The HBC Continuing Shareholders Send Letter to Special Committee
03 Dezember 2019 - 12:30PM
Business Wire
Shareholders Have a Clear Choice to Make:
Accept the All-Cash Offer for $10.30 Per Share
from the Continuing Shareholders or Remain Investors in HBC as a
Public Company
A group of shareholders of Hudson’s Bay Company
(TSX: HBC) (“HBC” or the “Company”), who collectively own
approximately 57% of the outstanding common shares of HBC on an
as-converted basis (collectively the “Continuing Shareholders”),
yesterday sent the following letter to the Special Committee
regarding the Catalyst Capital Group’s unsolicited proposal to
acquire HBC:
December 2, 2019
Special Committee of the Board of Directors Hudson’s Bay Company
401 Bay Street, Suite 500 Toronto, ON M5H 2Y4
Re: Catalyst Announcement
Dear Members of the Special Committee:
We refer to the announcement by The Catalyst Group Inc.
(Catalyst) on November 27, 2019 (the Catalyst
Announcement) and to the arrangement agreement dated October
20, 2019 between Rupert Acquisition LLC and Hudson’s Bay Company
(the Company) (the Arrangement Agreement).
As you know, under the Arrangement Agreement the Continuing
Shareholders have agreed to roll approximately $1.5 billion of
equity in the Company into a transaction that delivers $10.30 per
share to the Company’s minority shareholders. The Special Committee
and the full Board of Directors approved the terms of the
transaction after extensive analysis and negotiations. The
transaction has been pending before the minority shareholders since
October 21, 2019.
We and our advisors have reviewed the Catalyst Announcement and
have serious concerns.
It is intended to mislead and
manipulate
- We believe that the Catalyst Announcement is an illusory offer,
intended to mislead minority shareholders, manipulate the market,
and would only serve to frustrate the opportunity for minority
shareholders to receive premium cash consideration for their
shares.
It is not capable of being
financed
- The Catalyst Announcement fails to identify or account for
obvious and significant uses of cash to fund its proposal, and is
not realistic in its assumptions regarding sources of cash.
- Even on their flawed sources and uses, the Catalyst
Announcement contemplates the Company incurring in excess of $1
billion in incremental net indebtedness. The amount of pro forma
leverage is unrealistic, and much higher than the Company, or any
department store retailer, can achieve or bear.
- Catalyst’s reckless financing plans would swiftly add the
Company to the long list of retailers that have been forced to
close their doors, shed jobs and impact pensioners. Indeed, we
question how the Board or any financing source could ever be
satisfied with the solvency of the Company under Catalyst’s highly
levered capital structure, which appears to be approximately 90%
debt financed.
Catalyst is not a credible
counterparty
- HBC is a storied and important Canadian company and its
shareholders deserve certainty and transparency. We believe it is
also highly relevant to the review of the Catalyst Announcement for
the Special Committee to consider Catalyst’s track record and
reputation.
- As is widely reported, Catalyst has a track record of failing
to execute on its promises and of engaging in conduct that is
viewed critically by many participants in the capital markets.
- Rupert Acquisition LLC has made a complaint to the Ontario
Securities Commission about Catalyst’s misleading disclosure
regarding, among other things, the adequacy of their publicly
stated financing arrangements (which have not been committed by any
means) and their purported “blocking position” in respect of our
transaction.
It is not capable of being
completed
- We have consistently stated that we are not, in our capacities
as shareholders, interested in any transaction that would result in
a sale of our interests in HBC – a fact that is well known by
Catalyst. The Catalyst Announcement is therefore a tactic, plain
and simple, designed to confuse and mislead the markets and
minority shareholders.
Sincerely,
Rupert Acquisition LLC
The Continuing Shareholders include individuals and entities
related to, or affiliated with, Richard A. Baker, Governor and
Executive Chairman of HBC; Rhône Capital L.L.C.; WeWork Property
Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital
Management, L.P.
HBC’s Circular states that HBC’s Board, having received the
unanimous recommendation of the Special Committee, determined that
the Arrangement is in the best interests of HBC and fair to the
minority shareholders. The HBC Board has recommended that minority
shareholders vote in favor of the arrangement at the special
meeting of shareholders to approve the take private transaction on
December 17, 2019.
Your vote is important no matter how many shares you own. The
Special Committee and the Board recommend that minority
shareholders vote FOR the transaction well in advance of the
proxy voting deadline for the special meeting of shareholders,
which is 10:00 a.m. ET on Friday, December 13, 2019.
Shareholders who have any questions or require assistance with
voting, please contact the Company’s proxy solicitation agent
Kingsdale Advisors: (toll-free) 1.866.581.0512 (collect)
1.416.8672272 or contactus@kingsdaleadvisors.com.
For further information on the arrangement to take HBC private,
please refer to the Company’s Management Information Circular dated
November 14, 2019 and related proxy materials. A copy of the
Management Information Circular and related proxy materials may be
found under the Company’s profile on SEDAR at www.sedar.com and on
HBC’s website at http://investor.hbc.com/investor-relations.
Forward-Looking Statements
Certain statements made in this news release are forward-looking
statements within the meaning of applicable securities laws. Often
but not always, forward-looking statements can be identified by the
use of forward-looking terminology such as “may”, “will”, “expect”,
“believe”, “estimate”, “plan”, “could”, “should”, “would”,
“outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the
negative of these terms or variations of them or similar
terminology.
Although the Continuing Shareholders believe that the
forward-looking statements in this news release are based on
information and assumptions that are current, reasonable and
complete, these statements are by their nature subject to a number
of factors that could cause actual results to differ materially
from their expectations and plans as set forth in such
forward-looking statements, including those set forth in the "Risk
Factors" section of the Company’s Annual Information Form dated May
3, 2019, those set forth in the “Risk Factors” section of the
Company’s Management Information Circular dated November 14, 2019
as well as the Company’s other public filings, available at
www.sedar.com and at www.hbc.com.
The forward-looking statements contained in this news release
describe the Continuing Shareholders’ expectations at the date of
this news release and, accordingly, are subject to change after
such date. Except as may be required by applicable Canadian
securities laws, the Continuing Shareholders do not undertake any
obligation to update or revise any forward-looking statements
contained in this news release, whether as a result of new
information, future events or otherwise. Readers are cautioned not
to place undue reliance on these forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20191203005519/en/
Matthew Sherman / Kelly Sullivan / Annabelle Rinehart / Kara
Brickman Joele Frank, Wilkinson Brimmer Katcher, (212) 355-4449