the Company has entered into an arrangement agreement (the "Arrangement Agreement") pursuant to which certain members of Tuckamore's senior management, along with the support of certain funds managed by Birch Hill Equity Partners ("Birch Hill"), have agreed to indirectly acquire, by way of a plan of arrangement under the Business Corporations Act (Ontario), all of the issued and outstanding common shares of the Company (each a "Share") for cash consideration at a price of $0.75 (the "Consideration") per Share (the "Arrangement"), which price per Share represents a 21.0% premium to the closing price of the Shares on the Toronto Stock Exchange ("TSX") on May 2, 2014 and a 39.2% premium to the volume-weighted average price of the Shares over the last 30 trading days.

The Arrangement Agreement provides that a newly-formed entity (the "Purchaser"), the voting control of which will be held by Mr. Dean MacDonald, a director and the Chief Executive Officer of the Company, and Mr. Adrian Montgomery, the Chief Investment Officer of the Company, will acquire all of the Shares under the Arrangement. Pursuant to the Arrangement, each Tuckamore shareholder (the "Shareholders"), other than Messrs. MacDonald, Montgomery and Mr. Paul Hatcher, the Chief Executive Officer of ClearStream Energy Holdings LP (a wholly-owned subsidiary of the Company), will receive the Consideration in exchange for each Share held.

Tuckamore's Board of Directors, after consultation with Canaccord Genuity Corp. ("CG"), who acted as Tuckamore's financial advisor, and Norton Rose Fulbright Canada LLP, Tuckamore's legal advisors, and based on the unanimous recommendation of the independent directors of the Company, has unanimously determined that the Arrangement is fair to Shareholders and recommends that Shareholders vote in favour of the Arrangement. Neither Mr. MacDonald, Mr. Montgomery or Mr. Hatcher participated in any discussions or negotiations on behalf of the Company regarding the Arrangement and Mr. MacDonald abstained from the Board's deliberations and voting thereon.

Shareholders of Tuckamore will be asked to approve the Arrangement at a meeting of Shareholders (the "Meeting") expected to be held as soon as reasonably practicable. Accordingly, the Board has resolved to postpone the annual general meeting of shareholders currently scheduled to be held on June 26, 2014 and has scheduled the Meeting for July 15, 2014. The terms and conditions of the Arrangement Agreement will be summarized in Tuckamore's management information circular (the "Information Circular") which will be filed and mailed to Shareholders in connection with the Meeting. The Arrangement will be subject to, among other things, the approval of (i) at least 66 2/3% of the votes cast at the Meeting by Shareholders; and (ii) at least a majority of the votes cast by minority Shareholders (being Shareholders other than the Purchaser, Messrs. MacDonald, Montgomery and Hatcher and any other persons required to be excluded under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101")). Tuckamore will, in accordance with MI 61-101, obtain a formal valuation in respect of the Arrangement (the "Valuation"), under the supervision of the independent directors. The Valuation or a summary thereof will be included in the Information Circular.

Tuckamore's directors (excluding Mr. MacDonald), who collectively own approximately 3.8% of the outstanding Shares (on an undiluted basis as of the date hereof), have entered into voting support agreements with the Purchaser which provide that they will vote their Shares at the Meeting in favour of the resolution authorizing the Arrangement, subject to the provisions thereof. In connection with the Arrangement Agreement, the Investment Committee of Newport Private Wealth Inc. ("Newport Private Wealth"), a wealth management firm who in its capacity as portfolio manager has control or direction over 25,701,028 Shares (representing approximately 32.08% of the outstanding Shares (on an undiluted basis) as of the date hereof) owned by clients of Newport Private Wealth (of which 3,361,893 of those Shares are beneficially owned or controlled by directors or officers of the Company), has agreed, subject to certain conditions to recommend to its clients to vote in favour of the Arrangement.

The Arrangement Agreement contains customary non-solicitation provisions which are subject to Tuckamore's right to consider and accept superior proposals subject to a matching right in favour of the Purchaser. If the Arrangement Agreement is not completed as a result of a superior proposal or for other certain specified circumstances, a termination fee equal to $6,000,000 will be paid by Tuckamore to the Purchaser. If the Arrangement is not completed, due to the failure to receive necessary security holder approval, an expense reimbursement, capped at $1,500,000, will be paid by Tuckamore to the Purchaser. Following receipt of the Valuation, the Board of Directors of the Company has the right to terminate the Arrangement Agreement, in which case a termination fee equal to $3,000,000 will be paid by Tuckamore to the Purchaser, or to change its recommendation to Shareholders, in which case the Arrangement Agreement will not be terminated and Tuckamore will pay a fee equal to $2,000,000 to the Purchaser. In the event that the Arrangement is not completed by the Purchaser in certain circumstances, the Company is entitled to a reverse termination fee from the Purchaser in the amount of $6,000,000 (which amount has been guaranteed by Birch Hill).

Closing of the Arrangement is subject to the satisfaction of a number of conditions precedent customary for transactions of this nature, including court approval, relevant regulatory approvals (including approval under the Competition Act) and the absence of any material adverse effect with respect to the Company. The Arrangement is expected to close in the third quarter of 2014. As part of the Arrangement, it is contemplated that the obligations of the Company under its 8.0% secured debentures (the "Debentures") will be assumed by the Purchaser and it is a condition to the Arrangement that the Debentures (as assumed) be approved for listing on the TSX, subject to the satisfaction of the customary listing conditions of the TSX. If the Arrangement is completed, the Shares will be delisted from the TSX.

CG has provided a verbal opinion that, based upon and subject to the assumptions, limitations, and qualifications in such opinion, the consideration to be received by Shareholders is fair, from a financial point of view, to Shareholders. A copy of the fairness opinion of CG, the Valuation, the factors considered by the independent directors in arriving at its recommendation, details relating to the ownership structure of the Purchaser and other relevant background information will be included in the meeting materials that will be sent to Shareholders in connection with the Meeting and will be filed on SEDAR at www.sedar.com.

About the Company

Tuckamore has investments in 7 businesses representing a diverse cross-section of the Canadian economy.

About Birch Hill's Investment

The investment will be part of Birch Hill Fund IV with over $1 billion in committed capital.

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements based on current expectations, including but not limited to Tuckamore's plans, objectives and expectations, Birch Hill's and the Purchaser's plans, objectives and expectations with respect to the Company and its business, statements regarding the timing of the Meeting, and the closing of the Arrangement, the effect of the Arrangement on the Debentures (including that the Debentures will continue to be listed on the TSX) and the anticipated impact of the Arrangement. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Tuckamore's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada and available at ww.sedar.com. Additional important factors that could cause actual results to differ materially include, but are not limited to: the actual closing of the Arrangement; the satisfaction or non-satisfaction as applicable of one or more conditions to the closing of the Arrangement; delay of, or inability to receive, Shareholders' approval or approval of the Ontario Superior Court of Justice; the risk that the Arrangement may involve unexpected costs, liabilities or delays; the possible occurrence of an event, change or other circumstance that could result in termination of the Arrangement Agreement; and risks regarding the failure of the Purchaser to receive the funding necessary to complete the Arrangement. With respect to the forward-looking statements and information concerning the anticipated impact and completion of the Arrangement and the anticipated timing for completion of the Arrangement, Tuckamore has provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the time required to prepare and mail Meeting materials to Shareholders, the ability of the parties to receive, in a timely manner, the Valuation or the necessary Ontario Superior Court of Justice and Shareholders' approvals, and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the proposed Arrangement. Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive.

Forward-looking statements are not guarantees of future performance. In light of the significant uncertainties inherent in the forward-looking information included herein, any such forward-looking information should not be regarded as representations by Tuckamore that its, the Purchaser's or Birch Hill's, respective objectives or plans will be achieved. Investors are cautioned not to place undue reliance on any forward-looking information contained herein. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. Tuckamore disclaims any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Keith Halbert
Chief Financial Officer
416-775-3796
keith@tuckamore.ca

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