The Catalyst Capital Group Inc. Agrees to Vote
in Favour of the Transaction
Special Meeting of Shareholders to Approve
Privatization Transaction to be Held in February 2020
Hudson’s Bay Company (TSX: HBC) (“HBC” or the “Company”) today
announced that it has entered into an amended arrangement agreement
(the “Amended Arrangement Agreement”) with a group of existing
shareholders (the “Continuing Shareholders”) under which the HBC
common shares held by the Company’s other shareholders (the
“Minority Shareholders”) will be acquired by HBC for $11.00 in cash
per share.
HBC and the Continuing Shareholders have also entered into a
voting and support agreement (the “Support Agreement”) with The
Catalyst Capital Group Inc. (“Catalyst”), HBC’s largest Minority
Shareholder, under which Catalyst has agreed to vote the 32,236,878
common shares it controls in favour of the privatization
transaction.
David Leith, Chair of the Special Committee of the HBC Board of
Directors, said, "We are pleased to have reached agreement with the
Continuing Shareholders for a privatization transaction at a
substantially increased price, which provides Minority Shareholders
with compelling and immediate value and is supported by our largest
Minority Shareholder. I would like to commend Catalyst on their
constructive approach to getting a transaction agreed which we
believe is in the best interests of the Company and the Minority
Shareholders."
HBC intends to hold the special meeting of shareholders to
approve the privatization transaction in February 2020. The
transaction requires the approval at the special meeting of (i) at
least 75% of the votes cast by shareholders, and (ii) a simple
majority of the votes cast by common shareholders, excluding for
this purpose votes attached to common shares required to be
excluded pursuant to Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions. Votes cast by
Catalyst will be included in determining whether approval is
reached under both tests.
In view of the increased consideration payable to Minority
Shareholders, the Company’s operating results since October 20,
2019 (during which period revenues have been lower than
anticipated) and the period of time since the issuance of the
independent valuation originally provided by TD Securities Inc. in
connection with the privatization transaction, the Special
Committee has requested that TD Securities prepare an updated
valuation and fairness opinion. The Special Committee has also
requested new fairness opinions from its financial advisors, J.P.
Morgan and Centerview Partners LLC, in respect of the increased
consideration payable to Minority Shareholders. The updated
valuation and new fairness opinions will be included in the amended
management information circular that will be mailed to shareholders
in advance of the special meeting of shareholders.
In the event that TD Securities provides a formal valuation
range of the common shares with a lower end that exceeds $11.00 per
common share, or the new fairness opinions have not been received
by February 14, 2020, HBC is entitled to terminate the Amended
Arrangement Agreement. Catalyst is entitled to terminate the
Support Agreement in certain circumstances, including in the event
that the amended management information circular (i) has not been
filed on SEDAR and mailed to shareholders by February 14, 2020,
(ii) does not include the new fairness opinions from the Special
Committee’s financial advisors, or (iii) does not include an
updated valuation in which the opinion of TD Securities is that the
lower end of the range of the fair market value of the common
shares is equal to or less than $11.00 per common share. The
Continuing Shareholders or the Company will be entitled to
terminate the Amended Arrangement Agreement in the event that the
Support Agreement is terminated.
Required Early Warning Report Information
HBC’s head office is located at 8925 Torbram Road, Brampton,
Ontario L6T 4G1.
The Continuing Shareholders and their affiliates and associates
have ownership and control over an aggregate of 83,692,653 Common
Shares (approx. 45% of the issued and outstanding common shares),
50,919,608 Series A preferred shares (100% of the issued and
outstanding Series A preferred shares) and assuming the conversion
of the outstanding Series A preferred shares into common shares as
of January 2, 2020, 140,829,052 common shares (approx. 58% of the
issued and outstanding common shares), all on an undiluted
basis.
Upon closing of the privatization transaction, the Continuing
Shareholders intend to cause the common shares to cease to be
listed on the Toronto Stock Exchange and to cause HBC to submit an
application to cease to be a reporting issuer under applicable
Canadian securities laws and to otherwise terminate HBC’s public
reporting requirements.
Early warning reports will be filed by the Continuing
Shareholders, as applicable, with applicable Canadian securities
regulatory authorities. To obtain copies of the early warning
report, please contact Joele Frank, Wilkinson Brimmer Katcher at
(212) 355-4449 (Contact: Matthew Sherman / Kelly Sullivan /
Annabelle Rinehart / Matthew Gross).
About HBC
HBC is a diversified retailer focused on driving the performance
of high-quality stores and their omni-channel platforms and
unlocking the value of real estate holdings. Founded in 1670, HBC
is the oldest company in North America. HBC’s portfolio today
includes formats ranging from luxury to premium department stores
to off price fashion shopping destinations, with nearly 250 stores
and approximately 30,000 employees around the world. HBC’s leading
businesses across North America include Saks Fifth Avenue, Hudson’s
Bay, and Saks OFF 5TH. HBC also has significant investments in real
estate joint ventures. It has partnered with Simon Property Group
Inc. in the HBS Joint Venture, which owns properties in the United
States. In Canada, it has partnered with RioCan Real Estate
Investment Trust in the RioCan-HBC Joint Venture.
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 HBC believes 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 management’s expectations and
plans as set forth in such forward-looking statements, including,
without limitation, the following factors, many of which are beyond
HBC’s control and the effects of which can be difficult to predict:
(a) the possibility that the transaction will not be completed on
the terms and conditions, or on the timing, proposed, and that it
may not be completed at all, due to a failure to obtain or satisfy,
in a timely manner or otherwise, required shareholder and
regulatory approvals and other conditions of closing necessary to
complete the transaction or for other reasons; (b) risks related to
tax matters; (c) the possibility of adverse reactions or changes in
business relationships resulting from the announcement or
completion of the transaction; (d) risks relating to HBC’s ability
to retain and attract key personnel during the interim period; (e)
the possibility of litigation relating to the transaction; (f)
credit, market, currency, operational, real estate, liquidity and
funding risks generally and relating specifically to the
transaction, including changes in economic conditions, interest
rates or tax rates; (g) risks and uncertainties relating to
information management, technology, supply chain, product safety,
changes in law, competition, seasonality, commodity price and
business; and (h) other risks inherent to the Company’s business
and/or factors beyond its control which could have a material
adverse effect on the Company or the ability to consummate the
transaction.
HBC cautions that the foregoing list of important factors and
assumptions is not exhaustive and other factors could also
adversely affect its results. For more information on the risks,
uncertainties and assumptions that could cause HBC’s actual results
to differ from current expectations, please refer to the “Risk
Factors” sections of HBC’s Annual Information Form dated May 3,
2019 and Management Information Circular dated November 14, 2019,
as well as HBC’s other public filings, available at www.sedar.com
and at www.hbc.com.
The forward-looking statements contained in this news release
describe HBC’s 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, HBC does 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/20200103005414/en/
Investor Relations: Jennifer Bewley, 646-802-4631
jennifer.bewley@hbc.com
Media: Special Committee Sard Verbinnen & Co
Liz Zale/Paul Scarpetta, 212-687-8080 Meghan Gavigan,
415-618-8750
Company Andrew Blecher, 646-802-4030 press@hbc.com