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Fairfax makes offer to Acquire Prime Restaurants Inc.


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Prime Restaurants Inc. Announces Receipt of Superior Proposal and

Commencement of Cara's Matching Period

 

MISSISSAUGA, ONTARIO -- (Marketwire) -- 11/21/11 -- Prime Restaurants

Inc. ("PRI" or the "Company") (TSX:EAT) announced today that it has

received an offer from Fairfax Financial Holdings Limited ("Fairfax")

to acquire of all of the issued and outstanding class A limited

voting shares (the "Shares") and restricted share units ("RSUs") of

the Company by way of a plan of arrangement under Section 182 of the

Business Corporations Act (Ontario) (the "Fairfax Offer"). The

Fairfax Offer was solicited by the Company during the "go-shop"

period permitted under its agreement with Cara Operations Limited

("Cara") described below. The total consideration payable by Fairfax

under the Fairfax Offer is approximately $71 million, equivalent to

$7.75 per Share or RSU. Under the Fairfax Offer, holders of Shares

(the "Shareholders") would receive $7.50 per Share in cash directly

from Fairfax on the effective date. In addition, Fairfax would pay

approximately $2.2 million to the Company to be used for paying

certain expenses associated with the Fairfax Offer (including the

Cara Termination Payment described below), with any remainder

available to be distributed to Shareholders as a special dividend.

The amount of the special dividend to be paid, if any, could not

exceed $0.25 per Share and will depend on, among other things, the

amount of the Cara Termination Payment and the Company's cash

position on the effective date, as determined by the Board. It is

possible that no special dividend will be paid. The special dividend,

if any, would be an eligible dividend for purposes of the Income Tax

Act (Canada) and any applicable provincial taxing statutes.

 

The Company's board of directors (the "Board") has unanimously

determined that the Fairfax Offer is a superior proposal within the

meaning of the Cara Acquisition Agreement (defined below) and that

Fairfax has the financial ability to execute the transaction.

 

"After carefully weighing the alternatives, in consultation with our

legal and financial advisors, the board of directors has concluded

that the Fairfax Offer provides greater shareholder value than Cara's

existing offer," said the Company's Chairman Steven Sharpe.

 

On October 17, 2011, PRI entered into an acquisition agreement (the

"Cara Acquisition Agreement") with Cara, whereby Cara agreed to

acquire all of the issued and outstanding Shares of the Company by

way of plan of arrangement (the "Cara Offer"). Under the Cara Offer,

Shareholders would receive a total of $7.00 per Share on the

effective date, comprised of $6.75 per Share payable by Cara in cash

and $0.25 per Share as a special dividend from PRI. In accordance

with the Cara Acquisition Agreement, PRI has notified Cara of the

Board's determination that the Fairfax Offer is a superior proposal

and that it is prepared to accept the Fairfax Offer. Cara now has

five business days during which it may choose to make a proposal

which it believes would cause the Fairfax Offer to no longer

constitute a superior proposal (a "Matching Proposal").

Alternatively, Cara can terminate the Cara Acquisition Agreement and

receive a termination payment (the "Cara Termination Payment").

 

If Cara makes a Matching Proposal and the Board determines in good

faith, after consultation with its financial advisors and outside

counsel, that the Fairfax Offer no longer constitutes a superior

proposal, the Board will support a revised transaction with Cara.

Otherwise, PRI may immediately terminate the Cara Acquisition

Agreement, pay the Cara Termination Payment and execute an

acquisition agreement with Fairfax in respect of the Fairfax Offer.

 

The Fairfax Offer provides for, among other things, a

non-solicitation covenant on the part of the Company, subject to a

customary "fiduciary out" provision, which entitles the Company to

consider and accept a superior proposal, subject to the right of

Fairfax to match the superior proposal and the payment to Fairfax of

a termination payment of $3,500,000.

 

As a condition of the Fairfax Offer, John Rothschild (the Company's

CEO), Nicholas Perpick (the Company's President) and Grant Cobb (the

Company's Senior Vice President - Brand Management) have agreed to

invest a portion of the proceeds of the Fairfax Offer each would

receive into shares of the Company following closing.

 

If accepted, the Fairfax Offer will be subject to a number of

conditions, including (a) approval of Ontario's Superior Court of

Justice, (b) approval by the holders of at least 66 2/3% of the votes

cast by Shareholders present in person or by proxy at a special

meeting of Shareholders, © approval by a "majority of the minority"

Shareholders, excluding the votes of John Rothschild, Nicholas

Perpick and Grant Cobb, together with any parties related to, and any

person acting jointly or in concert with, John Rothschild, Nicholas

Perpick and Grant Cobb, including Prime Restaurant Holdings Inc., and

(d) certain other customary conditions. The Fairfax Offer is not

conditional on financing.

 

About Prime Restaurants Inc.

 

PRI franchises, owns and operates one of Canada's leading networks of

casual dining restaurants and pubs. With such well-respected brands

as East Side Mario's, Casey's, Fionn MacCool's, D'Arcy McGee's, Paddy

Flaherty's, Tir nan Og, and Bier Markt, Prime has been delivering

quality, value and a superior guest experience for more than thirty

years. Prime's class A limited voting shares are listed on the

Toronto Stock Exchange under the symbol "EAT".

 

Forward-Looking Statements

 

The public communications of PRI often include written or oral

forward-looking statements. Statements of this type are included in

this news release, and may be included in filings with Canadian

securities regulators, or in other communications. Forward-looking

statements may involve, but are not limited to, the completion of

either of the Cara Offer or Fairfax Offer in accordance with their

proposed terms, comments with respect to our objectives for 2011 and

beyond, our strategies or planned future actions, and our targets or

expectations for our financial performance and condition. All

statements, other than statements of historical fact, contained in

this news release are forward-looking statements, including, without

limitation, statements regarding the future financial position and

operations, business strategy, plans and objectives of or involving

PRI. Readers can identify many of these statements by looking for

words such as "believe", "expects", "will", "intends", "projects",

"anticipates", "estimates", "continues" and similar words or the

negative thereof. Although management believes that the expectations

represented in such forward-looking statements are reasonable, there

can be no assurance that such expectations will prove to be correct.

 

The forward-looking statements contained herein are expressly

qualified in their entirety by this cautionary statement. The

forward-looking statements included in this news release are made as

of the date of this news release. Except as required by applicable

securities laws, PRI does not undertake to update any forward-looking

statement, whether written or oral, that may make or that may be

made, from time to time.

Contacts:

Prime Restaurants Inc.

John Rothschild

Chief Executive Officer

(905) 568-0000

jrothschild@primerestaurants.com

www.primerestaurants.com

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