SYMBOL: HIS (TSXV)
www.hartstores.com
LAVAL, QC, Dec. 23, 2014
/CNW Telbec/ - Hart Stores Inc. (TSXV: HIS) is pleased to announce
that it has entered into a Merger Agreement and related agreements
with 9102221 Canada Inc. (the "Purchaser"), a
newly-incorporated corporation owned by a third party at
arm's-length from Hart Stores, in order to sell, in effect, all of
the 13,662,296 issued and outstanding shares of Hart Stores to the
Purchaser at a price of $0.20 per
share. The transaction will be effected by way of an
amalgamation of Hart Stores and the Purchaser under the Canada
Business Corporations Act (the "Amalgamation").
Under the Amalgamation, all of the 13,662,296 common shares of
Hart Stores will be cancelled and shareholders will receive
$0.20 in cash for each share held in
consideration for the cancellation of the shares. The total
purchase price is approximately $2.73 million. Immediately after the
Amalgamation, it is expected that the Purchaser will continue to
carry on the operations of Hart Stores.
The Amalgamation is subject to approval by the shareholders of
Hart Stores. In this regard, Hart Stores has called a special
meeting of shareholders, to be held at Hart Stores' head office in
Laval, Quebec on February 6,
2015, to vote on the Amalgamation. Hart Stores will mail a
detailed management information circular to shareholders shortly
after the record date of January 6, 2015 for the special
meeting.
If shareholders approve the Amalgamation, it is expected to take
effect on or about February 9, 2015. As a result,
shareholders will cease to hold shares of Hart Stores.
H & N Family Subco Inc., which holds 7,998,900
shares of Hart Stores, and Mr. Harry
Hart, who holds 278,240 shares, representing in the
aggregate 8,277,140 shares or 60.6% of the outstanding shares of
Hart Stores, have entered into a Support and Voting Agreement
with the Purchaser under which they have agreed irrevocably to
support and vote their shares in favour of the Amalgamation.
Mr. Harry Hart, the founder,
Executive Chairman and Chief Executive Officer of Hart Stores, and
members of his immediate family directly or indirectly own
H & N Family Subco Inc. Under the Support and
Voting Agreement, H & N Family Subco Inc. and
Mr. Hart have agreed, among other things, not to take any
action which may in any way adversely affect the success of the
Amalgamation.
The Board of Directors of Hart Stores, after consultation with
its financial and legal advisors, unanimously approved entering
into the Merger Support. In doing so, the Board of Directors
determined that the Amalgamation is fair to the shareholders of
Hart Stores and in the best interests of Hart Stores, and
authorized the submission of the Amalgamation to shareholders for
their approval at the special meeting to be held on
February 6, 2015.
In making its determination, the Board of Directors considered,
among other things, an opinion from Burkman Capital Corporation to
the effect that, as of December 23, 2014 and based upon and
subject to the limitations, assumptions and qualifications
contained therein, the consideration of $0.20 cash per share to be received by the
shareholders in the Amalgamation is fair, from a financial point of
view, to the shareholders. A copy of the fairness opinion
will be included in the management information circular to be
mailed to shareholders.
To be effective, the Amalgamation must be approved by a special
resolution of the shareholders. The requisite approval for
the special resolution will be two-thirds of the votes cast on the
special resolution by shareholders present in person or represented
by proxy and entitled to vote at the special meeting. The
Amalgamation is also subject to satisfaction of certain conditions
set out in the Merger Agreement. The Board of Directors
unanimously recommends that shareholders vote for the special
resolution.
The Amalgamation is fully funded. In this regard, the
Purchaser has placed approximately $2.73 million, representing the aggregate
amount of all payments to shareholders, in escrow with Fasken
Martineau DuMoulin LLP, counsel to Hart Stores, as escrow
agent, pursuant to an Escrow Agreement. In the event that the
Amalgamation is completed, Fasken Martineau DuMoulin LLP, as
escrow agent, will deliver the escrowed funds to the party acting
as depositary for the Amalgamation, which will use the escrowed
funds to make the cash payment of $0.20 per share to Hart Stores shareholders
pursuant to the Amalgamation.
The Merger Agreement contains customary deal-protection
provisions in favour of Hart Stores for a transaction of this
kind. The Purchaser and Hart Stores are at
arm's-length. Hart Stores will file a copy of the Merger
Agreement and related agreements on SEDAR.
The shares of Hart Stores have been subject to cease-trade
orders issued by five Canadian provincial securities commissions
since August 2012. In connection with the Amalgamation,
Hart Stores has obtained partial revocation orders from the five
provincial securities commissions, as a result of which the
Amalgamation may be completed. Copies of the five partial
revocation orders will be included in Hart Stores' management
information circular.
Burkman Capital Corporation is acting as financial advisor and
Fasken Martineau DuMoulin LLP is acting as legal counsel to
Hart Stores in connection with the Amalgamation.
Third-Quarter Results
Hart Stores also announces its financial results for the third
quarter ended November 2, 2014.
For the third quarter, sales reached $18.2 million compared to $19.7 million for the same period in the
previous year. Comparable store sales decreased by 7.8% over
the same period in the previous year. The Company reported a
net loss of $2,388,000 or
$0.17 per share compared to a net
loss of $1,386,000 or $0.10 per share for the same period in the
previous year.
For the nine-month period ended November 2, 2014, sales
reached $53.5 million compared
to $57.9 million for the
comparable period in the previous year. Comparable store
sales decreased by 7.8% over the same period in the previous
year. The Company reported a net loss of $6,237,000 or $0.46
per share for this period compared to a net loss of $3,892,000 or $0.28
per share for the same period last year.
As of November 2014, $4.5 million of the total $6.0 million in payments agreed under the
terms of the Company's CCAA Plan of Arrangement have been paid to
the Company's unsecured creditors as scheduled under the Plan of
Arrangement. The final payment of $1.5 million is scheduled for
February 2015.
ABOUT HART STORES INC.:
Hart Stores Inc. operates a network of 61 mid-sized department
stores located in secondary and tertiary markets in Eastern Canada, where the Company has
established a dominant position in many of the communities that it
serves. The stores offer an extensive and differentiated
selection of national and exclusive fashion apparel brands as well
as family footwear, home furnishings, electronics, appliances,
giftware, toys and seasonal goods.
FORWARD-LOOKING STATEMENTS
Certain statements included in this news release may constitute
"forward-looking statements" within the meaning of the Canadian
securities legislation and regulations. Such forward-looking
statements involve assumptions, known and unknown risks,
uncertainties and other factors that may affect our ability to
implement our strategies and plans, which could cause actual
results to differ materially from future results expressed or
implied by such forward-looking statements. You should not
place undue reliance on these forward-looking statements, which are
made only as of the date of this press release. In
particular, the timing and completion of the proposed Amalgamation
are subject to certain conditions, termination rights and other
risks and uncertainties. Accordingly, there can be no
assurance that the proposed Amalgamation will occur, or that it
will occur on the timetable or on the terms and conditions
contemplated. We refer you to the Company's filing with the
Canadian securities regulatory authorities for a discussion of
other factors and risks that may affect the Company's future
results.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of the release.
SOURCE Hart Stores Inc.