Page: 103
Core Assts for the purposes of the transaction” agreed upon prior to any meeting. Mr. Jameson
then conveyed, at length, the position of the Non-Selling Shareholders on the sale transaction:
I can confirm that the non-selling shareholders are agreeable to the value of the Core
Assets being that set out in the revised CIBC report i.e. $58.9 Million for College Square
and $6 Million for Zena’s Fisher Heights Plaza. The non-sellers have affirmed their
confidence in the CIBC process and the results which have lead to the values established
in the revised CIBC report. Please confirm that the selling shareholders are content and
agree to transact at these values. These values in turn establish the amount which each
selling shareholder will receive at the end of the restructuring which constitutes the
Proposed Transaction set out in the CIBC report. There must be agreement on these
values before any meeting can take place. To do so otherwise would I believe simply
lead to a non-productive meeting.
You had asked that the non-selling shareholders advise the selling shareholders of the
form of financing transaction they intend to utilize to be able to finance the
reorganization transaction.
The non-selling shareholders have told me, and I am
authorized to advise you and the selling shareholders, that no form of financing
transaction has been structured and/or finalized, as the non selling shareholders will not
commence discussions with any third parties, including the College Square senior debt
holders, that they do not have the ability to complete. As such, financing proposals
cannot be started or advanced until an executed and irrevocable LOI is delivered by the
selling shareholders. The non selling shareholders are in agreement with the CIBC
team’s view that the Proposed Transaction will require a disproportionate share of equity
financing, due to the severe restrictions that exist on placing subordinated debt on
College Square. Moreover, there is the suggestion that the non-selling shareholders have
arranged, in effect, a bought deal to enable them to complete this transaction immediately
following the execution of the LOI, which seems to have given rise to the request for an
adjustment of the value of College Square at closing if the value for financing purposes is
greater than the valuation used for the Proposed Transaction.
This would suggest and necessitate that the non selling shareholder i) have sought and
obtained the requisite approvals from the College Square senior debt holders; ii) dealt
satisfactorily with the anchor tenants purchase rights; iii) negotiated a co-tenancy
agreement and sale of an undivided interest with a third party equity investor; based on
the successful completion of the third party’s due diligence. I can confirm that none of
the above noted events have been arranged. The non selling shareholders however have
requested that I communicate their absolute intention to use their best efforts to finance
the Proposed Transaction at the most favourable terms and conditions possible and will
not allow financing terms and conditions to influence the price at which selling
shareholders will be expected to sell.
They expect to require the full 120 day financing period to assemble the necessary due
diligence information, find parties interested in the transaction, negotiate financing and