TORONTO, Dec. 2, 2019 /PRNewswire/ - The Catalyst Capital
Group Inc., on behalf of investment funds managed by it,
("Catalyst") has filed a notice of application for a hearing
with the Ontario Securities Commission (the "OSC") in
relation to the October 20, 2019
agreement (the "Arrangement Agreement") between Hudson's Bay Company (TSX: HBC) ("HBC"
or the "Company") and certain insiders led by Mr.
Richard Baker (the "Baker
Group").
Among the orders requested, Catalyst seeks to:
- permanently prohibit the Baker Group from acquiring securities
of HBC as contemplated under the Arrangement Agreement or any
similar transaction;
or, in the alternative,
- require HBC to amend and resend to shareholders its Management
Information Circular dated November 14,
2019 (the "Circular") to address numerous omissions
and misrepresentations,
- require HBC to postpone the special meeting of shareholders
(the "Meeting") currently scheduled to be held on
December 17, 2019 to consider the
transactions contemplated by the Arrangement Agreement (the
"Transaction") to a date not earlier than 21 calendar days
after the date the amended Circular is sent to shareholders of HBC,
and
- cease trading of the securities of the Company in connection
with the Transaction until such time that the Company complies with
the order requiring it to amend the Circular and the interim order
requiring the postponement of the Meeting.
As a substantial minority shareholder, Catalyst requires the
OSC's assistance seeking redress for inadequate and inaccurate
disclosure, and coercive and unfair practices leading up to and
following HBC Board approval of the Transaction. Catalyst is
asking that the Transaction be prevented from proceeding or, at a
minimum, that the level of disclosure made to the shareholders who
are impacted by it be significantly enhanced and shareholders be
given sufficient time to review and understand such enhanced
disclosure.
Issues Related to the Baker Group Transaction and
Conduct
Catalyst's notice of application sets out certain allegations,
including:
- The Transaction is the result of a deeply flawed process. The
proposal announced by the Baker Group on June 10, 2019 to acquire the minority shares of
the Company at $9.45 per share (the
"Initial Proposal"), and the negotiations among the Baker
Group leading up to the making of the Initial Proposal, could only
have been made based on material information that was not generally
disclosed. The Initial Proposal and related negotiations thus
involved breaches of management and director fiduciary duties and
related duties of confidence.
- In addition, the Baker Group formed a group with the result of
negating key aspects of the mandate of the Special Committee that
reviewed the Transaction, including the consideration of any
alternative transactions available to the Company, and otherwise
acted in a coercive manner to undermine the Special Committee.
- When finally provided to HBC's shareholders, the Circular
contained misrepresentations, both in terms of untrue statements of
material facts and omissions of material information. The Company,
in breach of Multilateral Instrument 61-101, failed to provide
summaries of certain key valuations and appraisals related to the
Transaction, including prior valuation work relating to its most
material asset (its Saks Fifth Avenue flagship store on Fifth
Avenue in New York City).
- The Circular also failed to disclose certain benefits that
would accrue to the Baker Group and falsely claimed that the
Transaction was negotiated on an arm's length basis.
Catalyst is also challenging HBC's reliance on deficient
valuations and appraisals in advancing the Transaction.
It is believed that there are material deficiencies in the
Circular that must be addressed or corrected. The Circular has been
and will be relied on by investors as a primary source of
information for their decisions related to the Transaction and
Arrangement Agreement. Unless these deficiencies are remedied, it
is not possible for shareholders to fully understand the
Transaction.
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content:http://www.prnewswire.com/news-releases/catalyst-applies-for-hearing-with-ontario-securities-commission-to-review-richard-bakers-transaction-with-hudsons-bay-company-300967880.html
SOURCE Gagnier Communications