NorRock Realty Finance Corporation and Partners Real Estate Investment Trust Announce the Closing of the Acquisition by Partn...
January 31 2012 - 11:03AM
PR Newswire (Canada)
TORONTO, Feb. 1, 2012 /CNW/ - NorRock Realty Finance Corporation
("NorRock") and Partners Real Estate Investment Trust ("Partners
REIT") announced today the closing of the previously announced
acquisition of substantially all the assets of NorRock, consisting
of cash, cash equivalents, mortgages and other assets from NorRock
in exchange for the issuance of Partners REIT units, certain rights
to acquire Partners REIT units and cash. Closing Consideration Paid
by Partners REIT Partners REIT paid $41,742,531 (which amount
includes a credit to NorRock of $1,425,000 on account of expenses
and a payment of $1,200,000 in respect of certain cash equivalents)
(the "Cash at Closing Payment") for the cash and cash equivalents
held by NorRock. In addition, it has paid $9,422,980 (the "Assets
at Closing Payment") for the non-cash assets of NorRock. Since
October 17, 2011, NorRock has sold assets with a value of
$3,177,020, which amount has been deducted from the Assets at
Closing Payment and added to the Cash at Closing Payment. Partners
REIT made the Cash at Closing Payment and Assets at Closing Payment
by transferring (or directing the transfer) to NorRock the
following units and cash (excluding the stub period dividend
payments and payments to stock appreciation rights holders which
were funded by NorRock) to NorRock: (a) for each NorRock preferred
share, 13.72824 Partners REIT units, together with cash equal to
any stub period dividend payment, or, if the holder has so elected,
12.71676 Partners REIT units and $1.75 in cash together with cash
equal to any stub period dividend payment; (b) for each NorRock
Class A share, 3.29445 Partners REIT units, a number calculated by
determining the amount of the Cash at Closing Payment and Assets at
Closing Payment, less an amount equal to the number of issued and
outstanding NorRock preferred shares multiplied by $23.75, and
dividing the result by the number of outstanding NorRock Class A
shares (the amount per share being the "NorRock Class A Share
Consideration") and then dividing by $1.73; and (c) for each of the
150,000 NorRock stock appreciation rights outstanding, $0.59 paid
in cash per stock appreciation right, a number calculated by
subtracting $5.11 from the NorRock Class A Share Consideration. The
Partners REIT units payable to holders of NorRock Class A shares
have a value of $6.33 based on the $1.92 closing price of the
Partners REIT units on the TSX Venture Exchange on January 31,
2012. The Partners REIT units payable to holders of NorRock
preferred shares who did not elect to receive some of the
consideration in cash have a value of $26.36 based on the same
closing price. In connection with closing: -- 29,575,333 Units were
issued (representing approximately 95% of the currently issued and
outstanding Units) to holders of NorRock preferred shares and Class
A shares; -- $344,050 was paid to those holders of NorRock
preferred shares that elected to receive partial consideration in
cash; -- $217,717 was paid on account of the stub period dividend
payment for the NorRock preferred shares to holders of such shares;
-- $88,500 was paid to holders of NorRock stock appreciation
rights; and -- 3,074,160 Rights (as defined below) will be issued
to holders of NorRock Class A shares and holders of NorRock stock
appreciation rights. Rights - Additional Consideration Payable by
Partners REIT In addition to the Partners REIT units issued and
cash paid at closing as described above, at Closing Partners REIT
issued 3,074,160 non-transferable rights ("Rights") to NorRock.
Under the plan of arrangement, NorRock is obligated to distribute
these Rights to the holders of its Class A shares and stock
appreciation rights. See "Timing of Distributions of Partners REIT
Units to Holders of NorRock Securities" below. The Rights will
entitle the holder to receive Partners REIT units (or, in Partners
REIT's discretion, a cash payment in lieu of all or a portion of
such units) corresponding to that holder's pro rata share of the
Deferred Payment described below. The number of Partners REIT units
to be issued, if any, will be calculated based on the five day
volume weighted average trading price of the Partners REIT units
determined at the time of issue. Holders of the Rights may receive
additional payments after closing in accordance with the terms of
the Rights, which will be paid on a pro rata basis based upon the
number of issued and outstanding Rights. The aggregate of
such payments (the "Deferred Payment"), if any, will be equal to
the (A) Liquidated Value plus the Retained Value (both as defined
below) less (B) the Assets at Closing Payment less (C) 20% of the
amount (if any) that the Liquidated Value exceeds the Assets at
Closing Payment. To the extent that the Deferred Payment is equal
to or less than $0.01 per Right, a payment of $0.01 will be payable
per Right. After closing, Partners REIT may choose to sell the
mortgages and other non-cash assets it has purchased from NorRock.
If Partners REIT chooses to sell any of such assets before July 1,
2012, such assets will be valued at the net sale price (in the case
of a sale to parties that are arm's-length to Partners REIT, or at
a price equal to or above an independent valuation if such asset is
sold to a party that is not arm's-length to Partners REIT) (the
"Liquidated Value"). If Partners REIT continues to hold any such
assets on July 1, 2012, it will have such assets valued as of July
1, 2012 by two independent and qualified valuators by August 1,
2012. The average valuation will be considered to be the
"Retained Value" for such assets. In accordance with the terms of
the Rights, the Deferred Payment will be made up to 90 days
following the earlier of: -- the liquidation of all non-cash assets
acquired by Partners REIT from NorRock; and -- August 1, 2012. The
Rights are not and will not be listed on any stock exchange. The
Rights are not transferable by an initial holder except by
operation of law or to the heirs, executors and successors of an
initial holder. Timing of Distributions of Partners REIT Units to
Holders of NorRock Securities Under the plan of arrangement,
NorRock is obligated to distribute any cash, Rights and Partners
REIT units received from Partners REIT to its security holders, as
set out above. The distribution of Partners units and cash to
holders of NorRock preferred shares will be made by Computershare
Investor Services Inc., the depositary for the arrangement, as soon
as practicable after closing. The distribution of Rights to holders
of NorRock stock appreciation rights will be made by Computershare
Investor Services Inc., the depositary for the arrangement, as soon
as practicable after closing. The distribution of Partners units
and Rights to holders of NorRock Class A shares will be made to
these shareholders of record as of the close of trading on February
6, 2012 and will be made by Computershare Investor Services Inc.,
the depositary for the arrangement, on or about February 14, 2012.
Dilution A total of 29,575,333 Partners REIT units were issued at
closing (representing approximately 95% of the currently issued and
outstanding Partners REIT units). The maximum number of
Partners REIT units issuable under the Rights agreement is
3,000,000, representing approximately 10% of the currently issued
and outstanding Partners REIT units. Trading of NorRock Preferred
Shares and Class A Shares on the TSX As part of the plan of
arrangement completed today, the NorRock preferred shares were
cancelled, so certificates representing the NorRock preferred
shares represent only the right to receive the Partners REIT units
to which such holder is entitled and, if elected by the holder
prior to January 31, 2012, cash. The Toronto Stock Exchange has
advised NorRock that it expects that the NorRock preferred shares
will be delisted from the Toronto Stock Exchange on or about
February 3, 2012. The TSX has also advised NorRock that it expects
that the NorRock Class A shares will be halt traded as at the
opening of the markets on or about February 6, 2012. Trading in the
NorRock Class A shares will continue to be halted until such time
as the NorRock Class A shares are delisted. Upon closing of the
Transaction, NorRock will have substantially sold all of its
assets. As a result, NorRock is required to meet the original
listing requirements of TSX in order to remain listed. NorRock does
not expect to meet the original listing requirements of TSX.
If NorRock does not voluntarily delist from TSX by March 1, 2012,
TSX may delist NorRock's securities. To maintain liquidity in the
NorRock Class A shares, NorRock intends to apply to list its Class
A shares on NEX. NEX is a separate board of the TSX Venture
Exchange that provides a trading forum for listed companies that
have low levels of business activity or have ceased to carry on an
active business. Only companies that were formerly listed on
TSX or TSX-V are eligible to list on NEX. NEX companies are
subject to the same disclosure standards as all Canadian public
companies and trading on NEX takes place on the same fully
electronic system used by TSX-V and is governed by the same trading
rules. NorRock's board of directors and management continue to
explore options which they believe will be in the best interests of
NorRock and its shareholders. Any proposed transaction will
be subject to receipt of all necessary regulatory approvals.
The business of NorRock may remain in the commercial real estate
lending industry or be in a different industry. Consolidation of
Partners REIT Units In addition, the previously announced
consolidation of Partners REIT units on the basis of one
post-consolidation unit for every four pre-consolidation units held
is now expected to occur on or about February 16, 2012. More
information will be disseminated to Partners REIT unitholders
closer to that time. About NorRock NorRock is a mutual fund
corporation incorporated under the laws of the Province of Ontario.
It was created to obtain exposure to the investment performance of
an actively managed portfolio of mortgages and secured loans in the
Canadian commercial real estate sector on a tax-efficient basis.
About Partners REIT Partners REIT is a growth-oriented real estate
investment trust, which currently owns (directly or indirectly) 21
retail properties located in British Columbia, Ontario, Manitoba
and Quebec, aggregating approximately 1.7 million square feet of
leaseable space. Partners REIT focuses on expanding and managing a
portfolio of retail and mixed-use community and neighbourhood
shopping centres located in both primary and secondary markets
across Canada. Forward-looking Statements Certain statements
included in this press release constitute forward-looking
statements, including, but not limited to, those identified by the
expressions "believe", "expect," "will", "offers the
opportunity", "intend, "look forward" and similar expressions to
the extent they relate to Partners REIT and NorRock. The
forward-looking statements are not historical facts but reflect
Partners REIT's and NorRock's current expectations regarding future
results or events. These forward looking statements are subject to
a number of risks and uncertainties that could cause actual results
or events to differ materially from current expectations, including
the anticipated value to be received by holders of NorRock Class A
shares and stock appreciation rights; our ability to obtain
regulatory and other approvals; the fulfillment of conditions
precedent to closing the transaction and the successful completion
of the transaction; our expectations regarding an increase in funds
available to Partners REIT as a result of the acquisition,
our expectations regarding the retention or sale of the mortgages
and other assets acquired by Partners REIT in connection with the
transaction; Partners REIT's status as a "real estate investment
trust" after the closing of the transaction; our expectations
regarding an additional payment to the holders of NorRock Class A
shares and stock appreciation rights after the closing of the
transaction; Partners REIT's intention to continue to grow
and diversify its portfolio; the continued listing of the NorRock
preferred shares and Class A shares on the TSX; intended
acquisitions to be made by Partners REIT; any proposed changes to
the business of NorRock that its directors believe will be in the
best interests of NorRock and its shareholders; and general
economic and industry conditions. Although each of Partners REIT
and NorRock believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking
statements are not guarantees of future performance and,
accordingly, readers are cautioned not to place undue reliance on
such statements due to the inherent uncertainty therein. The
forward-looking statements contained in this press release reflect
our current views with respect to future events and are also
subject to certain other risks and uncertainties and other risks
detailed from time-to-time in Partners REIT's and NorRock's ongoing
filings with the securities regulatory authorities, which filings
can be found at www.sedar.com. Neither Partners REIT nor NorRock
undertakes any obligation to publicly update or revise any
forward-looking statements either as a result of new information,
future events or otherwise, except as required by applicable
securities laws. Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release. Partners REIT CONTACT:
Partners REIT:Patrick Miniutti, President and Chief Operating
Officer (250) 940-5500NorRock Realty Finance Corporation:
Jacqueline Boddaert, Chief Executive Officer (416) 479-9510 ext.
305
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