TORONTO, Sept. 1,
2022 /CNW/ - Recipe Unlimited Corporation ("Recipe"
or the "Company") (TSE: RECP) announced today that it has entered
into an arrangement agreement (the "Arrangement Agreement") with
1000297337 Ontario Inc. (the "Purchaser"), a newly-formed
subsidiary of Fairfax Financial Holdings Limited ("FFHL") and FFHL,
as guarantor, in respect of a transaction (the "Transaction")
whereby the Purchaser 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 FFHL and its affiliates (collectively,
"Fairfax") and 9,398,729 MVS owned by Cara Holdings Limited ("CHL",
and together with Fairfax, the "Buying Group"), at a purchase price
of $20.73 per Share (the
"Purchase Price"), payable in cash. Today's announcement is the
culmination of the negotiations that took place following the
August 9, 2022 announcement of the
signing of a letter of intent by the Company and the Buying Group
in respect of the Transaction. The signing of the Arrangement
Agreement followed the recommendation of the independent special
committee (the "Special Committee") of the board of directors of
the Company (the "Board"). The Purchase 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.
Stephen K Gunn, the chair of the Special Committee, commented,
"Recipe has valued its relationship with Fairfax since Fairfax
invested in the Company in 2013. The Transaction offers an
attractive premium and immediate liquidity to our shareholders
while providing the Company with additional flexibility to operate
as a private company in the hands of a committed long-term
owner."
The Transaction is to be effected by way of a court-approved
plan of arrangement and is expected to close in the last quarter of
2022, subject to receipt of shareholder and court approvals and
certain other customary closing conditions. Completion of the
Transaction is not subject to any financing condition.
Unanimous Board Approval
The Board, having received the unanimous recommendation of the
Special Committee, determined that pursuing the Transaction is in
the best interests of the Company and the Board intends to
recommend that the Company's shareholders vote in favour of the
Transaction at a special meeting of the shareholders to be held to
approve the Transaction.
Formal Valuation and Fairness Opinion
In connection with its review of the Transaction, the Special
Committee retained Greenhill to
provide financial advice and prepare a formal valuation of the
Shares (the "Formal Valuation") 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 Shares was in the range of
$16.67 to $21.85 per Share. 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 the Shares (other
than the Purchaser or its affiliates and CHL) pursuant to the
Transaction is fair, from a financial point of view, to the holders
of the Shares (other than the Purchaser or its affiliates and CHL).
Transaction Details
Pursuant to the terms of the Arrangement Agreement, the
Purchaser will acquire all of the Shares, other than those
Shares owned by Fairfax and 9,398,729 MVS owned by CHL, for a
purchase price of $20.73 per Share,
payable in cash. Pursuant to the Transaction, of the 12,740,077 MVS
owned by CHL, 3,341,348 MVS will be purchased by the Purchaser
for the Purchase Price and CHL has agreed to rollover the remaining
balance of its MVS for shares in the capital of the Purchaser. The
Transaction is not subject to any financing condition. FFHL has
provided a full and unconditional guarantee in favour of the
Company with respect to the obligations of the Purchaser under the
Arrangement Agreement.
The consummation of the Transaction will be subject to
conditions customary to transactions of this nature, including,
among others, (i) receipt by the Company and the Purchaser of court
and/or stock exchange approvals; and (ii) the approval of the
Transaction at a special meeting of the shareholders of the Company
entitled to vote on the Transaction (including a "majority of the
minority" vote of the Shareholders excluding for this purpose the
votes of Shares owned or controlled by Fairfax, CHL and other
persons whose votes are required to be excluded under MI
61-101).
Recipe expects to hold a special meeting (the "Special Meeting")
of Recipe's shareholders to approve the Transaction on or around
October 21, 2022. The Transaction is
expected to close in the last quarter of 2022, subject to
shareholder and court approvals and other customary closing
conditions. The terms and conditions of the Transaction will be
disclosed in greater detail in a management information circular
for the Special Meeting that will be mailed to Recipe's
shareholders. 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.
Voting Support Agreements
CHL and the directors and certain officers of the Company have
each entered into voting support agreements to vote their Shares in
favour of the Transaction subject to certain customary
exceptions.
Early Warning Information
Fairfax currently owns and controls, directly and in the
investment portfolios of its insurance companies, 5,657,435 SVS and
21,314,747 MVS, representing approximately 22.3% of the SVS and
approximately 62.6% of the MVS, immediately prior to the execution
of the Arrangement Agreement. Following completion of the
Transaction, Fairfax will beneficially own approximately 84% of the
issued and outstanding Shares. An early warning report will be
filed by Fairfax in accordance with applicable securities laws and
will be available on SEDAR at www.sedar.com or may be obtained
directly from Fairfax upon request at 416-367-4941 (Attention:
John Varnell) or at Fairfax
Financial Holdings Limited, 95 Wellington Street West, Suite 800,
Toronto, Ontario M5J 2N7.
CHL currently owns 12,740,077 MVS, representing approximately
37.4% of the MVS and 21.7% of the Shares immediately prior to the
execution of the Arrangement Agreement. Following completion of the
Transaction, CHL will own approximately 16% of the Shares. An early
warning report will be filed by CHL in accordance with applicable
securities laws and will be available on SEDAR at www.sedar.com or
may be obtained directly from CHL upon request from Sean Regan at 416-276-9027. The address of CHL
is 2497 Marine Drive W West Vancouver,
BC Canada, V7V 1L3. CHL is
disposing of a portion of its MVS for investment purposes.
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 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 Transaction, management has provided same based on
reliance on certain assumptions it considers reasonable at this
time including that any conditions precedent to the closing of the
Transaction can be satisfied. 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 Transaction include, but
are not limited to: failure of Recipe and the Purchaser to obtain
the required shareholder and court approvals for, or satisfy other
closing conditions to effect, the Transaction; the risk that the
Transaction may involve unexpected costs, liabilities or delays;
the risk that, prior to or as a result of the completion of the
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.
About Fairfax Financial Holdings Limited
Fairfax Financial Holdings Limited is a holding company which,
through its subsidiaries, is primarily engaged in property and
casualty insurance and reinsurance and the associated investment
management. For further information contact: John Varnell, Vice President, Corporate
Development at (416) 367-4941.
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.
