ISG Capital Corporation Announces Proposed Conversion to Real Estate Investment Trust
August 30 2012 - 6:21AM
PR Newswire (Canada)
- Firm Capital to manage new diversified REIT - TORONTO, Aug. 30,
2012 /CNW/ - ISG Capital Corporation ("ISG") announced today that
it has entered into an arrangement agreement with Firm Capital
Property Trust ("FCPT") to effectively convert ISG into a new Real
Estate Investment Trust (REIT) with members of the Firm Capital
group of companies providing asset, property and executive
management services. "This transaction provides immediate liquidity
for ISG shareholders who wish to crystallize the value of their
investment in ISG. It also provides an opportunity to
participate in future growth of a new publicly traded REIT under
the direction of Firm Capital's proven management team", noted
David Ogden, ISG's President and CEO. This proposed conversion will
be implemented by way of a Plan of Arrangement under the Canada
Business Corporations Act and is subject to the approval of the TSX
Venture Exchange (the "TSXV"), the Ontario Superior Court of
Justice and ISG's shareholders as well as completion of the
previously announced sale of ISG's sole real estate asset - the
distribution facility located in Ingersoll, Ontario (the "Ingersoll
Facility") and other customary closing conditions. Details of the
Transaction Redemption of ISG Common Shares Pursuant to the Plan of
Arrangement, holders of ISG common shares ("Shares") other than
Firm Capital Mortgage Corporation ("FCMC"), an affiliate of FCPT,
will have the option of redeeming their Shares for cash, exchanging
them for units in FCPT or a combination of the two, provided that
each Shareholder who owns a sufficient number of Shares to receive
100 FCPT units under the Plan of Arrangement will be required to
exchange Shares for at least 100 FCPT units. The cash redemption
amount per Share will be determined based on ISG's cash on hand
following completion of its sale of the Ingersoll Facility less
deductions for (i) required payments under ISG's management
incentive plan, (ii) the cost of purchasing a "run-off" directors'
and officers' insurance policy and (iii) ISG's transaction costs,
and less a further deduction of $0.005 per Share. ISG
currently anticipates that this will result in a cash redemption
amount of approximately $0.175 per Share. The ratio at which
Shares would be exchanged for FCPT units will be determined based
on the cash redemption amount per Share but without the $0.005 per
Share deduction, resulting in an exchange value of approximately
$0.18. The FCPT units will have an initial value of $5.00 per
unit, which, assuming an exchange value of $0.18 per Share, would
result in an exchange ratio of 0.036 FCPT units for each Share.
Following redemption of all the Shares pursuant to the Plan of
Arrangement, ISG will be a wholly-owned subsidiary of FCPT, its
sole remaining Shareholder. Listing In connection with the
transaction, FCPT will apply to list its units on the TSXV in
substitution for the Shares, and receipt of TSXV conditional
approval for such listing is a condition of closing. Shareholder
Approvals The Plan of Arrangement and the sale of the Ingersoll
Facility (collectively, the "Transactions") will each require
approval by at least two-thirds of the votes cast by Shareholders
at a special meeting. In addition, for the reasons described
under "Business Combination" below, the Plan of Arrangement must
also be approved by a simple majority of the votes cast by
Shareholders at the special meeting other than FCMC and its
affiliates and David Ogden and his affiliates. Voting Agreements
David Ogden and Joseph Sorbara, each an officer and director of
ISG, along with FCMC have each entered into support and voting
agreements pursuant to which: -- David Ogden (and entities
affiliated with him) has agreed to vote the 3,013,000 Shares he
controls in favour of the Plan of Arrangement and the sale of the
Ingersoll Facility and to exchange a minimum of 750,000 Shares for
new REIT units; -- Joseph Sorbara (and entities affiliated with
him) has agreed to vote the 3,141,000 Shares he controls in favour
of the Transactions and to exchange a minimum of 750,000 Shares for
new REIT units; and -- FCMC has agreed to vote the 2,071,000 Shares
it controls in favour of the Transactions and to exchange all
2,071,000 Shares for new REIT units. In addition to the commitments
of David Ogden and Joseph Sorbara described above, each of the
other directors of ISG have indicated that they intend to vote all
of their Shares in favour of the Transactions. Collectively,
the directors and officers of ISG and Firm Capital Mortgage
Corporation own 10,590,000 Shares, which represent 58% of ISG's
18,242,000 issued and outstanding Shares. Non-Solicitation The
arrangement agreement provides for customary board support and
non-solicitation covenants from ISG, which are subject to customary
"fiduciary out" provisions that entitle ISG to consider and accept
an unsolicited superior proposal in certain circumstances.
The arrangement agreement also provides for the payment of a
termination fee by ISG of $200,000 to FCPT on the occurrence of
certain termination events. Business Combination Pursuant to
Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions ("MI 61-101"), the Plan of
Arrangement constitutes a "business combination" for ISG. Because
it is listed on the TSXV, ISG is exempt from the formal valuation
requirement of MI 61-101 in connection with the Plan of
Arrangement. Under MI 61-101 and TSXV rules, ISG is required
to obtain approval for the Plan of Arrangement by a majority of the
votes cast by "disinterested" Shareholders. Recommendation of Board
of Directors ISG's Board of Directors has unanimously determined
that the Transactions are in the best interests of ISG and all
Shareholders and unanimously recommends that all Shareholders
approve the Transactions. Timing ISG expects that an information
circular describing the Transactions and FCPT in greater detail
will be mailed to Shareholders and available on www.sedar.com in
September 2012. A special meeting of Shareholders to consider the
Transactions is currently expected to be held in Toronto, Ontario
in October 2012. About ISG ISG is a publicly-traded commercial
real-estate company (www.isgcapital.ca). The company is
committed to creating shareholder value by incorporating
environmentally and socially responsible approaches in its growth
strategy. About FIRM CAPITAL PROPERTY TRUST Firm Capital
Property Trust (FCPT) is focused on creating long-term value,
capital preservation and disciplined investing to achieve stable
distributable income for Unitholders. In partnership with
management and industry leaders, FCPT focuses on co-owning a
diversified property portfolio of multi residential, flex
industrial, net lease convenience retail, net lease stand alone
retail, core service provider professional and healthcare
professional office space. In addition to stand alone accretive
acquisitions, FCPT's primary focus is on acquisitions, on a
co-ownership basis with strong financial co-owned partners and will
specifically focus on joint acquisitions and the acquisition of
partial interests from existing co-ownership groups, in a manner
that provides liquidity to those selling co-owners and professional
management for those remaining as co-partners. Firm Capital Realty
Partners Inc. (FCRP), through a structure solely focused on an
alignment of financial interests with FCPT, is the asset and
property manager. In addition to asset and property management,
FCRP will source, syndicate and participate in investments
alongside FCPT. Reader Advisory This news release contains
"forward-looking statements" within the meaning of applicable
securities laws, including those relating to the Plan of
Arrangement, the anticipated cash redemption amount thereunder, the
expected sale of the Ingersoll Property and the proposed listing of
FCPT units on the TSXV. 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. In particular, there can be no assurance that
the parties will proceed with the proposed plan of arrangement and
associated transactions, that the ultimate terms of the proposed
plan of arrangement and associated transactions will be consistent
with those that currently are contemplated, that the required
court, shareholder or TSXV approvals will be obtained, that the
proposed plan of arrangement and associated transactions will be
successfully completed or that the cash redemption amount that
Shareholders are ultimately entitled to receive will be consistent
with the amount currently expected by ISG. The statements in
this news release are made as of the date of this release. Although
ISG 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. Neither the TSX Venture Exchange Inc.
nor its Regulation Services Provider (as that term is defined in
policies of the TSX Venture Exchange) has approved or disapproved
the contents of this press release. ISG Capital Corporation
CONTACT: David OgdenPresident and Chief Executive Officer(416)
203-7538 or (877) 877-0213www.isgcapital.ca
Copyright
Firm Capital Property Trust (TSXV:SUS)
Historical Stock Chart
From Sep 2024 to Oct 2024
Firm Capital Property Trust (TSXV:SUS)
Historical Stock Chart
From Oct 2023 to Oct 2024