- The Concerned Unitholders believe that there was an overwhelming vote “against” the Original Arrangement and call on Melcor REIT to release voting tabulations.
- We believe both the independent committee of Melcor REIT’s Board of Trustees and Melcor Parent are well aware that any price below $6.94 per Trust Unit is not an adequate offer to Unitholders.
- The Concerned Unitholders plan to continue their effort to obtain fair value for the Melcor REIT units, including pursuant to the Amended Agreement, until an adequate price is offered.
- Melcor REIT has wasted substantial Unitholder resources pursuant to the Original Arrangement and is now wasting additional resources with its Amended Agreement, which the Concerned Unitholders believe will ultimately be voted down.
TORONTO, Nov. 26, 2024 (GLOBE NEWSWIRE) — FC Private Equity Realty Management Corp. (“Firm Capital”) and Telsec Property Corporation (“Telsec” and, together with Firm Capital, the “Concerned Unitholders”) wish to express their concern and disappointment in respect of the press release issued yesterday by Melcor Real Estate Investment Trust (“Melcor REIT”) and Melcor Developments Ltd. (“Melcor Parent”) announcing the entering into of an amended and restated arrangement agreement (the “Amended Agreement”) and cancellation of the special meeting of unitholders of Melcor REIT (the “Meeting”) scheduled to be held on November 26, 2024.
Cancelling the Meeting only a day before it was scheduled to be held can only mean that Melcor REIT and Melcor Parent were not satisfied with the likely outcome and that the pre-Meeting voting tabulations were overwhelmingly against the previously announced plan of arrangement among Melcor REIT, Melcor Parent and Melcor REIT GP Inc. (the “Original Arrangement”). Unitholders of Melcor REIT (“Unitholders”) have a right to view these numbers and as such, the Concerned Unitholders call on Melcor REIT to disclose the pre-Meeting voting tabulations immediately.
The nominal increase in price under the Amended Agreement to $5.50 (the “New Consideration”) per participating trust unit of Melcor REIT (the “Trust Units”) is inadequate and we believe is ultimately an attempt to circumvent what would have been a vote against the initial take-under offer made by Melcor Parent. The New Consideration includes all taxable income and the effective offer price under the Amended Agreement is $4.84 per Trust Unit, when accounting for $0.66 of undistributed income by the time the proposed transaction were to close. Further, the Amended Agreement contains an unjustifiable termination fee of $5.8 million payable to Melcor Parent.
We believe both the independent committee of Melcor REIT’s Board of Trustees and Melcor Parent are well aware any price below $6.94 per Trust Unit, being $6.50 per Trust Unit plus payment of unpaid distributions in 2024 totaling $0.44 per Trust Unit (assuming a transaction were to close by the end of fiscal 2024), is not an adequate offer to Unitholders. The Concerned Unitholders have offered to support this price in the past, and continue to support it, despite it being substantially below the Net Asset Value (NAV).
Melcor REIT has wasted a significant amount of Unitholder money and resources negotiating the original arrangement agreement and preparing for the Meeting, and is now burning through additional resources, rather than offering what we believe is a fair price to Unitholders.
We thank Unitholders who voted against the Original Arrangement and the Concerned Unitholders look forward to turning their attention towards saving Melcor REIT from the Amended Agreement, which continues to be highly self-serving to Melcor Parent, and helping to bring increased value to all Unitholders as it believes it has already done to date.
Unitholder Questions
For further information regarding the information contained herein, please contact:
Shorecrest Group Ltd.
North American Toll-Free: 1-888-637-5789
Calls outside North America: 647-931-7454
Email: [email protected]
Firm Capital and Telsec’s Advisors
The Concerned Unitholders have engaged Norton Rose Fulbright Canada LLP as legal advisor and Shorecrest Group Ltd. as proxy advisor and depositary and information agent.
About Firm Capital
FC Private Equity Realty Management Corp. is a leading real estate private equity investment firm in Toronto, Canada.
About Telsec
Telsec Property Corporation is a leading real estate developer in Calgary, Canada with commercial flex industrial, retail, office, and residential property for lease and sale.
Cautionary Statement Regarding Forward-Looking Information
Certain statements contained in this press release, including without limitation statements regarding the anticipated voting outcome of the Meeting, pre-Meeting voting tabulations, voting results at a meeting to consider the Amended Agreement, reasons for the New Consideration, Melcor REIT being worth more than its current price per Trust Unit, efforts of the Concerned Unitholders to block the take-under offer, future undistributed income of Melcor REIT, Melcor REIT wasting additional Unitholder resources, the Concerned Unitholders being successful in protecting Unitholders interests and defeating the Amended Agreement, and the Concerned Unitholders helping to bring increased value to all Unitholders, contain “forward-looking information” and are prospective in nature. Statements containing forward-looking information are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties that could cause actual results to differ materially from the future outcomes expressed or implied by the statements containing forward-looking information. Often, but not always, statements containing forward-looking information can be identified by the use of forward-looking words such as “plans”, “expects”, “intends”, “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would”, “might”, or “will” be taken, occur or be achieved. Although the Concerned Unitholders believe that the expectations reflected in statements containing forward-looking information herein made by it (and not, for greater certainty, any forward-looking statements attributable to Melcor REIT) are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Material factors or assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting Melcor REIT’s operations will continue substantially in the current state, including, without limitation, with respect to industry conditions, general levels of economic activity, continuity and availability of personnel, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation and taxes, that there will be no unplanned material changes to Melcor REIT’s operations, and that Melcor REIT’s public disclosure record is accurate in all material respects and is not misleading (including by omission). The Concerned Unitholders caution that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of the Concerned Unitholders and there is no assurance that they will prove correct. Important facts that could cause outcomes to differ materially from those expressed or implied by such forward-looking information include, among other things, actions taken by Melcor REIT in respect of the Amended Agreement, the content of subsequent public disclosures by Melcor REIT, general economic conditions, legislative or regulatory changes and changes in capital or securities markets. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of the Concerned Unitholders’ forward-looking information. Other unknown and unpredictable factors could also impact outcomes. Statements containing forward-looking information in this press release are based on Concerned Unitholders beliefs and opinions at the time the statements are made, and there should be no expectation that such forward-looking information will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and the Concerned Unitholders disclaim any obligation to do so, except as required by applicable law.
