Taggart Capital Corp. (the "Company") (TSX VENTURE:TAG) announced today that it
has filed a management information circular (the "Information Circular") and
notice of annual and special meeting in respect of its previously announced
reorganization by way of plan of arrangement (the "Arrangement") under the
Business Corporation Act (Ontario) (the "OBCA") whereby it intends to convert
into a real estate investment trust (a "REIT") to be named PRO Real Estate
Investment Trust ("PROREIT"), subject to receipt of all necessary approval,
including the approval of the TSX Venture Exchange (the "Exchange") and the
shareholders of the Company (the "Shareholders"). As previously disclosed, the
Company completed its Qualifying Transaction on January 29, 2013, as defined
under Exchange Policy 2.4 - Capital Pool Companies, and is now listed as a Tier
1 Real Estate Issuer on the Exchange.
The Arrangement
Pursuant to the Arrangement, among other things, the issued and outstanding
common shares of the Company ("Shares") will be exchanged for units of PROREIT
("Units") on a 10 for 1 basis (1 Unit for every 10 Shares). Upon completion of
the Arrangement, PROREIT is expected to meet all of the minimum listing
requirements for a Tier 1 Real Estate Issuer.
Management and the Board of Directors of the Company (the "Board of Directors")
have considered and concluded that the reorganization of the Company into a REIT
in the manner contemplated by the Arrangement is an optimal strategy to increase
value to Shareholders. The Company has decided to pursue the Arrangement and
related transactions as management believes the resulting trust structure will:
(i) enhance Shareholder value, (ii) create a favourable platform for growth and
development of the properties and business of the Company, and (iii) ultimately
provide a vehicle to deliver cash flow from the business of the Company to
security holders in a tax efficient manner.
The closing of the Arrangement is subject to a number of conditions, including,
among other things, (i) the approval of the Arrangement by 66 2/3% of the
Shareholders and with a vote passed by the majority of the minority of the
Shareholders (the "Majority of the Minority Shareholder Approval"), (ii) the
receipt of the final order from the Ontario Superior Court of Justice (the
"Court") and, (iii) the final approval of the Arrangement by the Exchange. In
the event that the necessary approvals are not obtained for the proposed
Arrangement, management of the Company will continue to identify and evaluate
real estate property that it considers appropriate for the Company. In such an
event, management of the Company would also consider the appropriate time to
reorganize the Company into a real estate investment trust by way of a plan of
arrangement.
Information About the Meeting
The annual and special meeting (the "Meeting") of the Shareholders will be held
at 9:00 a.m. (E.S.T.) on March 8, 2013, at 1000 De La Gauchetiere Street West,
Suite 2100, Montreal, Quebec, H3B 4W5.
Each person who is a holder of record of Shares at the close of business on
February 4, 2013 (the "Record Date") is entitled to receive notice of, and to
attend and vote at the Meeting and any adjournment thereof, provided that to the
extent that a person has transferred any Shares after the Record Date and the
transferee of the Shares establishes that the transferee owns the Shares and
demands not later than 10 days before the Meeting to be included in the list of
holders eligible to vote at the Meeting, the transferee will be entitled to vote
the Shares at the Meeting.
Registered Shareholders have the right to dissent with respect to the
Arrangement and be paid the fair value of their Shares in accordance with the
provisions of Section 185 of the OBCA and an interim order of the Court with
respect to the Arrangement dated January 31, 2013, if the Arrangement becomes
effective. This right to dissent is further described in the Information
Circular. Failure to strictly comply with the dissent procedures set out in the
Information Circular may result in the loss or unavailability of any right of
dissent. Beneficial owners of Shares registered in the name of a broker,
custodian, nominee or other intermediary who wish to dissent should be aware
that only a registered owner of Shares is entitled to exercise dissent rights.
Shareholders unable to attend the Meeting in person are requested to read the
Information Circular and form of proxy which accompanies the notice of Meeting
and to complete, sign, date and deliver the form of proxy, together with the
power of attorney or other authority, if any, under which it was signed (or a
copy thereof certified by a notary) to the Company's transfer agent, Equity
Financial Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario, M5H
4H1. To be effective, proxies must be received by Equity Financial Trust Company
not later than 5:00 p.m. (Montreal time) on March 6, 2013 or, if the Meeting is
adjourned, not later than 48 hours (excluding Saturdays, Sundays and holidays)
before the time of the adjourned Meeting, or any further adjournment thereof.
Unregistered shareholders who received the proxy through an intermediary must
deliver the proxy in accordance with the instructions given by such
intermediary.
Investors are cautioned that, except as disclosed in the Information Circular,
any information released or received with respect to the Arrangement may not be
accurate or complete and should not be relied upon. Investors are encouraged to
review the Information Circular, a copy of which will be made available on SEDAR
at www.sedar.com.
Long Term Incentive Plan of PROREIT
At the Meeting, Shareholders will also be asked to approve the proposed long
term incentive plan of PROREIT (the "Long Term Incentive Plan"). The trustees,
directors, employees and consultants of PROREIT and its affiliates
(collectively, the "Eligible Persons") are eligible to participate in the Long
Term Incentive Plan.
The Board of Directors has approved the Long Term Incentive Plan pursuant to
which PROREIT may award deferred units ("DUs") and restricted units ("RUs") to
Eligible Persons. The aggregate number of Units that may be issued pursuant to
the Long Term Incentive Plan is 571,388. The Board of Directors considers the
Long Term Incentive Plan to be fair to Shareholders and in the best interests of
PROREIT and its unitholders.
The rules of the Exchange require that the resolution approving the Long Term
Incentive Plan receives the affirmative vote of a majority of the votes cast at
the Meeting excluding votes attached to Shares beneficially owned by (i)
insiders to whom RUs and DUs may be granted under the Long Term Incentive Plan,
and (ii) associates of such insiders.
Rights Plan
At the Meeting, Shareholders will also be asked to approve the proposed rights
plan of PROREIT (the "Rights Plan"). The Rights Plan will utilize the mechanism
of the "Permitted Bid" to ensure that a person seeking control of PROREIT gives
unitholders and the board of trustees of PROREIT sufficient time to evaluate the
bid, negotiate with the initial bidder and encourage competing bids to emerge.
The purpose of the Rights Plan is to protect unitholders by providing an
incentive for all potential bidders to comply with the conditions specified in
the "Permitted Bid" provisions. If such bidders do not comply with the
"Permitted Bid" provisions, they will be subject to the dilutive features of the
Rights Plan.
The Board of Directors has approved the Rights Plan pursuant to which PROREIT
will issue one right (a "Right") for each voting Unit which is outstanding on
closing of the Arrangement and will issue one Right for each voting Unit issued
during the currency of the Rights Plan. The Board of Directors considers the
Rights Plan to be fair to Shareholders and in the best interests of PROREIT and
its unitholders.
The rules of the Exchange require that the resolution approving the Rights Plan
receives the affirmative vote of a majority of the votes cast at the Meeting.
Acquisition of Common Shares by James W. Beckerleg
James W. Beckerleg, President and Chief Executive Officer of Company, has
acquired ownership of 3,022,381 Shares in connection with the recently announced
completion of the Company's Qualifying Transaction, representing approximately
10.6% of the 28,569,368 issued and outstanding Shares (the "Acquisition"). Mr.
Beckerleg acquired the Shares through his holding company, Ware Hill Investments
Inc. ("Ware Hill"), a private company controlled by Mr. Beckerleg.
More precisely, Ware Hill acquired (i) 2,070,000 Shares pursuant to a share
purchase agreement between Ware Hill, the Company, and the former principals of
the Company at a purchase price of $0.13 per Share for an aggregate
consideration of $269,100, and (ii) 952,381 Shares pursuant to a subscription
agreement between Ware Hill and the Company at a purchase price of $0.1575 per
Share for an aggregate consideration of $150,000. The Acquisition was subject to
the issuance of the Final Exchange Bulletin by the Exchange, which was released
on February 6, 2013. Pursuant to the terms of two escrow agreements dated
September 14, 2011 and January 29, 2013, respectively, the Shares acquired by
Ware Hill are subject to escrow restrictions pursuant to the policies of the
Exchange.
Ware Hill acquired the Shares for investment purposes and to fund, among other
things, the acquisition of a property located at 135 Main Street in Moncton, New
Brunswick, which forms part of the Qualifying Transaction. Ware Hill has filed
an early warning report describing the above transactions with applicable
Canadian securities regulators, a copy of which is available under the Company's
profile on SEDAR at www.sedar.com.
Trustees and Executive Officers of PROREIT
Biographical information regarding the initial trustees and executive officers
of PROREIT is set out below.
James W. Beckerleg - President, Chief Executive Officer and Trustee of PROREIT
From May 2010 until recently, James W. Beckerleg was the President and Chief
Executive Officer of CANMARC Real Estate Investment Trust ("CANMARC"), a
publicly-traded REIT with a nationally diversified portfolio of commercial
properties. From 1995 to 2010, Mr. Beckerleg was President of Belwest Capital
Management Corp., a private consulting firm which provided consulting and
management services in the area of strategic advice and planning, corporate
finance, mergers and acquisitions to various clients, including but not limited
to, Homburg Canada Inc., a private international real estate management company.
From 2005 to 2009, Mr. Beckerleg also served as Executive Vice-President, Quebec
Region for Homburg Canada Inc.
Mr. Beckerleg has many years of experience in corporate finance, mergers and
acquisitions and has served as an executive and director of several public
companies, including CANMARC and several other companies in the real estate
sector. He has a B.Sc (Mathematics) from McGill University (Montreal, Quebec)
and an MBA from Concordia University (Montreal, Quebec).
Gordon G. Lawlor, CA - Chief Financial Officer of PROREIT
From May 2010 until recently, Gordon G. Lawlor was the Executive Vice President,
Chief Financial Officer and Secretary of CANMARC. From 2005 to 2010, Mr. Lawlor
held senior management positions, including that of Chief Financial Officer,
with Homburg Canada Inc., a private international real estate management
company. After graduating from Saint Mary's University (Halifax, Nova Scotia) in
1988 with a Bachelor of Science (Mathematics), he began working with a chartered
accounting firm, receiving his Chartered Accountant designation in 1994. Prior
to CANMARC and the Homburg group, Mr. Lawlor spent seven years at Emera Inc., a
publicly traded utility company where he served in a number of senior management
positions, including Director of Finance.
Vitale A. Santoro - Corporate Secretary and Trustee of PROREIT
Vitale A. Santoro is a partner in the corporate department of the Montreal
office of Osler, Hoskin & Harcourt LLP. Mr. Santoro practices corporate law,
with an emphasis on corporate finance and mergers & acquisitions. Mr. Santoro
obtained an LL.B. from Universite de Montreal (Montreal, Quebec) and a B.A.
(Economics) from Concordia University (Montreal, Quebec).
John Levitt - Independent Trustee and Chairman of the Board of PROREIT
From May 2010 until recently, John Levitt was an Independent Trustee of CANMARC
and served on several committees during his time with CANMARC, including the
Audit Committee, the Governance and Nominating Committee, and the Investment
Committee. Mr. Levitt is currently a partner at EDEV Real Estate Advisors which
he joined as a partner in 2005, and has over 25 years of experience in the real
estate sector. EDEV Real Estate Advisors is a multi-faceted real estate
consulting company offering development management, strategic planning and
transaction services to clients. From 1997 to 2005, he was a member of the
senior management of O&Y Properties Corporation with specific responsibility for
O&Y's acquisition and development programs, which over eight years grew from an
asset base of $250 million to over $2 billion.
Gerard A. Limoges, CM, FCPA, FCA - Independent Trustee of PROREIT
From May 2010 until recently, Gerard A. Limoges was an Independent Trustee of
CANMARC and served on several committees during his time with CANMARC, including
the Audit Committee (as Chair), the Governance and Nominating Committee, and the
Compensation Committee. Gerard A. Limoges is currently a corporate director and
sits on the board of directors of several public companies. He is also a member
of the board of directors of private companies and not-for-profit organizations,
including the Orchestre Symphonique de Montreal. He was formerly deputy Chairman
of Ernst & Young Canada until retirement in September 1999, after a career of 37
years with this firm. He has vast experience in the areas of accounting, audit,
mergers and acquisitions and has worked for clients in a wide range of
industries including service companies, retail, communications, transportation,
real estate, financial institutions, insurance, manufacturing and pulp and
paper. He is a member of the Institute of Corporate Directors, of the Quebec
Order of CPA and of the Canadian Institute of Chartered Accountants. Mr. Limoges
received the Order of Canada in 2002.
Ronald E. Smith, FCA, ICD.D - Independent Trustee of PROREIT
Ronald Smith is a Corporate Director and experienced Board Member with an
extensive background in finance, human resources and management consulting
across a wide spectrum of industries and enterprises. He currently serves on the
Board of AuRico Gold Inc. (formerly Gammon Gold Inc.) and Innovative Properties
Inc., two TSX listed entities. For ten years he was also a member of the Canada
Pension Plan Investment Board, which manages over $170 billion of CPP funds.
Over the last 30 years, he has served on Boards and Audit Committees of six
Canadian public companies. He also served on various not-for-profit boards and
committees, including the Acadia University Board of Governors where he was
chair from 2004 to 2009 and the national board of The Arthritis Society where he
is currently treasurer. From 2000 to 2004, he was Senior Vice President and
Chief Financial Officer of Emera Inc, a publicly-traded Nova Scotia based energy
company. From 1987 to 1999, Mr. Smith was Chief Financial Officer of MTT, a
publicly-traded telecommunications company and, prior thereto, had a 16 year
career at Ernst & Young in the financial recovery and insolvency practice
including real estate, construction and financial services. He is a member of
the Institute of Corporate Directors and is a Fellow of the Institute of
Chartered Accountants of Nova Scotia.
About PROREIT
The objectives of PROREIT will be to: (i) provide holders of Units with stable
and growing cash distributions from investments focused on real estate
properties in Canada, primarily in the Maritimes, Ontario and Quebec, on a tax
efficient basis; (ii) enhance the value of PROREIT's assets and maximize
long-term Unit value; and (iii) expand the asset base of PROREIT and increase
PROREIT's AFFO per Unit, through internal growth strategies and accretive
acquisitions.
Following completion of the Arrangement, PROREIT may finance the acquisition of
additional properties, if identified, through its cash on hand, offerings of
Units, convertible debentures or other securities of PROREIT, mortgage
financings or assumptions of loan, vendor take-back financings as well as the
issuance of securities exchangeable into Units to vendors of properties.
Forward-Looking Statements
This press release contains forward-looking statements. Often, but not always,
forward-looking statements can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "estimates", "intends",
"anticipates" or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company or PROREIT to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. Accordingly, readers should not place undue reliance on forward
looking statements. The factors identified above are not intended to represent a
complete list of the factors that could affect the Company. Completion of the
Arrangement is subject to a number of conditions, including but not limited, to
final approval of the Exchange and obtaining the Majority of the Minority
Shareholder Approval. There can be no assurance that the Arrangement will be
completed as proposed or at all.
FOR FURTHER INFORMATION PLEASE CONTACT:
Taggart Capital Corp.
James W. Beckerleg
President and Chief Executive Officer
(514) 933-9552
Taggart Capital Corp.
Gordon G. Lawlor
Chief Financial Officer
(514) 933-9552
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