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MONTREAL, Nov. 18, 2021 /CNW/ - Sportscene Group
Inc. ("Sportscene" or the "Corporation") (TSX
Venture Exchange: SPS.A ) announced today that it had entered
into a final combination agreement (the "Combination
Agreement") pursuant to which Jean Bédard, the President and
Chief Executive Officer of Sportscene, and a consortium of Québec
investors led by Champlain Financial Corporation ("Champlain" and collectively with
Jean Bédard, the "Offerors") will acquire, through a
newly incorporated corporation (the "Purchaser"), all of the
issued and outstanding Class A shares of Sportscene (the
"Shares"), except for 1,715,288 Shares held, directly or
indirectly, by Jean Bédard, for a cash consideration of
$7.25 per Share (the
"Transaction"). Under the terms of the Transaction,
Sportscene will therefore become a private corporation for a total
consideration of approximately 51.25 million dollars,
excluding the value of certain Shares and the options of the
Corporation held by Jean Bédard and his affiliated entity, and the
Shares will cease to be listed on the TSX Venture Exchange
(the "TSX-V").
The cash consideration of $7.25
per Share represents a premium of approximately 84% to the closing
price of the Shares on the TSX-V on November 18, 2021, the
last trading day before this press release, and a premium of 79% to
the volume-weighted average trading price of the Shares on the
TSX-V for the 20-day period ending at the close of market on
November 18, 2021.
"Eighteen months after the start of the worst crisis ever to
affect the restaurant industry, we believe that privatizing the
business will simplify the Corporation's operations and enable us
to better pursue the implementation, with the management team and
our new partners, of our strategic plan initiated before the
pandemic. I would like to stress the invaluable support of the
shareholders, key among them being Charles
St-Germain and his family, who for 25 years have given
the Corporation the support and resources needed to make Sportscene
a leader in the Québec restaurant industry and to contribute to its
exemplary growth," said Jean Bédard, President and Chief Executive
Officer of Sportscene.
"We are proud to join Jean Bédard and all the employees,
franchisees and partners of Sportscene Group, who have shown great
creativity and the ability to innovate and adapt both before and
during the pandemic," said Pierre
Simard, President of Champlain. "We firmly believe that the vision
of Sportscene's team is a perfect fit with our desire to create
strong Québec brands and our value creation approach."
Independent Valuation Process
In accordance with applicable securities legislation, the board
of directors of the Corporation formed a special committee composed
of independent directors to examine and review the proposed
Transaction and to make recommendations to the board of directors
of the Corporation as to whether the Transaction being considered
is in the best interests of the Corporation and whether the board
of directors of the Corporation should approve the Combination
Agreement and recommend that Disinterested Shareholders (as defined
below) vote their Shares in favour of the Transaction. The members
of the special committee, Nelson
Gentiletti (chair of the special committee), Annick Mongeau and Katia
Marquier, retained Stikeman Elliott LLP as independent legal
advisers, and PricewaterhouseCoopers LLP ("PwC") was
retained as independent financial advisers to advise the special
committee and prepare an opinion as to the fairness of the
Transaction from a financial point of view.
PwC has provided an opinion (the "Fairness Opinion") to
the special committee to the effect that, on the date hereof,
subject to the assumptions, limitations and qualifications
contained therein, the consideration to be received by the
shareholders of the Corporation, other than Jean Bédard and the
corporations under his control (the "Disinterested
Shareholders"), pursuant to the Transaction is fair, from a
financial point of view, to the Disinterested Shareholders.
Based on PwC's conclusions, among the other factors taken into
consideration, and after consulting with its financial and legal
advisers, the special committee has unanimously determined that the
Transaction was in the best interests of the Corporation and was
fair to the Disinterested Shareholders and recommended that the
board of directors of the Corporation determine that the
Transaction is in the best interests of the Corporation and is fair
to the Disinterested Shareholders and recommend that the
Disinterested Shareholders vote in favour of the Transaction.
Consequently, the board of directors of the Corporation unanimously
approved the Transaction (the interested directors, Jean Bédard and
Marc Poulin (Mr. Poulin being a
director of corporations related to Champlain) having recused
themselves) and recommended that the Disinterested Shareholders
vote their Shares in favour of the Transaction.
Charles St-Germain and his
family's affiliated entities holding Shares representing 53.2% of
all voting rights attached to the 8,647,786 issued and outstanding
Shares, have signed irrevocable support and voting agreements
pursuant to which they have agreed to vote all of their Shares at
the Meeting in favour of the Transaction, and they will vote as
Disinterested Shareholders at the Meeting. Jean Bédard and his
affiliated entities holding Shares representing 20.3% of all voting
rights attached to all Shares, have also signed irrevocable support
and voting agreements pursuant to which they have agreed to vote
all of their Shares at the Meeting in favour of the Transaction. In
addition, the directors and certain executive officers of the
Corporation who hold Shares also signed support and voting
agreements under which, subject to certain terms and conditions,
they have agreed to vote all of their Shares at the Meeting in
favour of the Transaction.
Transaction Details
The Transaction will be carried out by amalgamation of the
Corporation and two subsidiaries of the Purchaser under the
Canada Business Corporations Act. At the time of the
amalgamation, the shareholders of the Corporation, with the
exception of the Offerors who hold Shares, will receive, in
consideration of each of their Shares, one redeemable preferred
share of the amalgamated entity, which will be redeemed immediately
after the amalgamation for a cash consideration of $7.25.
Under the Combination Agreement, on the date on which the
amalgamation takes effect, each option that has not yet been
exercised will be terminated and cancelled, at the time the
amalgamation takes effect, in exchange for a cash payment made by
the Corporation corresponding to the difference between
$7.25 per option and the option
exercise price (less applicable withholdings and deductions
provided by law) in accordance with the terms of the Corporation's
stock option plan, which will be amended prior to the closing date
of the Transaction to provide for this cash payment. Options that
have an exercise price equal to or greater than $7.25 will be terminated and cancelled without
payment of any consideration.
The Transaction is not subject to a financing condition. To
guarantee its obligations under the Combination Agreement,
including the payment of the total consideration and the required
payments to option holders under the Combination Agreement, the
Purchaser has arranged for an amount of 50 million dollars to
be deposited in trust with the TSX Trust Company, as escrow agent,
in order to guarantee its obligation under the Combination
Agreement. Such amount will be held in trust and released once the
conditions to which the Transaction is subject under the
Combination Agreement have been met.
The shareholders of the Corporation will be asked to approve the
Transaction at a special meeting (the "Meeting") that the
Corporation intends to hold in January
2022. Completion of the Transaction is subject to certain
closing conditions, including the approval of the TSX Venture
Exchange, approval by at least two-thirds of the votes attached to
the Shares held by the shareholders of the Corporation voting at
the Meeting as well as the approval by a simple majority of the
votes attached to the Shares held by the Disinterested Shareholders
voting at the Meeting and the absence of any material adverse
change affecting the Corporation. Mr. St–Germain and his
affiliates will vote as Disinterested Shareholders at the Meeting.
The Combination Agreement governing the Transaction contains
customary representations, warranties and undertakings for a
transaction of this nature. If all conditions are met, the closing
of the Transaction is expected to take place in the week following
the Meeting. Termination fees of $2 million may be payable to
the Purchaser by the Corporation in certain circumstances,
including in the event that the Corporation supports a superior
proposal.
Further information about the Transaction, including a copy of
the Fairness Opinion and the specific reasons why the board of
directors of the Corporation and the special committee made a
favourable recommendation to the shareholders of the Corporation,
will be included in the information circular (the
"Circular") to be mailed to the shareholders of the
Corporation in December 2021 in
connection with the Meeting.
The Combination Agreement, the Circular (including the Fairness
Opinion) and certain related documents will be filed in a timely
manner on SEDAR, under the Corporation's profile, at
www.sedar.com.
The Corporation plans to release its results for the fiscal year
ended August 29, 2021, on
November 26, 2021, prior to the
opening of the markets.
Advisers
Fasken Martineau DuMoulin LLP is acting as legal counsel to the
Corporation. BCF Business Law LLP is acting as legal counsel to the
Offerors. PwC is acting as financial adviser and Stikeman Elliott
LLP is acting as legal counsel to the special committee.
The shareholders should consult their own tax advisers and
investment advisers regarding the Transaction, the details of which
will be provided in the Circular.
About Champlain
Champlain is a Canadian private
holding company that has been based in Montreal since 2004. It has over
$800 million in assets under management through a portfolio of
22 companies located primarily in Québec and operating in the
consumer goods, food processing, retail and distribution sectors.
Its investment portfolio in Québec includes JLD Lague (John Deere),
La Canadienne, Wong Wing,
Boulangerie Dumas, Louis Garneau,
Kanuk, Jardins de Ville, Maison
Corbeil, Must Société, Les Épices Dion, Les Eaux Naya,
Brault & Bouthillier, Beach Day Every Day Transport Inter-Nord
and Orthofab.
Forward-Looking Statements
This press release contains forward-looking statements
relating to the Corporation. Statements made in reference to the
current expectations of management involve inherent risks and
uncertainties, known and unknown, including risks associated with
public health issues such as those resulting from the COVID–19
pandemic. All statements other than statements of historical facts
included in this press release, including statements regarding the
prospects of the industry and prospects, plans, financial position
and business strategy of the Offerors or Sportscene, may constitute
forward-looking statements within the meaning of Canadian
securities legislation and regulations. Forward-looking statements
can generally be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "plan," "foresee," "believe" or "continue" or the
negatives of these terms or variations of them or similar
terminology or the use of the future tense. These forward-looking
statements are not facts or guarantees of future performance, but
only reflections of estimates and expectations of Sportscene's and
the Offerors' management and involve a number of risks,
uncertainties and assumptions.
In respect of the forward-looking statements, the anticipated
date of the Meeting and the anticipated timing for the completion
of the Transaction, as well as the release date of its results for
the fiscal year ended August 29,
2021, Sportscene has relied on certain assumptions that it
considers reasonable at this time, including assumptions as to the
ability of the parties to receive, in a timely manner and on
satisfactory terms, the necessary approvals by the TSX-V and the
shareholders; and the ability of the parties to satisfy, in a
timely manner, the other conditions relating to the closing of the
Transaction; and other expectations and assumptions concerning the
Transaction. The anticipated timing for the Meeting may change for
a number of reasons. Although Sportscene believes that the
expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to be correct. Accordingly, investors and others are
cautioned that undue reliance should not be placed on any
forward-looking statements.
The risks and uncertainties inherent in the nature of the
Transaction include, but are not limited to, the failure of the
parties to obtain the required approvals from the shareholders and
regulatory bodies, including the approval of the regulatory bodies
and the approval of the TSX-V, or to otherwise satisfy the
conditions relating to the completion of the Transaction, or the
failure of the parties to obtain such approvals or satisfy such
conditions in a timely manner; significant transaction costs or
unknown liabilities; and the general economic conditions. Failure
to obtain the necessary approvals of the shareholders and the
regulatory bodies, or the failure of the parties to otherwise
satisfy the conditions relating to the completion of the
Transaction or to complete the Transaction may result in the
Transaction not being completed on the proposed terms or at all. In
addition, if the Transaction is not completed, and Sportscene
continues as an independent entity, there are risks that the
announcement of the Transaction and the dedication of substantial
resources of the Corporation to the completion of the Transaction
could have an impact on its business and strategic relationships
(including with future and prospective employees, customers,
suppliers and partners), operating results and activities in
general, and could have a material adverse effect on its current
and future operations, financial condition and prospects.
Furthermore, failure by Sportscene to comply with the terms of the
Combination Agreement may, in certain circumstances, result in it
being required to pay a termination fee to the Offerors, the result
of which could have a material adverse effect on its financial
position and results of operations and its ability to finance
growth prospects and current operations.
The forward-looking statements contained in this press
release are expressly qualified in their entirety by these
cautionary statements. Actual results may vary from expectations.
The reader is cautioned not to place undue reliance on
forward-looking information. The Corporation does not undertake to
update or revise any forward-looking statements as a result of new
information, future events or any other reason, except if required
by applicable laws.
Neither the TSX–V nor its Regulation Services Provider (as
that term is defined in the policies of the TSX–V) accepts
responsibility for the adequacy or accuracy of this press
release.
Profile
Sportscene Group is a pioneer and a leader in the ambiance
restaurant niche in Québec. Since 1984, it has been operating the
La Cage – Brasserie Sportive ("La Cage")
restaurant chain, differentiated by its sporting ambiance and food
offering made from fresh, local products. With a strong brand
image, La Cage is established throughout the province and
currently comprises 38 locations. Sportscene continues to
diversify its restaurant activities, notably through the operation
of P.F. Chang's, an Asian cuisine
restaurant, and its La Cage – Corporate Events division,
making the Corporation a key player in Québec's restaurant
industry. In addition to its restaurant operations, Sportscene is
active in the sale of La Cage and Moishes
branded products in grocery stores, and the sale of ready-to-eat
meals and ready-to-cook boxes.
NO OFFER OR SOLICITATION
This announcement is for information purposes only and does not
constitute an offer to purchase or the solicitation of an offer to
sell Shares.
SOURCE Sportscene Group Inc.
