- Increases number of shares to be acquired to a maximum of 19,782,393 shares, reflecting $200 million total value
- Catalyst Offer provides HBC shareholders who choose to participate with an alternative, which offers a significant premium and immediate liquidity, to the Baker Group proposal announced on June 10, 2019
- Baker Group's creation of a control block through a binding lock-up agreement (with a six-month tail) has direct impact on Special Committee's ability to achieve fair value for minority shareholders
- Catalyst's interests are aligned with HBC and its minority shareholders; Catalyst is committed to working with the Special Committee to ensure fair value is achieved or, absent a transaction, maintaining a position as a long-term shareholder
- Baker Group proposal deemed inadequate and rejected by HBC Special Committee; offer should be for fair value and funded with outside cash if allowed to proceed
TORONTO, Aug. 5, 2019 /PRNewswire/ - The Catalyst Capital Group Inc., on behalf of investment funds managed by it, ("Catalyst") today announced that it has amended its offer (the "Catalyst Offer") to purchase common shares of Hudson's Bay Company (HBC.TO) ("HBC" or the "Company") at a price of $10.11 per common share (the "Purchase Price"), payable in cash. The maximum number of shares to be purchased under the Catalyst Offer has been increased to 19,782,393 shares (representing approximately 10.75% of the issued and outstanding common shares) from 14,836,795 shares (representing approximately 8.06% of the issued and outstanding common shares), reflecting a total value of $200 million.
As disclosed on July 22, 2019, the Purchase Price offered under the Catalyst Offer is equal to an approximate 7% premium to the $9.45 per share price offered by the controlling shareholders of the Company and certain other insiders (collectively, the "Baker Group" or the "Controlling Insiders") in their buyout proposal announced on June 10, 2019 (the "Insider Buyout Proposal"), an approximate 59% premium to the closing price of the common shares on the Toronto Stock Exchange (the "TSX") on June 7, 2019 (the last trading day prior to the announcement of the Insider Buyout Proposal) and an approximate 52% premium to the volume-weighted average trading price of the common shares on the TSX for the 30 trading days prior to the announcement of the Insider Buyout Proposal.
No other terms of the Catalyst Offer have been amended and as a result the Catalyst Offer remains open for acceptance until 5:00 p.m. (Toronto time) on Friday, August 16, 2019, unless the Catalyst Offer is extended, varied or withdrawn. Please see "Details of Amended Offer" below for additional information.
REASONS AND BACKGROUND FOR CATALYST OFFER
The Insider Buyout Proposal made by the Baker Group is not reflective of the fair value of the Company's common shares, which is to the benefit of the Baker Group and the detriment of HBC's minority shareholders:
- Catalyst believes that the Insider Buyout Proposal greatly undervalues the Company across each of its real estate, retail and iconic brand attributes.
- Further, the Baker Group is seeking to only use shareholder capital and assets to buy out the Company's minority owners at a price that is not at all reflective of fair value.
- The Baker Group's strategy is to purchase HBC for an inadequate consideration to the detriment of the minority shareholders by constraining the Company and the special committee of the Company's board of directors (the "Special Committee") from pursuing a broad strategic review process. The Controlling Insiders have formed a control block through a joint lock-up agreement that has a novel six month expiration tail, and have stated that they have no intention of entertaining any alternative transaction or paying an appropriate premium to the minority shareholders of HBC.
- With 57% of HBC's voting shares under joint control by way of a binding lock-up agreement, the Baker Group has purposefully disenfranchised shareholders and impeded the ability of the Special Committee to maximize value for the minority shareholders. As such, the Special Committee needs to purposefully align with the interests of the minority shareholders, including Catalyst.
- Catalyst notes that the Special Committee has announced that it intends to review the Insider Buyout Proposal. Catalyst believes that, in addition to reviewing the Insider Buyout Proposal, the Special Committee has a duty to explore every alternative that can maximize value for all shareholders, whether through a sale process, dividend distributions of the cash to be realized from the sale of the Company's key European assets or otherwise. The Special Committee should not be restricted by the wishes or desires of the Baker Group.
- On August 2, 2019, the Special Committee disclosed that:
- The Special Committee has taken the first step to prevent the Baker Group's use of coercive power by summarily concluding that the proposal is inadequate, before even completing its review of the proposal. Catalyst requests that the Special Committee also examine the manner in which the Controlling Insiders developed the Insider Buyout Proposal (including the terms of the lock-up agreement among them) and whether the Controlling Insiders complied with their fiduciary and confidentiality obligations owed to the Company, and with the standstill agreements they have entered into with the Company, in proceeding with and announcing the Insider Buyout Proposal.
- Catalyst also requests that the Special Committee demand that, for the Baker Group to proceed with any proposal to purchase HBC, it does so through an independently funded cash offer that does not use or depend on HBC assets or capital that belongs to shareholders.
- The fully-funded Catalyst Offer provides shareholders who choose to participate with immediate liquidity at a premium to the current trading price of the common shares and at a significant premium to the Insider Buyout Proposal.
- Catalyst is committed to ensuring that the rights of minority shareholders are protected and that any transaction for the Company reflects fair value. Catalyst is also committed to supporting HBC as a long-term shareholder should an appropriate transaction fail to materialize.
DETAILS OF AMENDED OFFER
Catalyst has posted at www.sedar.com, under the Company's profile, a letter to shareholders (the "Letter") setting out more information pertaining to the amendment to the Catalyst Offer as well as a revised letter of transmittal (the "Letter of Transmittal") that can be used to accept the Catalyst Offer. The Letter has also been publicly disclosed by way of a separate press release.
Except as expressly otherwise set forth in the Letter, the terms and conditions set forth in the letter to shareholders dated July 22, 2019 (the "Original Letter") in respect of the Catalyst Offer continue to be applicable in all respects. The Letter should be read in conjunction with the Original Letter and the Letter of Transmittal. A shareholder of HBC who wishes to accept the Catalyst Offer may use the letter of transmittal that accompanied the Original Letter (the "Original Letter of Transmittal"). Completion, execution and tender of the Original Letter of Transmittal or a manually executed facsimile thereof, together with any other documents required by the Original Letter of Transmittal, to the Depositary and Information Agent will constitute an acceptance of the Catalyst Offer.
The Catalyst Offer is now for 19,782,393 shares (representing approximately 10.75% of the issued and outstanding common shares). No other terms of the Catalyst Offer have been amended. As a result, the Catalyst Offer remains open for acceptance until 5:00 p.m. (Toronto time) on Friday, August 16, 2019, provided however that Catalyst reserves the right, in its sole and absolute discretion at any time, to: (i) extend or vary the Catalyst Offer at any time; or (ii) withdraw the Catalyst Offer if the conditions thereto are not met, and if withdrawn, it will not be required to take up or pay for common shares delivered pursuant to the Catalyst Offer.
If more than the maximum number of common shares for which the Catalyst Offer is made are delivered in accordance with the Catalyst Offer and not withdrawn at the time of take up of the common shares, the common shares to be purchased from each depositing shareholder will be determined on a pro rata basis according to the number of common shares delivered by each shareholder, disregarding fractions, by rounding down to the nearest whole number of common shares.
If you have any questions with respect to the Catalyst Offer, or need assistance in depositing your common shares, please contact the Depositary and Information Agent for the Catalyst Offer: North America Toll Free Number: 1-877-452-7184; Outside North America Call Collect: 1-416-304-0211; Email: firstname.lastname@example.org.
Catalyst is relying on the exemption under section 9.2(4) of National Instrument 51‐102 ‐ Continuous Disclosure Obligations to make this public broadcast solicitation. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.
This solicitation is being made by Catalyst, and not by or on behalf of the management of HBC. Laurel Hill Advisory Group will receive a fee of $45,000 for its services as Depositary and Information Agent under the Catalyst Offer plus ancillary payments and disbursements. Based upon publicly available information, HBC's registered office is at 401 Bay Street, Suite 500, Toronto, Ontario, Canada M5H 2Y4 and its head office is at 8925 Torbram Road, Brampton, Ontario, Canada L6T 4G1. Catalyst is soliciting proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian laws. In addition, this solicitation may be made by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person by employees of Catalyst. All costs incurred for the solicitation will be borne by Catalyst.
A registered shareholder who has given a proxy under the terms of the Letter of Transmittal may, prior to its common shares being taken up and paid for under the Catalyst Offer, in accordance with Section 148(4) of the Canada Business Corporations Act, revoke the proxy (i) by depositing an instrument or act in writing executed or, in Québec, signed by such registered shareholder or by his, her or its personal representative authorized in writing, either: (a) at the registered office of HBC at any time up to and including the last business day preceding the day of the meeting, or an adjournment thereof, at which the proxy is to be used, or (b) with the chairman of the meeting on the day of the meeting or an adjournment thereof; or (ii) in any other manner permitted by law. A non‐registered shareholder may revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered shareholder by its intermediary. Non-registered shareholders should contact their broker for assistance in ensuring that forms of proxies or voting instructions previously given to an intermediary are properly revoked. None of Catalyst and its directors and officers, or, to the knowledge of Catalyst, any associates or affiliates of the foregoing, has any material interest, direct or indirect, in any transaction since the commencement of HBC's most recently completed financial year, or in any proposed transaction which has materially affected or will materially affect HBC or any of its subsidiaries. None of Catalyst or, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at any upcoming shareholders' meeting, other than as set out herein and in the Letters.
The Catalyst Offer is not a formal or exempt takeover bid under applicable Canadian securities laws and regulations.
Catalyst has engaged Laurel Hill Advisory Group as Depositary and Information Agent, McMillan LLP as Canadian legal advisor, and Brown Rudnick LLP and Latham & Watkins LLP as U.S. legal advisors. Gagnier Communications is serving as strategic communications advisor to Catalyst.
The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management, is a Canadian private equity investment firm founded in June 2002. Catalyst specializes in control and/or influence investments in distressed and undervalued Canadian situations. The Catalyst team collectively possesses more than 110 years of relevant experience in restructuring, credit markets and merchant and investment banking in both the U.S. and Canada. For more information, please visit www.catcapital.com.
Shareholder with questions or who need assistance tendering their common shares can contact the Depositary and Information Agent:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls outside North America: 1-416-304-0211
Certain statements contained in this press release, including statements regarding taking up and paying for common shares deposited under the Catalyst Offer, Catalyst's support of minority shareholders, the fair value of HBC and whether HBC will pursue a broad strategic review process, contain "forward-looking statements" and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "intends", "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Although Catalyst believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Material factors or assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting HBC's operations will continue substantially in the current state, including, without limitation, with respect to industry conditions, general levels of economic activity, continuity and availability of personnel and third party service providers, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation, and taxes, and that there will be no unplanned material changes to HBC's facilities, operations and customer and employee relations. Catalyst cautions that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of Catalyst and there is no assurance that they will prove correct. Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements include, among other things, actions taken by HBC or the Controlling Insiders in respect of the Catalyst Offer, actions taken by the Controlling Insiders with respect to the Insider Buyout Proposal and agreements entered into among them, the failure to satisfy the conditions of the Catalyst Offer, industry risk and other risks inherent in the running of the business of HBC, foreign currency exchange rates and interest rates, general economic conditions, legislative or regulatory changes, changes in income tax laws, and changes in capital or securities markets. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of Catalyst's forward-looking statements. Other unknown and unpredictable factors could also impact its results. Many of these risks and uncertainties relate to factors beyond Catalyst's ability to control or estimate precisely. Consequently, there can be no assurance that the actual results or developments anticipated by Catalyst will be realized or, even if substantially realized, that they will have the expected consequences for, or effects on, Catalyst or HBC and their respective future results and performance. Forward-looking statements in this press release are based on Catalyst's beliefs and opinions at the time the statements are made, and there should be no expectation that these forward-looking statements will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and Catalyst disavows and disclaims any obligation to do so, except as required by applicable law.