DARTMOUTH, NS, May 2, 2018 /CNW/ - Newfoundland Capital
Corporation Limited (the "Company" or "NCC") today announced that
it has signed a definitive agreement with Stingray Digital Group
Inc. ("Stingray") under which Stingray will acquire all the issued
and outstanding shares of the Company. Stingray (TSX: RAY.A, RAY.B)
is the world-leading provider of multiplatform music and video
services, and digital experiences for pay TV operators, commercial
establishments, OTT providers, mobile operators, consumers, and
more.
Stingray will acquire all Class A Subordinate Voting Shares and
Class B Common Shares of NCC (TSX: NCC.A, NCC.B) for $14.75 per share payable by a combination of cash
and Stingray shares, representing a premium of approximately 16%
based on NCC's volume-weighted average closing share price on the
TSX for the last 20 trading days (the "Transaction"). The
Transaction is valued at approximately $508
million (the "Purchase Price"), including the assumption of
net debt of approximately $112
million as at December 31,
2017.
"Today marks the start of an exciting chapter for NCC," said
Rob Steele, Chairman, President
and Chief Executive Officer of NCC. "By joining forces with
Stingray, we are of the view that the synergies will allow our
business to move towards even greater success. Together, we have
begun to build a solid foundation for Canada's next great media group. We
expect that our combined company will stand out in today's fiercely
competitive market for its world-class talent and complementary
service offering. On behalf of NCC's management and Board of
Directors, I am thrilled NCC is joining the Stingray family."
"This transaction with NCC comes after months of careful review"
said Eric Boyko, President,
Co-founder, and Chief Executive Officer of Stingray. "It
represents a considerable milestone for Stingray — positioning us
as a major player in the Canadian media landscape — and is a
valuable opportunity for our stakeholders. We have found in NCC an
established and trusted partner with a proven track record of
delivering results in niche markets across the country. I am
excited to expand Stingray's operations into radio broadcasting and
bring on board some of Canada's
most popular on-air talent and an experienced sales force, which
will help us grow our revenue streams. I look forward to welcoming
the NCC team to the Stingray family and collaborating with the
current management in place."
Transaction Details
For each NCC share, shareholders will receive between
$13.17 and $13.28 in cash with the balance of the price to
be paid in Stingray subordinate voting shares (or Stingray variable
subordinate voting shares, as applicable). This will result in
between 0.15371 and 0.14294 in Stingray shares for each share of
NCC owned, based on the total number of NCC shares outstanding at
closing. They will also be entitled to receive regular semi-annual
dividends in the amount of $0.25 per
share that would be expected to be declared by NCC until closing of
the Transaction.
The Transaction will be effected through a plan of arrangement
and will be subject to the approval of 66 2/3% of the votes cast by
NCC shareholders, voting together as a single class, at a special
meeting of NCC shareholders expected to be held in July 2018 (the "Special Meeting"). In addition to
NCC shareholder approval, the Transaction is subject to customary
closing conditions, including court, Canadian Radio-television and
Telecommunications Commission (CRTC) and other regulatory
approvals.
The Board of Directors of NCC, having received a unanimous
recommendation from a special committee comprised solely of
independent directors (the "Special Committee"), has unanimously
approved the Transaction and recommends that NCC shareholders vote
in favour of the Transaction. The financial advisor to the Special
Committee, Blair Franklin Capital Partners, has provided an opinion
to the Board of Directors and the Special Committee to the effect
that the consideration to be received by NCC shareholders is fair,
from a financial point of view, to such shareholders.
Members of the Steele Family, representing approximately 87% of
the outstanding shares and approximately 93% of the voting rights
of NCC, have entered into irrevocable support and voting agreements
in favour of the Transaction, and a 5 year standstill and voting
trust agreement with the Boyko Group for the shares received as
consideration in the Transaction. In addition, directors and senior
officers of NCC that beneficially own NCC Shares have also entered
into support and voting agreements pursuant to which, subject to
certain terms and conditions, they have agreed to vote all their
NCC Shares in favour of the Transaction at the Special Meeting.
The agreement between Stingray and NCC provides for a
non-solicitation covenant on the part of NCC, subject to customary
"fiduciary out" provisions, and a right in favour of Stingray to
match any superior proposal. If Stingray does not exercise its
right to match, Stingray would receive a termination fee of
$12 million should NCC support any
superior proposal. A reverse break fee of up to $12 million would also be payable by Stingray to
NCC under certain circumstances.
Upon closing, Rob Steele will
step down as Chairman, President and Chief Executive Officer of NCC
and Mr. Ian S. Lurie, Chief
Operating Officer of NCC, will assume leadership responsibilities
for Stingray's newly formed radio division.
Financial and Legal Advisors
Marckenz Group Capital Partners and Scotiabank are acting as
financial advisors for NCC. Stewart
McKelvey are acting as legal counsel. Blair Franklin
Capital Partners are acting as financial advisors to the Special
Committee of NCC. National Bank Financial Inc. is acting as
financial advisor to Stingray on the Transaction. Legal advice is
being provided to Stingray by Davies Ward Phillips & Vineberg
LLP. Legal advice is being provided to the Underwriters by Fasken
Martineau Dumoulin LLP.
Further information regarding the Transaction will be contained
in a management proxy circular that NCC will prepare, file and mail
to NCC shareholders in advance of the Special Meeting. Copies of
the Agreement and management proxy circular will be available on
SEDAR at www.sedar.com.
Closing of the Transaction is expected to occur by the end of
2018.
About Newfoundland Capital Corporation
Limited
Newfoundland Capital Corporation Limited (TSX:
NCC.A, NCC.B) owns and operates Newcap Radio which is one of
Canada's leading radio
broadcasters with 101 broadcast licences (72 radio stations and 29
repeating signals) across Canada.
The Company reaches millions of listeners each week through a
variety of formats and is a recognized industry leader in radio
programming, sales and networking. For more information:
www.ncc.ca
About Stingray
Stingray (TSX: RAY.A, RAY.B) is the
world-leading provider of multiplatform music and video services,
and digital experiences for pay TV operators, commercial
establishments, OTT providers, mobile operators, consumers, and
more. Its services include audio television channels, premium
television channels, 4K UHD
television channels, karaoke products, digital signage, in-store
music, and music apps. Stingray reaches 400 million subscribers (or
users) in 156 countries and its mobile apps have been downloaded
over 90 million times. Stingray is headquartered in Montreal and currently has close to 400
employees worldwide. For more information: www.stingray.com
This news release may contain "forward-looking information"
within the meaning of applicable Canadian securities legislation.
Such forward-looking information includes information with respect
to the Company's goals, beliefs, plans, expectations,
anticipations, estimates and intentions. Forward-looking
information is identified by the use of terms and phrases such as
"may", "would", "should", "could", "expect", "intend", "estimate",
"anticipate", "plan", "foresee", "believe", and "continue", or the
negative of these terms and similar terminology, including
references to assumptions. Please note, however, that not all
forward-looking information contains these terms and phrases.
Forward-looking information in this document includes timing and
completion of the Transaction which is conditional upon regulatory
approval and several other conditions. Forward-looking information
is based upon a number of assumptions and is subject to a number of
risks and uncertainties, many of which are beyond the Company's
control. These risks and uncertainties could cause actual results
to differ materially from those that are disclosed in or implied by
such forward-looking information. Additional risks and
uncertainties include, but are not limited to, the risk factors
identified in the Company's Annual Information Form (AIF) dated
March 8, 2018, which is available on
SEDAR at www.sedar.com. Consequently, all of the forward-looking
information contained herein is qualified by the foregoing
cautionary statements, and there can be no guarantee that the
results or developments that the Company anticipates will be
realized or, even if substantially realized, that they will have
the expected consequences or effects on NCC's business, financial
condition or results of operation. Unless otherwise noted or the
context otherwise indicates, the forward-looking information
contained herein is provided as of the date hereof, and the Company
does not undertake to update or amend such forward-looking
information whether as a result of new information, future events
or otherwise, except as may be required by applicable law.
SOURCE Newfoundland Capital Corporation Limited
