VAUGHAN,
ON, Aug. 9, 2022 /CNW/ - Recipe Unlimited
Corporation ("Recipe" or the "Company") (TSE: RECP) announced today
that, based on the unanimous recommendation of a special committee
of independent directors (the "Special Committee") of its board of
directors (the "Board"), it has entered into a letter of intent
with Hamblin Watsa Investment Counsel Ltd., investment manager on
behalf of certain affiliates of Fairfax Financial Holdings Limited
(collectively, "Fairfax"), in respect of a transaction (the
"Proposed Transaction") whereby a newly-formed wholly-owned
subsidiary (the "Purchaser") of the buying group comprised of
certain affiliates of Fairfax (collectively, the "Buying Group")
will acquire all of the multiple voting shares ("MVS") and
subordinate voting shares ("SVS", and together with "MVS", the
"Shares") in the capital of the Company, other than those Shares
owned by Fairfax or its affiliates and a maximum of 4,000,000 MVS
owned by Cara Holdings Limited ("CHL"), at a purchase price of
$20.73 per Share (the "Offer
Price"), payable in cash.
The Offer Price represents a 53.4% premium to the closing price
on August 8, 2022, and a 59.2% and
58.1% premium to the 30- and 60-trading-day volume weighted average
price, respectively, as of the end of trading on August 8, 2022.
The Board, having received the unanimous recommendation of the
Special Committee, determined that pursuing the Proposed
Transaction is in the best interests of the Company and subject to
negotiating a definitive agreement, the Board intends to recommend
that the Company's shareholders vote in favour of the Proposed
Transaction at a special meeting of shareholders to be held to
approve the Proposed Transaction.
In connection with its review of the Proposed Transaction, the
Special Committee retained Greenhill & Co. Canada Ltd.
("Greenhill") to provide financial advice and prepare a formal
valuation of the SVS (the "Formal Valuation") to be issued by the
Company pursuant to the Proposed Transaction as required under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101").
Greenhill concluded that, as of
August 8, 2022, and subject to the
assumptions, limitations and qualifications as set out in the
Formal Valuation, that the fair market value of the SVS was in the
range of $16.67 to $21.85 per SVS. Greenhill has also provided its opinion (the
"Fairness Opinion") to the Special Committee that, as of
August 8, 2022, and subject to the
assumptions, limitations and qualifications contained therein, the
consideration to be received by the holders of SVS (other than the
Purchaser or its affiliates) pursuant to the Proposed Transaction
is fair, from a financial point of view, to the holders of SVS
(other than the Purchaser or its affiliates).
Transaction Details
Pursuant to the terms of the Proposed Transaction, the Purchaser
will acquire all of the Shares, other than those Shares owned
by Fairfax or its affiliates and a maximum of 4,000,000 MVS owned
by CHL, for a purchase price of $20.73 per Share, payable in cash. The Buying
Group is comprised of certain affiliates of Fairfax. The Proposed
Transaction would be financed by equity proceeds contributed by
members of the Buying Group and debt financing, and would not be
subject to any financing condition. The consummation of the
Proposed Transaction will be subject to conditions customary to
transactions of this nature, including, among others, (i) the
negotiation and execution of a definitive agreement concerning the
Proposed Transaction; (ii) receipt by the Company and the Buying
Group of any required regulatory, court and/or stock exchange
approvals; and (iii) the approval of the Proposed Transaction at a
special meeting of the shareholders of the Company entitled to vote
on the Proposed Transaction (including a "majority of the minority"
vote of the shareholders excluding for this purpose the votes of
Shares held or controlled by persons described in items (a) through
(d) of Section 8.1(2) of MI 61-101).
Recipe expects to hold a special meeting (the "Special Meeting")
of Recipe's shareholders to approve the Proposed Transaction
following execution of the definitive agreement. The Proposed
Transaction is expected to close in the last quarter of 2022,
subject to shareholder and regulatory approvals and other customary
closing conditions. The terms and conditions of the Proposed
Transaction will be disclosed in greater detail in a management
information circular for the Special Meeting that is expected to be
mailed to Recipe's shareholders following the execution of the
definitive agreement for the Proposed Transaction. Copies of the
definitive agreement and of the management information circular for
the Special Meeting will be filed with Canadian securities
regulators and will be available on the SEDAR profile of Recipe at
www.sedar.com. Recipe's shareholders are urged to read those and
other relevant materials when they become available.
There can be no assurance that Recipe and Buying Group will
enter into a definitive agreement for the Proposed Transaction or
that the Proposed Transaction will occur as proposed or at
all.
Forward Looking
Information
This press release contains "forward-looking information" as
defined under applicable Canadian securities laws. This information
includes, but is not limited to, statements concerning our
objectives, our strategies to achieve those objectives, as well as
statements made with respect to management's beliefs, plans,
estimates, projections and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking information generally can be identified by the use
of forward-looking terminology such as "outlook", "objective",
"may", "will", "expect", "intend", "estimate", "anticipate",
"believe", "should", "plans" or "continue", or similar expressions
suggesting future outcomes or events. Such forward-looking
information reflects management's current beliefs and is based on
information currently available to management. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement.
The forward-looking statements included in this press release,
including statements regarding the Proposed Transaction, are not
guarantees of future results and involve numerous risks and
uncertainties that may cause actual results to differ materially
from the potential results discussed in the forward-looking
statements. In respect of the forward-looking statements and
information concerning the Proposed Transaction, management has
provided same based on reliance on certain assumptions it considers
reasonable at this time including that the Proposed Transaction can
be completed on acceptable terms and that any conditions precedent
can be satisfied. There can be no assurance that Recipe and
Buying Group will enter into a definitive agreement for the
Proposed Transaction or that the Proposed Transaction will occur as
proposed or at all. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this news release.
Risks and uncertainties related to the Proposed Transaction
include, but are not limited to: failure of Recipe and Buying Group
to enter into the Proposed Transaction on satisfactory terms, or at
all; failure of Recipe and Buying Group to obtain the required
shareholders and regulatory approvals for, or satisfy other
conditions to effect, the Proposed Transaction; the risk that the
Proposed Transaction may involve unexpected costs, liabilities or
delays; the risk that, prior to or as a result of the completion of
the Proposed Transaction, the business of Recipe may experience
significant disruptions, including loss of clients or employees due
to transaction related uncertainty, industry conditions or other
factors; risks relating to employee retention; the risk that legal
proceedings may be instituted against Recipe; and risks related to
the diversion of management's attention from Recipe's ongoing
business operations.
The forward-looking information contained in this press release
is made as of the date of this press release, and should not be
relied upon as representing Recipe's views as of any date
subsequent to the date of this press release. Except as required by
applicable law, Recipe management and the Board undertake no
obligation to publicly update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise.
About Recipe
Founded in 1883, RECIPE Unlimited Corporation is Canada's largest full-service restaurant
company. The Company franchises and/or operates some of the most
recognized brands in the country including Swiss Chalet, Harvey's,
St-Hubert, The Keg, Montana's, Kelseys, East Side Mario's, New
York Fries, Bier Markt, The Landing Group of Restaurants, Original
Joe's, State & Main, Elephant & Castle, The Burger's
Priest, The Pickle Barrel, Marigolds & Onions, Blanco Cantina, Añejo, Fresh and Ultimate
Kitchens.
RECIPE's iconic brands have established the organization as a
nationally recognized franchisor of choice. As at June 26, 2022, Recipe had 20 brands and 1,223
restaurants, 82% of which are operated by franchisees and joint
venture partners, operating in several countries including
Canada, USA, Saudi
Arabia, India and the UAE.
RECIPE's shares trade on the Toronto Stock Exchange under the
ticker symbol RECP. More information about the Company is available
at www.recipeunlimited.com.
Advisors
Greenhill & Co. Canada Ltd. is acting as financial advisor
to the Special Committee. Davies Ward
Phillips & Vineberg LLP is acting as independent legal
advisor to the Special Committee. Stikeman Elliott LLP is acting as
legal advisor to the Company.
Scotia Capital is acting as financial advisor to Fairfax. Torys
LLP is acting as legal advisor to Fairfax. McCarthy Tetrault LLP is
acting as legal advisor to CHL.
SOURCE Recipe Unlimited Corp.