Firm Capital American Realty Partners Corp. Announces Intention to Convert to an Investment Trust and Sets Date for Special M...
November 04 2019 - 12:19PM
Firm Capital American Realty Partners Corp. (the
“
Company”), (TSXV: FCA.U), (TSXV: FCA) today
announced that its Board of Directors has unanimously approved the
conversion of the Company from a corporation into an investment
trust to be named “Firm Capital American Realty Partners Trust”
(the “
Trust”) by way of a statutory plan of
arrangement (“
Conversion”), subject to
shareholder, TSX Venture Exchange and court approvals and certain
other conditions.
The Company will hold a special meeting of
shareholders on December 12, 2019 (the “Special
Meeting”) at which shareholders will be asked to approve a
special resolution authorizing the Company to complete the
Conversion. An information circular describing the proposed
Conversion will be mailed to shareholders and filed under the
Company’s profile on www.sedar.com in mid-November 2019.
As stated previously, the Company believes a
conversion to an investment trust would enhance long-term
shareholder value by: (i) expanding the Company’s investor base and
investment profile with both retail and institutional investors as
an investment trust structure represents the preferred Canadian
structure to own income producing real estate; (ii) enhancing
comparability with the Company’s peers; (iii) providing a more
efficient vehicle to deliver the benefits of real estate debt and
equity investing from the Company’s business to investors; and (iv)
enhancing shareholder value by maximizing cash distributions to
investors in a more tax efficient way. An investment trust
structure would not result in a change in the Company’s current
strategy, portfolio or operations.
If the Conversion is completed, the Trust’s
annual distribution is expected to remain consistent with the
Company's current dividend policy.
Terms of the Arrangement
The proposed Conversion, if completed, will be
effected pursuant to a statutory plan of arrangement under the
Business Corporations Act (Ontario) (the
“Arrangement”) and will be subject to, among other
approvals, receipt of the approval of 66 2/3% of the votes cast by
holders of the Company’s common shares at the Special Meeting.
Pursuant to the Arrangement, shareholders of the
Company will receive either (i) one unit of the Trust
(“Trust Unit”) or, if an eligible shareholder so
elects, (ii) one exchangeable limited partnership unit (an
“Exchangeable Unit”) in a limited partnership
controlled by the Trust, for each common share held.
The Exchangeable Units will be designed to be
economically equivalent to, and exchangeable for, Trust Units on a
one-for-one basis and will be accompanied by special voting units
of the Trust that provide their holders with equivalent voting
rights to holders of Trust Units. A maximum of 20% of the Company’s
issued and outstanding common shares may be exchanged for
Exchangeable Units. The shareholders of the Company would continue
to own, through their Trust Units and/or Exchangeable Units, the
same pro rata economic interest in the Company’s business. Details
of the Exchangeable Units and those shareholders entitled to elect
to receive them will be set forth in the information circular to be
sent to shareholders in connection with the Special Meeting.
In connection with the Arrangement, the Trust
will be assuming all of the covenants and obligations of the
Company in respect of the Company’s outstanding convertible
debentures, common share purchase warrants, options and deferred
share units. Furthermore, the Trust intends to adopt a distribution
reinvestment plan and unit purchase plan that will have the same
terms as the Company’s current dividend reinvestment plan and share
purchase plan.
In addition to the requirement for shareholder
and court approvals, the completion of the Arrangement and exchange
of common shares for either Trust Units or Exchangeable Units will
be contingent on receipt of all necessary third party and
regulatory approvals and receipt of approval from the TSX Venture
Exchange to the listing of the Trust Units, the Company’s 6.25%
convertible unsecured subordinated debentures and the Company’s
common share purchase warrants expiring on May 29, 2020, on the
Exchange.
If all approvals are obtained and conditions
satisfied, the Company anticipates that the Arrangement will be
completed on or about January 1, 2020.
Tax Consequences for Shareholders
Generally, the completion of the Arrangement
will result in a disposition of common shares of the Company for
Canadian tax purposes, and the immediate acquisition of Trust Units
at a value equal to the fair value, on the date of the transaction.
If a shareholder holds common shares outside of a tax-sheltered
vehicle (such as an RRSP, RRIF, RDSP, RESP or TFSA) this will
result in a deemed dividend being received to the extent the fair
market value of the Trust Units received exceeds the paid-up
capital of the common shares. An eligible shareholder who elects to
exchange their common shares for Exchangeable Units may be able to
defer the potential tax cost associated with the Arrangement.
Exchangeable Units may allow for certain tax efficiencies; however,
they will be subject to certain restrictions and limitations and
will not be listed on the TSX Venture Exchange or any other
exchange. A more detailed discussion of the tax and other
considerations of the Arrangement will be set forth in the
information circular to be sent to shareholders in connection with
the Special Meeting.
ABOUT FIRM CAPITAL AMERICAN REALTY
PARTNERS CORP.Firm Capital American Realty Partners Corp.
is a U.S. focused real estate investment entity that pursues real
estate and debt investments through the following platforms:
- Income Producing Real Estate Investments:
Acquiring income producing real estate assets in major cities
across the United States. Acquisitions are completed solely by the
Company or in joint-venture partnership with local industry expert
partners who retain property management responsibilities;
and
- Mortgage Debt Investments: Real estate debt
and equity lending platform in major cities across the United
States, focused on providing all forms of bridge mortgage loans and
joint venture capital.
FORWARD LOOKING
INFORMATIONCertain information in this news release
constitutes forward-looking statements under applicable securities
law. Any statements that are contained in this news release that
are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements are often
identified by terms such as “may”, “should”, “anticipate”,
“expect”, “intend” and similar expressions. Forward-looking
statements in this press release include statements relating to the
Arrangement and its terms. Since the completion of the Arrangement
remains subject to a number of approvals, there is no guarantee
that the Arrangement will be completed on the terms set forth in
this press release or at all. Forward-looking statements
necessarily involve known and unknown risks, including, without
limitation, risks associated with general economic conditions;
adverse factors affecting the U.S. real estate market generally or
those specific markets in which the Company holds properties;
volatility of real estate prices; inability to access sufficient
capital from internal and external sources, and/or inability to
access sufficient capital on favourable terms; industry and
government regulation; changes in legislation, income tax and
regulatory matters; the ability of the Company to implement its
business strategies; competition; currency and interest rate
fluctuations and other risks, including those described in the
Company’s public disclosure documents on SEDAR at
www.sedar.com.
Readers are cautioned that the foregoing list is
not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Additional information about the Company is available at
www.firmcapital.com or www.sedar.com.
For further information, please contact:
Eli DadouchPresident & Chief Executive Officer(416)
635-0221 |
|
Sandy PoklarChief Financial Officer(416) 635-0221 |
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