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In connection with the Transaction, one of
Pursuant to the Commitment Letter, a portion of the proceeds of the New Loan will be used by the Purchaser, together with existing funds of the Purchaser, to: (i) purchase all of the Subordinate Voting Shares (other than held by SPV Participants, Rolling Shareholders and, if applicable, Shareholders who validly exercise their dissent rights (the "Dissenting Shareholders"); (ii) purchase all issued and outstanding Debentures; (iii) repay a discounted amount owed by the Company to
The Company has entered into an agreement with MEP amending the MEP Loan. Pursuant to the amendment, the Company will pay MEP US
The Special Committee is led by John Kim and composed of two other independent directors of the Company, excluding the SPV Participants. After receiving the fairness opinion from its independent valuator,
In connection with the Arrangement, the directors and senior officers, who hold a total of 8,580,906 Subordinate Voting Shares and Multiple Voting Shares, representing a combined total of 39.6% of all Multiple Voting Shares and Subordinate Voting Shares outstanding and 83.5% of the total shareholder votes, have entered into voting agreements pursuant to which they have agreed, subject to the terms thereof, to vote in favour of the Arrangement Resolution and the Continuance Resolution (as defined below).
As an initial step in the Transaction, and as a condition to completing the Arrangement, the Company is seeking Shareholder approval to continue out of the Business Corporations Act (
The Special Committee retained Evans & Evans as independent valuator of the Subordinate Voting Shares and to provide a fairness opinion with respect to the Subordinate Voting Shares and Debentures in connection with the Arrangement. Evans & Evans provided an opinion that, based upon and subject to the assumptions, limitations and qualifications contained in Evans & Evans' written fairness opinion, the consideration to be received by the holders of Subordinate Voting Shares and Debentures, other than the SPV Participants and the Rolling Shareholders, in connection with the Arrangement is fair, from a financial point of view, to the holders of Subordinate Voting Shares and Debentures. Evans & Evans also provided the Special Committee with a formal valuation of the Subordinate Voting Shares that was completed under the supervision of the Special Committee. The formal valuation determined that, based upon and subject to the assumptions, limitations and qualifications contained in Evans & Evans' written valuation report, the fair market value of the Subordinate Voting Shares ranged from
- Holders of Subordinate Voting Shares (other than Subordinate Voting Shares held by Rolling Shareholders and SPV Participants and, if applicable, Dissenting Shareholders) will receive
$0.375 per Subordinate Voting Share in cash, representing a 71% premium to the midpoint of Evans & Evans' written valuation report, a 60% premium to the closing price per Subordinate Voting Share on the TSX onOctober 17, 2023 , and a 36% premium to the 20-day volume-weighted average trading price for the Subordinate Voting Shares on the TSX for the period endedOctober 17, 2023 , the last trading day prior to the date of this announcement. - Debentureholders will receive cash consideration of
$100 for each$1,000 principal amount of Debentures held, representing a 67% premium to the closing price of the Debentures on the TSX onOctober 12, 2023 , the last day the Debentures were traded prior to the date of this announcement, and a 110% premium to the 20-day volume-weighted average closing price for the Debentures on the TSX for the period endedOctober 17, 2023 , the last trading day prior to the date of this announcement. Accrued and unpaid interest owing on the Debentures will be forgiven, settled and extinguished for no consideration. - The Board, with the SPV Participants having recused themselves, acting on the unanimous recommendation of the Special Committee, unanimously approved the Arrangement and unanimously recommended that Securityholders entitled to vote at the Arrangement Meeting vote in favour of the Arrangement Resolution.
SR controls, directly or indirectly, 602,570 Subordinate Voting Shares and 6,408,505 multiple voting shares of the Company (the "Multiple Voting Shares"), representing 3.95% of the issued and outstanding Subordinate Voting Shares, 100% of the issued and outstanding Multiple Voting Shares, 32.4% of all of the issued and outstanding shares of the Company (the Subordinate Voting Shares and Multiple Voting Shares, together, the "Shares") and over 80% of the voting rights attached to all the issued and outstanding Shares. HS controls, directly or indirectly, 1,287,053 of the issued and outstanding Subordinate Voting Shares, representing 8.45% of the issued and outstanding Subordinate Voting Shares and 1.62% of the voting rights attached to all of the issued and outstanding Shares. The Rolling Shareholders are expected to own 2,414,395 Subordinate Voting Shares representing 15.8% of the total issued and outstanding Subordinate Voting Shares. Each Multiple Voting Share entitles the holder to ten votes per share and each Subordinate Voting Share entitles the holder to one vote per share.
Prior to the Securityholders voting on the Arrangement Resolution at the Arrangement Meeting, shareholders will vote on the Continuance Resolution at the Continuance Meeting. The subsequent Arrangement Meeting and the Arrangement Resolution will be conditional on the Shareholders approving the Continuance Resolution at the Continuance Meeting, which is expected to take place on or about
The Transaction will be implemented by way of the Arrangement and is subject to Court approval. The Arrangement Resolution must be approved by: (i) at least two-thirds (66⅔%) of the votes cast by Shareholders and Incentive Securityholders voting together as a class present in person or represented by proxy at the Arrangement Meeting and entitled to vote, and (ii) a majority (50% + 1) of the votes cast by the holders of Subordinate Voting Shares present in person or represented by proxy at the Arrangement Meeting and entitled to vote, other than the Subordinate Voting Shares held by SPV Participants and the Rolling Shareholders in accordance with Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions.
The Arrangement Resolution must also be approved by Debentureholders holding: (i) at least two-thirds (66⅔%) of the total value or principal amount of the Debentures present in person or represented by proxy at the Arrangement Meeting; and (ii) a majority (50% +1) of the total value or principal amount of the Debentures cast by Debentureholders present in person or represented by proxy at the Arrangement Meeting, other than the value or principal amount of Debentures held by SR, in accordance with section 3.12 of the Policy on arrangements - CBCA, section 192.
Further details regarding the applicable voting requirements will be contained in the Circular to be filed and mailed to Shareholders and debentureholders in connection with the Transaction.
The Arrangement Agreement provides for customary non-solicitation covenants on the part of the Company and it provides the Purchaser with a right to match any superior proposal. In addition, pursuant to the Arrangement Agreement, a termination fee equal to
The Company intends to mail the Circular to its Securityholders in the coming weeks and to hold the Continuance Meeting and Arrangement Meeting on or about
Further to the requirements of National Instrument 62-103 – Early Warning System and Related Take-Over Bid and Insider Reporting Issuers, SR and an entity controlled by HS intend to file an early warning report with applicable Canadian securities regulatory authorities disclosing they intend to acquire, directly or indirectly, all of the issued and outstanding Subordinate Voting Shares (other than those owned by the SPV Participants and Rolling Shareholders) pursuant to the Arrangement. To obtain copies of the early warning report, please contact
All currency in this news release is in Canadian dollars, unless otherwise indicated.
This news release contains forward-looking information and forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws, regarding the Company's business and operations. In this news release, forward-looking statements relate to, among other things, information regarding: (a) the terms and conditions of the Arrangement; (b) the satisfaction of the conditions precedent to the Arrangement, including obtaining the requisite Securityholder, Court and other regulatory approvals for the Continuance and the Arrangement; (c) the timing and completion of the Continuance and the Arrangement; (d) expectations regarding the consideration to be paid to holders of Subordinate Voting Shares,
Such forward-looking statements include particulars regarding the amendments to the MEP Loan some of which are conditions to the closing of the New Loan; that SPV Participants will acquire all of the issued and outstanding Subordinate Voting Shares at a price of
Forward-looking statements are necessarily based on a number of estimates and assumptions that the Company considered appropriate and reasonable as of the date such information is given, including but not limited to the assumptions that the transactions will proceed according to the Company's anticipated timelines; all conditions to the closing of the transactions will be met; the transactions will be completed on the terms currently contemplated; definitive documentation for the New Loan will be entered into immediately prior to closing of the Arrangement; the Arrangement Agreement will not be terminated prior to closing; anticipated trading prices and volumes of the Subordinate Voting Shares and Debentures until closing; and that required votes for Securityholder approval of the Continuance and the Arrangement will be obtained. Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors, many of which are beyond the Company's control, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to the risk that the Company's assumptions on which its forward-looking statements are based may not be accurate; the inability to receive, in a timely manner and on satisfactory terms, the necessary Securityholder, Court and other regulatory approvals for the Continuance and the Arrangement; the inability to satisfy, in a timely manner, all other conditions to the completion of the transactions; the ability of the Board to consider and approve, subject to compliance by the Company of its obligations in this respect under the Arrangement Agreement, a superior proposal for the Company; the failure to realize the expected benefits of the Transaction; and the risk factors disclosed in the Company's periodic reports publicly filed and available on its SEDAR+ profile at www.sedarplus.ca. The anticipated dates indicated above may change for a number of reasons, including delays in preparing materials in connection with the Transaction, the inability to receive the necessary Securityholder, Court and other regulatory approvals for the Continuance and the Arrangement in a timely manner, or the need for additional time to satisfy the conditions to the completion of the Transaction. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur. The forward-looking statements contained in this news release are made as of the date of this announcement and the Company does not undertake any obligation to update such forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
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