FirstService Corporation (TSX: FSV; NASDAQ: FSV)
(“
FirstService” or the “
Company”)
announced that it has reaffirmed, without change, the agreed terms
announced in a press release issued on March 12, 2019 by entering
into a definitive agreement today with Jay S. Hennick, the
Company’s Founder, Chairman and largest voting shareholder, and
entities related to Mr. Hennick to settle the Restated Management
Services Agreement (the “
MSA”), including the
long-term incentive arrangement (the “
LTIA”),
entered into on February 1, 2004, between the Company, Mr. Hennick
and Jayset Management FSV Inc. (“
Jayset Mgt”) and
to eliminate FirstService’s dual class share structure.
As previously announced, as part of the
Transaction:
- Henset Capital Inc., a corporation controlled by Mr. Hennick,
will convert 1,325,694 Multiple Voting Shares of FirstService
(being 100% of the outstanding Multiple Voting Shares) into
Subordinate Voting Shares on a one-for-one basis and for no
consideration, thereby eliminating FirstService’s dual class share
structure;
- FirstService will acquire, directly or indirectly, all of the
shares of Jayset Mgt, the recipient of all current and future fees
and other entitlements under the MSA, for a purchase price
determined with reference to the LTIA formula provided in the MSA,
and the MSA will be terminated, thereby eliminating the LTIA and
all future fees and other entitlements owing thereafter. Mr.
Hennick has agreed to accept 80% of the purchase price in
Subordinate Voting Shares, with the balance paid in
cash;
- Mr. Hennick will retain his role as Chairman of FirstService,
at the discretion of the Board, with compensation commensurate with
that of a Non-Executive Chairman of a public company of similar
size to FirstService;
- Mr. Hennick has agreed to waive entitlement to any termination
fee under the MSA; and
- FirstService will, under the terms of the Transaction: (a) pay
US$62.9 million (approximately C$84.3 million) in cash; and (b)
issue a total of 2,918,860 Subordinate Voting Shares.
Subject to and following completion of the
Transaction, FirstService proposes to amend its articles to
eliminate the Multiple Voting Shares and the “blank cheque”
preference shares as part of the authorized capital of FirstService
and to re-designate its Subordinate Voting Shares as “common
shares”, after which FirstService would have a single class of
voting equity securities (being “common shares”), each having one
vote per share.
The Transaction is subject to customary closing
conditions, including lender approval, as well as the approval of a
majority of the disinterested holders of FirstService’s Subordinate
Voting Shares at an Annual and Special Meeting of Shareholders to
be held on May 3, 2019 at 2:00 p.m. in Toronto, Ontario at The
Design Exchange, 234 Bay Street, Toronto-Dominion Centre (the
“Meeting”). The Board (with Mr. Hennick recusing
himself) believes the Transaction is in the best interests of
FirstService and the holders of Subordinate Voting Shares. The
Board recommends that FirstService shareholders vote in favour of
the Transaction. T. Rowe Price Associates, Inc., which to the
knowledge of FirstService is the largest holder of Subordinate
Voting Shares and is considered a disinterested holder of
Subordinate Voting Shares, has advised FirstService that, based on
the information provided by the Company, it is supportive of the
Transaction.
The required information for FirstService
shareholders to consider in relation to their vote on the
resolution to approve the Transaction will be contained in the
management information circular to be mailed shortly to
shareholders in respect of the Meeting. This management information
circular will also be available at that time on SEDAR
(www.sedar.com) and on the Company’s website at
www.firstservice.com. A copy of the definitive transaction
agreement will also be filed on SEDAR and accessible at
www.sedar.com.
Mr. Hennick currently has control and direction
over 1,325,694 Multiple Voting Shares of FirstService representing
100% of the issued and outstanding Multiple Voting Shares of
FirstService and 1,522,526 Subordinate Voting Shares of
FirstService representing 4.4% of the issued and outstanding
Subordinate Voting Shares of FirstService. Immediately following
the completion of the Transaction, Mr. Hennick is expected to have
control and direction over 5,767,080 common shares of FirstService,
representing 14.8% of the then expected outstanding common shares
of FirstService. FirstService anticipates having 39,029,807 common
shares outstanding immediately following completion of the
Transaction.
About FirstService
Corporation
FirstService Corporation is a North American
leader in the property services sector, serving its customers
through two industry-leading service platforms:
FirstService Residential, North America’s largest
manager of residential communities; and FirstService
Brands, one of North America’s largest providers of
essential property services delivered through individually branded
franchise systems and company-owned operations.
FirstService generates more than US$1.9 billion
in annual revenues and has more than 20,000 employees across North
America. With significant insider ownership and an experienced
management team, FirstService has a long-term track record of
creating value and superior returns for shareholders. The
Subordinate Voting Shares of FirstService trade on the NASDAQ and
the Toronto Stock Exchange under the symbol “FSV”.
For the latest news from FirstService
Corporation, visit www.firstservice.com.
To obtain a copy of Mr. Hennick’s early warning
report, please contact:Sean Vanderpol5300 Commerce Court West199
Bay StreetToronto, Ontario, M5L 1B9Telephone: (416) 814-7980
Forward-looking Statements
This press release contains statements that
constitute “forward-looking statements” within the meaning of
applicable securities legislation, including, but not limited to,
the expected voting at the Meeting to approve the Transaction by
FirstService directors, contemplated changes to the articles of
FirstService and future filings to be made under securities laws.
Much of this information can be identified by words such as “expect
to,” “expected,” “will,” “estimated” or similar expressions
suggesting future outcomes or events. FirstService believes the
expectations reflected in such forward-looking statements are
reasonable but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements should
not be unduly relied upon.
Forward-looking statements are based on current
information and expectations that involve a number of risks and
uncertainties, which could cause actual results or events to differ
materially from those anticipated. These risks include, but are not
limited to, risks associated with the ability to satisfy
shareholder, regulatory, third party and stock exchange approvals
and conditions to consummate the Transaction or for any related
changes to the articles of FirstService, the market value and
trading price of the Subordinate Voting Shares of FirstService and
other risks related to FirstService’s business, including those
identified in FirstService’s annual information form for the year
ended December 31, 2018 under the heading “Risk factors” (a copy of
which may be obtained at www.sedar.com) and Annual Report on Form
40-F filed with the United States Securities and Exchange
Commission (a copy of which may be obtained at www.sec.gov), and
subsequent filings. Forward-looking statements contained in this
press release are made as of the date hereof and are subject to
change. All forward-looking statements in this press release are
qualified by these cautionary statements. Unless otherwise required
by applicable securities laws, we do not intend, nor do we
undertake any obligation, to update or revise any forward-looking
statements contained in this press release to reflect subsequent
information, events, results or circumstances or otherwise.
COMPANY CONTACTS:
D. Scott
PattersonPresident &
CEO (416)
960-9500
Jeremy RakusinChief
Financial Officer(416) 960-9500
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