/NOT FOR DISTRIBUTION TO
Validation of Tricon's Business – The Investment demonstrates the financial strength of Tricon and that
Exchangeable Preferred Issuance at Attractive Pricing – The exchange price of
Strengthens Tricon's Balance Sheet – Tricon expects to use the full net proceeds of the Investment to repay its corporate credit facility, reducing its proportionate leverage by approximately 500 basis points to approximately 56% net debt/assets (excluding convertible debentures) and enhancing its balance sheet flexibility. Tricon remains committed to reducing its leverage to a near-term target of 50-55% net debt/assets and expects the planned syndication of an equity interest in its
"This investment in Tricon illustrates
Frank Cohen, Chairman and CEO of BREIT, said, "We are pleased to make this preferred equity investment in Tricon. We continue to see strong underlying fundamentals in the rental housing sector and believe the company's high quality, income-generating assets are poised to generate stable performance under the leadership of its best-in-class management team."
Summary Investment Terms
Key terms of the Investment and Preferred Equity include:
- Quarterly cash dividend of 5.75% per annum through to the seventh anniversary of the Investment closing, subject to increases thereafter.
- Exchangeable for common shares of Tricon ("Common Shares") at any time at the option of the holder at an initial exchange price of
US$8.50 per share (approximatelyC$11.18 ), representing a 16% premium to the 30-day VWAP of the Common Shares on theToronto Stock Exchange (the "TSX") as ofAugust 26 . On an as-exchanged basis, the Preferred Equity will represent approximately 14% of the pro forma fully diluted outstanding Common Shares at closing. The exchange price will be subject to adjustment from time to time in accordance with the terms of the Preferred Equity. - The Preferred Equity will not entitle the holders to vote as common shareholders of Tricon.
In connection with the Investment, Tricon and its subsidiary will enter into an investor rights agreement with BREIT providing for, among other things, customary registration rights, participation rights, consent rights, certain standstill and transfer restrictions and the right to nominate one director to Tricon's board.
Tricon is pleased to welcome
Additional information regarding the Investment and the terms of the Preferred Equity will be included in a material change report to be filed by Tricon on www.sedar.com. This press release is only a summary of certain principal terms of the Investment and is qualified in its entirety by reference to the more detailed information contained in the material change report.
The closing date is expected to occur in late August or early September, subject to receipt of TSX approval.
Morgan Stanley acted as Tricon's sole private placement agent.
About
Founded in 1988,
Additional Early Warning Disclosures of BREIT
BREIT is making the Investment through
Pursuant to a subscription agreement with
Immediately prior to this Investment, the Investor and its affiliates (including BREIT) owned no voting or equity securities in the capital of Tricon. Upon closing of the Investment, the Investor and its affiliates will own one Common Share and 240,000 units of the Preferred Equity, representing approximately 12% of the currently outstanding Common Shares, assuming the exchange of all of the Preferred Equity for Common Shares at the initial exchange price of
An early warning report with additional information in respect of the foregoing matters will be filed and made available on the System for Electronic Document Analysis and Review (SEDAR) at www.sedar.com under Tricon's profile. The Investor's address is
Forward Looking Statements
Certain statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These forward-looking statements include: the expected pro forma fully diluted ownership represented by the Preferred Equity, the anticipated use of the net investment proceeds and associated impact on Company leverage, the Company's leverage targets and planned syndication of its
Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Forward-looking information herein is based on various assumptions and expectations that Tricon believes are reasonable in the circumstances. Such assumptions include the timing of receipt of necessary TSX approval, that all conditions to the closing of the Investment will be satisfied, that the Investment will be completed on the terms set forth in the relevant transaction agreements, and the anticipated impact of COVID-19. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons including but not limited to the assumptions, risks and uncertainties described above and under the heading "Risk Factors" in Tricon's annual information form for the fiscal year ended
SOURCE
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