Melcor Real Estate Investment Trust
(“Melcor REIT” or the “REIT”)
(TSX: MR.UN) and Melcor Developments Ltd.
(“Melcor” or the “Purchaser”)
(TSX: MRD) announce that they have entered into an Amended and
Restated Arrangement Agreement (the “Amended
Agreement”) with Melcor REIT GP Inc. (the
“GP”), which provides for, among other things,
consideration of $5.50 per unit (“Unit”) (the
“Improved Consideration”), which
is $0.55 per Unit or an 11% increase over the prior consideration.
Furthermore, the Amended Agreement has a new and extended 90-day
“go shop” period. Given the REIT’s execution of the Amended
Agreement, the REIT also announces today that it is cancelling the
special meeting of REIT unitholders scheduled for November 26,
2024. This will allow the REIT to immediately commence work on the
extended 90-day “go shop” process pursuant to the terms of the
Amended Agreement, which will expire at 11:59 MT on February 24,
2025. The Purchaser will not have the right to match any superior
proposal.
Execution of the Amended Agreement was
unanimously approved by the REIT’s Board of Trustees (with Mr.
Andrew Melton, Ms. Naomi Stefura and Mr. Ralph Young each
abstaining), acting on the unanimous recommendation of the
previously announced independent committee of the REIT’s Board of
Trustees (the “Independent
Committee”). BMO Capital Markets, financial
advisor to the REIT, and Ventum Financial Corp. (“Ventum
Capital Markets”), independent financial advisor and
independent valuator to the Independent Committee, have each
rendered fairness opinions to the effect that, as at November 24,
2024, the Improved Consideration to be received by the REIT’s
unitholders pursuant to the Amended Agreement is fair, from a
financial point of view. In addition, Ventum Capital Markets will
deliver an updated independent formal valuation.
It is anticipated that a new special meeting
(the “New Meeting”) of the
holders of Units and special voting units (the “Voting
Unitholders”) will be called to approve the New
Arrangement (as defined below) following expiry of the “go shop”
period, with such New Meeting having a new record date for
entitlement to vote. The REIT intends to apply to the Court of
King’s Bench of Alberta (the “Court”) for an
amended Interim Order providing for the updated transaction terms
and timeline. The REIT will provide further disclosure to its
unitholders, including with respect to the date of the New Meeting,
once available. Unitholders are not required to take any action at
this time.
Arrangement Details
The transaction pursuant to the Amended
Agreement is structured as a statutory plan of arrangement under
the Business Corporations Act (Alberta) (the “New
Arrangement”). Completion of the New Arrangement,
which is expected to occur in the second quarter of 2025 is subject
to customary closing conditions, including Voting Unitholder and
Court approval. The New Arrangement provides for a distribution by
the REIT to holders of Units (“Unitholders”) of
record immediately prior to closing in an amount equal to the
REIT’s estimate of its taxable income, including taxable income to
be allocated from the Melcor REIT Limited Partnership to the REIT,
in its current taxation year. Such distribution will be payable by
the issuance of additional Units which will immediately be
consolidated.
Pursuant to the Amended Agreement, the REIT will
have a 90-day “go-shop” period that will extend from November 25,
2024 to February 24, 2025 (the “Go-Shop Period”),
during which it is permitted to solicit third-party interest in
submitting a proposal which is superior to the proposal made by the
Purchaser. The Purchaser will not have the right to match a
superior proposal and has agreed to sell its interest in the REIT
under any superior proposal that is accepted by the Independent
Committee, subject to certain terms as set out in the Amended
Agreement, including the termination of and release under all
agreements between the Purchaser and the REIT. The Amended
Agreement also includes customary provisions, including
non-solicitation by the REIT of alternative transactions following
the conclusion of the Go-Shop Period, and a $5.8 million
termination fee payable to the Purchaser under certain customary
circumstances, including in the event the REIT is successful in
soliciting a superior proposal. In addition, the Purchaser has
agreed to (i) forego all termination and change of control payments
it would otherwise be entitled to under the property management and
asset management agreements in the event of a superior proposal;
and (ii) reimburse the REIT for the reasonable costs and expenses
incurred by it in connection with the New Arrangement (including
all financial advisor costs and legal costs), subject to certain
exceptions. There can be no assurance that the go-shop process will
result in a superior proposal.
Completion of the New Arrangement will be
subject to various closing conditions, including the approval of at
least (i) two-thirds (66 2/3%) of the votes cast by Voting
Unitholders present in person or represented by proxy at the New
Meeting (each holder of Units and special voting units being
entitled to one vote per Unit or special voting unit, as
applicable) and (ii) the majority of the holders of Units present
in person or represented by proxy at the New Meeting, excluding the
votes of the Purchaser and any other Voting Unitholders whose votes
are required to be excluded for the purposes of “minority approval”
under Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions. Further details regarding
the applicable voting requirements will be contained in a new
management information circular (the “New
Circular”) to be filed with applicable regulatory
authorities following the expiry of the Go-Shop Period and mailed
to Voting Unitholders in connection with the New Meeting to approve
the New Arrangement.
A copy of the Amended Agreement will be filed
with Canadian securities regulators and will be available on the
SEDAR+ profile of each of the Purchaser and the REIT at
www.sedarplus.ca. In addition, a copy of the New Circular will be
made available on the REIT’s SEDAR+ profile at www.sedarplus.ca.
All parties desiring details with respect to the Arrangement are
urged to read those and other relevant materials when they become
available.
Subject to and upon completion of the
Arrangement, the Units will cease to be listed on the TSX.
About Melcor REIT
Melcor REIT is an unincorporated, open-ended
real estate investment trust. Melcor REIT owns, acquires, manages
and leases quality retail, office and industrial income-generating
properties in western Canadian markets. Its portfolio is currently
made up of interests in 36 properties representing approximately
3.072 million square feet of gross leasable area located across
Alberta and in Regina, Saskatchewan.
About Melcor
Melcor is a diversified real estate development
and asset management company that transforms real estate from raw
land through to high quality finished product in both residential
and commercial built form. Melcor develops and manages mixed-use
residential communities, business and industrial parks, office
buildings, retail commercial centres and golf courses. Melcor owns
a well-diversified portfolio of assets in Alberta, Saskatchewan,
British Columbia, Arizona and Colorado.
Melcor has been focused on real estate since
1923. The company has built over 170 communities and commercial
projects across Western Canada and today manages 4.80 million sf in
commercial real estate assets and 455 residential rental units.
Melcor is committed to building communities that enrich quality of
life - communities where people live, work, shop and play.
Melcor’s headquarters are located in Edmonton,
Alberta, with regional offices throughout Alberta and in Kelowna,
British Columbia and Phoenix, Arizona. Melcor has been a public
company since 1968 and trades on the Toronto Stock Exchange
(TSX:MRD).
Forward Looking Statement Cautions and
Disclaimers:
This news release includes forward-looking
information within the meaning of applicable Canadian securities
laws. In some cases, forward-looking information can be identified
by the use of words such as “may”, “will”, “should”, “expect”,
“intend”, “plan”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “continue”, and by discussions of strategies that
involve risks and uncertainties, certain of which are beyond the
REIT’s and Melcor’s control. In this news release, forward-looking
information includes, among other things, anticipated timing and
completion of the transaction contemplated by the Amended
Agreement, the REIT calling and holding a New Meeting, the outcome
of the new 90-day “go shop” process, the receipt of a superior
proposal, the timing and contents of Ventum Capital Markets
providing an independent formal valuation, expectations with
respect to the timing and outcome of the New Arrangement and the
anticipated benefits thereof, the timing and amount of any
distributions made prior to completion of the New Arrangement (if
completed), the timing of mailing and filing of the New Circular,
and the benefits and outcome of the Amended Agreement. The
forward-looking information is based on certain key expectations
and assumptions made by the REIT and/or Melcor, including with
respect to the structure of the Arrangement and all other
statements that are not historical facts. The timing and completion
of the Arrangement pursuant to the Amended Agreement is subject to
customary closing conditions, termination rights and other risks
and uncertainties including, without limitation, required
regulatory, court, and unitholder approvals. Although the
managements of the REIT and Melcor believe that the expectations
reflected in the forward-looking information are reasonable, there
can be no assurance that any transaction, including the
Arrangement, will occur or that it will occur on the timetable or
on the terms and conditions contemplated in this news release. The
Arrangement could be modified, restructured or terminated. Readers
are cautioned not to place undue reliance on forward-looking
information. Additional information on these and other factors that
could affect the REIT and Melcor are included in reports on file
with Canadian securities regulatory authorities and may be accessed
through the SEDAR+ website (www.sedarplus.ca).
By its nature, such forward-looking information
necessarily involves known and unknown risks and uncertainties that
may cause actual results, performance, prospects and opportunities
in future periods of the REIT and Melcor to differ materially from
those expressed or implied by such forward-looking statements.
Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release and neither
the REIT, nor Melcor nor any other person assumes responsibility
for the accuracy and completeness of any forward-looking
information, and no one has any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or such other factors which affect this
information, except as required by law.
Contact Information:
Investor Relations
Tel: 1.780-945-4795
ir@melcor.ca
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