(All amounts are in US Dollars unless otherwise
stated.)
TORONTO, Nov. 21, 2019 /CNW/ - Firm Capital American
Realty Partners Corp. (the "Company"), (TSXV: FCA.U), (TSXV:
FCA) today announced that it has mailed and filed under the
Company's profile on www.sedar.com, the meeting materials for the
Company's special meeting of shareholders to be held on
December 12, 2019 (the "Special
Meeting") at which shareholders will be asked to approve a special
resolution authorizing the Company to complete the conversion of
the Company from a corporation into an investment trust (the
"Trust") by way of a statutory plan of arrangement
("Conversion").
As previous disclosed (see press release dated November 4, 2019), the Company believes a
conversion to an investment trust would enhance long-term
shareholder value by: (i) expanding the Company's investor base and
investment profile with both retail and institutional investors as
an investment trust structure represents the preferred Canadian
structure to own income producing real estate; (ii) enhancing
comparability with the Company's peers; (iii) providing a more
efficient vehicle to deliver the benefits of real estate debt and
equity investing from the Company's business to investors; and (iv)
enhancing shareholder value by maximizing cash distributions to
investors in a more tax efficient way. An investment trust
structure would not result in a change in the Company's current
strategy, portfolio or operations.
If the Conversion is completed, the Trust's annual distribution
is expected to remain consistent with the Company's current
dividend policy.
Terms of the Arrangement
The proposed Conversion, if completed, will be effected pursuant
to a statutory plan of arrangement under the Business
Corporations Act (Ontario)
(the "Arrangement") and will be subject to, among other
approvals, receipt of the approval of 66 2/3% of the votes cast by
holders of the Company's common shares at the Special Meeting.
Pursuant to the Arrangement, shareholders of the Company will
receive either (i) one unit of the Trust ("Trust Unit") or,
if an eligible shareholder so elects, (ii) one exchangeable limited
partnership unit (an "Exchangeable Unit") in a limited
partnership controlled by the Trust, for each common share
held.
The Exchangeable Units will be designed to be economically
equivalent to, and exchangeable for, Trust Units on a one-for-one
basis and will be accompanied by special voting units of the Trust
that provide their holders with equivalent voting rights to holders
of Trust Units. A maximum of 20% of the Company's issued and
outstanding common shares may be exchanged for Exchangeable Units.
The shareholders of the Company would continue to own, through
their Trust Units and/or Exchangeable Units, the same pro
rata economic interest in the Company's business. Details of
the Exchangeable Units and those shareholders entitled to elect to
receive them will be set forth in the information circular to be
sent to shareholders in connection with the Special Meeting.
In connection with the Arrangement, the Trust will be assuming
all of the covenants and obligations of the Company in respect of
the Company's outstanding convertible debentures, common share
purchase warrants, options and deferred share units. Furthermore,
the Trust intends to adopt a distribution reinvestment plan and
unit purchase plan that will have the same terms as the Company's
current dividend reinvestment plan and share purchase plan.
In addition to the requirement for shareholder and court
approvals, the completion of the Arrangement and exchange of common
shares for either Trust Units or Exchangeable Units will be
contingent on receipt of all necessary third party and regulatory
approvals and receipt of approval from the TSX Venture Exchange to
the listing of the Trust Units, the Company's 6.25% convertible
unsecured subordinated debentures and the Company's common share
purchase warrants expiring on May 29,
2020, on the Exchange.
If all approvals are obtained and conditions satisfied, the
Company anticipates that the Arrangement will be completed on or
about January 1, 2020.
Tax Consequences for Shareholders
Generally, the completion of the Arrangement will result in a
disposition of common shares of the Company for Canadian tax
purposes, and the immediate acquisition of Trust Units at a value
equal to the fair value, on the date of the transaction. If a
shareholder holds common shares outside of a tax-sheltered vehicle
(such as an RRSP, RRIF, RDSP, RESP or TFSA) this will result in a
deemed dividend being received to the extent the fair market value
of the Trust Units received exceeds the paid-up capital of the
common shares. An eligible shareholder who elects to exchange their
common shares for Exchangeable Units may be able to defer the
potential tax cost associated with the Arrangement. Exchangeable
Units may allow for certain tax efficiencies; however, they will be
subject to certain restrictions and limitations and will not be
listed on the TSX Venture Exchange or any other exchange. A more
detailed discussion of the tax and other considerations of the
Arrangement will be set forth in the information circular to be
sent to shareholders in connection with the Special Meeting.
ABOUT FIRM CAPITAL AMERICAN REALTY PARTNERS CORP.
Firm
Capital American Realty Partners Corp. is a U.S. focused real
estate investment entity that pursues real estate and debt
investments through the following platforms:
- Income Producing Real Estate Investments: Acquiring
income producing real estate assets in major cities across
the United States. Acquisitions
are completed solely by the Company or in joint-venture partnership
with local industry expert partners who retain property management
responsibilities; and
- Mortgage Debt Investments: Real estate debt and
equity lending platform in major cities across the United States, focused on providing all
forms of bridge mortgage loans and joint venture capital.
FORWARD LOOKING INFORMATION
Certain information in
this news release constitutes forward-looking statements under
applicable securities law. Any statements that are contained in
this news release that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking statements
are often identified by terms such as "may", "should",
"anticipate", "expect", "intend" and similar expressions.
Forward-looking statements in this press release include statements
relating to the Arrangement and its terms. Since the completion of
the Arrangement remains subject to a number of approvals, there is
no guarantee that the Arrangement will be completed on the terms
set forth in this press release or at all. Forward-looking
statements necessarily involve known and unknown risks, including,
without limitation, risks associated with general economic
conditions; adverse factors affecting the U.S. real estate market
generally or those specific markets in which the Company holds
properties; volatility of real estate prices; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms;
industry and government regulation; changes in legislation, income
tax and regulatory matters; the ability of the Company to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks, including those described in the
Company's public disclosure documents on SEDAR at
www.sedar.com.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Additional information about the Company is available at
www.firmcapital.com or www.sedar.com.
SOURCE Firm Capital American Realty Partners Corp.
