TORONTO,
May 17, 2013 /CNW/ - Edgefront Realty
Corp. ("Edgefront", or the "Corporation") (TSXV: ED)
announces today that it has filed a management information circular
(the "Information Circular") and notice of special meeting
in respect of its previously announced reorganization under a plan
of arrangement under the Business Corporations Act
(Ontario) (the
"Arrangement") whereby the Corporation intends to convert
into a real estate invest trust named "Edgefront Real Estate
Investment Trust" (the "REIT"), subject to receipt of all
necessary approvals, including the approval of the TSX Venture
Exchange ("TSXV") and the shareholders of the
Corporation.
Pursuant to the Arrangement, among other things:
(i) the issued and outstanding shares of the Corporation will be
exchanged for units of the REIT on a 40 for 1 basis (1 unit for
every 40 shares) (the "Exchange Ratio"), and (ii) the issued
and outstanding options to purchase shares will be exchanged for
options to purchase units on terms and conditions substantially
similar to the terms and conditions of the existing options of the
Corporation, subject to adjustments to the number of units
underlying REIT options based upon the Exchange Ratio.
Information about the Meeting
The special meeting (the "Meeting") of
shareholders will be held at 9:00
a.m. on June 14, 2013, at 199
Bay Street, Commerce Court West, 40th Floor, Toronto Ontario. Each person who is a holder
of record of shares at the close of business on May 13, 2013 is entitled to receive notice of,
and to attend and vote at, the Meeting, and any adjournment or
postponement thereof.
At the meeting, shareholders will also be asked
to consider resolutions regarding (i) the Arrangement, (ii) the
adoption by the REIT of a unit option plan, (iii) the adoption by
the REIT of a unitholder rights plan, (iv) the entering into of a
management agreement with Edgefront Realty Advisors Inc. pursuant
to which Edgefront Realty Advisors Inc. will be entitled to receive
unit compensation for the provision of advisory services to the
REIT (the "Management Agreement Resolution") and (v) the
acquisition of the Cambridge and
Oakville Properties (as defined below) from MM Sam Ltd. (the
"Acquisition Resolution"). The resolution regarding the
Arrangement put forth at the Meeting will be subject to the
approval of two-thirds of votes cast by shareholders entitled to
vote at the Meeting voting in person or by proxy, and each of the
remaining resolutions will be subject to the approval of a majority
of votes cast by disinterested shareholders.
Mario Forgione,
the Chairman and a director of Edgefront, is the President and a
director of MM Sam Ltd., which is the sole vendor of the
Cambridge and Oakville Properties.
Kelly C. Hanczyk, President and
Chief Executive Officer of Edgefront, Robert P. Chiasson, Chief Financial Officer and
Corporate Secretary of Edgefront, and Mario
Forgione are owners, and directors or officers, of Edgefront
Realty Advisors Inc. As such the acquisition of the Cambridge and Oakville Properties, and the unit compensation
under the management agreement, will be non-Arm's Length
Transactions and subject to Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special
Transactions and TSXV Policy 5.9, and will be subject to all
necessary approvals, including the approval by the affirmative vote
of a majority of votes cast by minority shareholders voting at the
Meeting.
Shareholders are urged to read the Information
Circular for a full description of all matters to be considered at
the Meeting. Shareholders 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. The Information Circular is available
for review at www.sedar.com.
Registered shareholders unable to attend the
Meeting in person are requested to read the Information Circular
and the 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 notarially certified copy thereof) to Equity
Financial Trust Company at 200 University Avenue, Suite 400,
Toronto, Ontario M5H 4H1,
Attention: Proxy Department, no later than 48 hours prior to the
Meeting, excluding Saturdays, Sundays and holidays, or any
adjournment thereof. Late proxies may be accepted or rejected by
the Chairman of the Meeting in his discretion, and the Chairman is
under no obligation to accept or reject any particular late
proxy.
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 Business Corporations Act (Ontario) and an interim order of the Ontario
Superior Court of Justice (Commercial List) with respect to the
Arrangement dated May 13, 2013, if
the Arrangement becomes effective. This right to dissent is
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.
Private Placement
As previously announced, immediately prior to
the conversion into a REIT, the Corporation intends to complete a
private placement of shares at a price per share equal to
$0.15 for an aggregate subscription
amount of approximately $45,000,000,
resulting in the issuance of approximately 300,000,000 shares. The
net proceeds from the private placement will be used to acquire the
REIT Properties (as defined below), fund future acquisitions and
for general trust purposes.
REIT Properties
As previously announced, in connection with the
Arrangement, the Corporation will acquire the following properties
(the "REIT Properties") for a total purchase price of
$74,485,000.
- a 396,000 square foot portfolio of industrial properties in
Ajax, Ontario which are fully
occupied by 11 tenants, with a total weighted remaining lease term
for all tenants of over seven years (the "Ajax Properties")
for a total purchase price of $29,500,000 to be satisfied by way of cash and
the delivery to the vendor of the Ajax Properties of approximately
$5,000,000 of REIT units based on an
issue price of $6.00 per unit;
- a 150,000 square foot industrial property in Cambridge, Ontario that is currently 100%
occupied with an average remaining lease term of 2.2 years (the
"Cambridge Property") for a total purchase price of
$7,400,000 to be satisfied by way of
cash and the delivery to MM Sam Ltd. of approximately $1,000,000 of REIT units based on an issue price
of $6.00 per unit;
- a 16,200 square foot retail property in Oakville, Ontario that is currently 100%
occupied with an average remaining lease term of 3.25 years (the
"Oakville Property") to be satisfied by way of cash and the
delivery to MM Sam Ltd. of approximately $1,000,000 of REIT units based on an issue price
of $6.00 per unit;
- a 71,800 square foot retail/office property in Bedford, Nova Scotia that is currently 100%
occupied, with an average remaining lease term of 4.6 years (the
"Bedford Property") for a total purchase price of
$17,200,000 to be satisfied by way of
cash;
- a 24,200 square foot retail/office property in Bedford, Nova Scotia that is currently 100%
occupied, with an average remaining lease term of 8.8 years (the
"Nova Scotia Property") for a total purchase price of
$6,875,000 to be satisfied by way of
cash; and
- a 23,100 square foot single-tenant office property in
Halifax, Nova Scotia that is
currently 100% occupied by the Nova
Scotia provincial government with a remaining lease term of
seven years and a real estate management company with a remaining
lease term of three years (the "Halifax Property") for a
total purchase price of $6,875,000 to
be satisfied by way of cash and the assumption of a mortgage in
respect of the property in the remaining principal amount of
approximately $3,050,000, with a
fixed interest rate of 5.49% per annum. On closing of the
acquisition of the Halifax Property the Corporation shall receive a
credit in the amount sufficient to reduce the annual interest rate
of such mortgage to 4.1%.
The Corporation retained Atlantic Realty
Advisors to provide appraisals of the Bedford, Nova Scotia and Halifax Properties,
and CB Richard Ellis Limited to provide appraisals of the
Cambridge, Oakville and Ajax Properties. Atlantic Realty Advisors
estimated the value of the Bedford, Nova
Scotia and Halifax Properties at $17,200,000, $7,060,000 and $7,160,000, respectively, and CB Richard Ellis
Limited estimated the value of the Cambridge, Oakville and Ajax Properties at $7,500,000, $6,350,000 and $29,900,000, respectively, for a total appraised
value of $75,170,000 for the REIT
Properties. Based on the negotiated purchase price to be paid
for the REIT Properties of $74,485,000, the appraised value is $685,000 greater than the aggregate purchase
price to be paid for the REIT Properties. It is expected that the
REIT will operate with a debt to gross book value ratio in the
range of 50 to 55%, and a 95% adjusted funds from operations payout
ratio.
About Edgefront
Edgefront is a growth oriented, diversified real
estate company focused on increasing shareholder value through the
acquisition, ownership and management of commercial real estate
assets initially located in secondary markets. It is the intention
of Edgefront to expand its business of purchasing, owning and
operating real estate assets and to raise funds in the marketplace
in order to convert Edgefront into a real estate investment trust
having an external asset management structure, subject to receipt
of all necessary approvals, including that of the TSXV.
Completion of Arrangement remains subject to
TSXV approval. There can be no assurance that the Arrangement
will be completed as proposed or at all.
The TSXV has in no way passed upon the merits
of the Arrangement and has neither approved nor disapproved the
contents of this press release. Neither the TSXV nor its
Regulation Services Provider (as that term is defined in the
policies of the TSXV) accepts responsibility for the adequacy or
accuracy of this release.
This press release contains forward-looking
information within the meaning of Canadian securities laws.
Such information includes, without limitation, information
regarding the completion of the Arrangement. Although
Edgefront believes that such information is reasonable, it can give
no assurance that such expectations will prove to be correct. In
particular, this news release contains forward-looking information
relating to the expected completion of the Arrangement and the
business strategies of Edgefront.
Forward looking information is typically
identified by words such as: believe, expect, anticipate, intend,
estimate, postulate and similar expressions, or are those, which,
by their nature, refer to future events. Edgefront cautions
investors that any forward-looking information provided by
Edgefront is not a guarantee of future results or performance, and
that actual results may differ materially from those in forward
looking information as a result of various factors, including, but
not limited to: Edgefront's ability to complete the Arrangement;
the state of the real estate sector in the event the Arrangement is
completed; recent market volatility; Edgefront's ability to secure
the necessary financing or to be fully able to implement its
business strategies and other risks and factors that Edgefront is
unaware of at this time. The reader is referred to
Edgefront's Information Circular for a more complete discussion of
risk factors relating to Edgefront and their potential effects, a
copy of which may be accessed through Edgefront's page on SEDAR at
www.sedar.com.
This news release shall not constitute an offer
to sell or the solicitation of an offer to buy any securities nor
shall there by any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful.
SOURCE Edgefront Realty Corp.
