TORONTO--(BUSINESS WIRE)--The Catalyst Capital Group Inc., on behalf of investment funds managed by it, (“Catalyst”) today commented on a recent letter sent to the Special Committee of the Board of Directors of Hudson’s Bay Company (TSX: HBC) (“HBC” or the “Company”) by Richard A. Baker, Governor and Executive Chairman of HBC, and certain other insiders of the Company (collectively, the “Baker Group” or the “Controlling Insiders”).
Catalyst notes that, since the disclosure of the Baker Group proposal, there has been broad public opposition by significant minority shareholders to the value proposed by the Controlling Insiders. It is also widely recognized that the Baker Group only intends to use shareholder capital and assets to buy out the Company’s minority owners below fair value.
The Baker Group’s recent letter to the Special Committee amounts to an admission that the offer of $9.45 per share severely undervalues the Company. In addition, the fear mongering about the potential for a declining stock price should the Baker Group offer fail purposefully omits any recognition for the value to be derived from the proposed sale of the Company’s European assets (which was announced simultaneously with the Baker Group’s offer and never reflected in the share price), management and the Board’s previously expressed confidence in executing a turnaround of the retail business, and the inherent value of the real estate portfolio, which the market has now come to better recognize.
Rather than offer shareholders fair value, the Baker Group is asking the Special Committee to consider taking steps to disenfranchise a minority shareholder and to deprive other shareholders from seeking liquidity at a price significantly higher than the Baker Group offer. This request by the controlling shareholders of HBC, in itself, is the height of coercion, particularly since the Controlling Insiders have made it clear that, from their perspective, HBC’s only option is to accept or reject the Baker Group offer and ignore their duty to maximize value for all shareholders.
Catalyst has given all shareholders, including the Controlling Insiders, the opportunity to participate in its offer to purchase up to 14,836,795 common shares at a price of $10.11 per share, payable in cash. Catalyst, as a private equity fund with a long-term focus that supports the rights of minority shareholders, is well suited to be a long-term holder of HBC shares.
The HBC Board has a unique opportunity to seek out every alternative that can maximize value for all shareholders, whether through a sale process, dividend distributions of the cash to be realized from the sale of the Company’s European assets (which the Controlling Insiders intend to use to buy out the minority shareholders) or otherwise. Catalyst welcomes the opportunity to meet with the Special Committee and the Controlling Insiders to express its views as soon as practicable.
In addition, Catalyst requests that the Special Committee examine the manner in which the Controlling Insiders developed their buyout proposal and whether the Controlling Insiders complied with applicable laws, and the agreements they have entered into with the Company, in proceeding with and announcing their buyout proposal.
Catalyst believes that the Special Committee and its advisors will ultimately determine that fair value is significantly superior to the Baker Group proposal, and that analysis will reinforce the broader market’s understanding of the potential of this iconic company.
The Catalyst offer is for up to 14,836,795 of the outstanding common shares of the Company. The Catalyst offer is open for acceptance until 5:00 p.m. (Toronto time) on Friday, August 16, 2019, unless the offer is extended, varied or withdrawn.
Catalyst has posted at www.sedar.com, under the Company’s profile, a letter to shareholders setting out more information pertaining to Catalyst’s offer as well as a letter of transmittal to be used to accept the offer.
If shareholders have any questions with respect to Catalyst’s offer, or need assistance in depositing their common shares, please contact the Depositary and Information Agent for the offer: North America Toll Free Number: 1-877-452-7184; Outside North America Call Collect: 1-416-304-0211; Email: firstname.lastname@example.org.
The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management, is a Canadian private equity investment firm founded in June 2002. Catalyst specializes in control and/or influence investments in distressed and undervalued Canadian situations. The Catalyst team collectively possesses more than 110 years of relevant experience in restructuring, credit markets and merchant and investment banking in both the U.S. and Canada. For more information, please visit www.catcapital.com.
Shareholder with questions or who need assistance tendering their common shares can contact the Depositary and Information Agent:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls outside North America: 1-416-304-0211
Certain statements contained in this press release, including statements regarding the success of the Catalyst offer and that the fair value of HBC will prove to be significantly superior to the Baker Group proposal, contain “forward-looking statements” and are prospective in nature. Forward-looking statements 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 results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements 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 Catalyst believes that the expectations reflected in such forward-looking statements 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 HBC’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 and third party service providers, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation, and taxes, and that there will be no unplanned material changes to HBC’s facilities, operations and customer and employee relations. Catalyst cautions 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 Catalyst and there is no assurance that they will prove correct. Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements include, among other things, actions taken by HBC or the Controlling Insiders in respect of the Catalyst offer, the failure to satisfy the conditions of the Catalyst offer, industry risk and other risks inherent in the running of the business of HBC, foreign currency exchange rates and interest rates, general economic conditions, legislative or regulatory changes, changes in income tax laws, 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 Catalyst’s forward-looking statements. Other unknown and unpredictable factors could also impact its results. Many of these risks and uncertainties relate to factors beyond Catalyst’s ability to control or estimate precisely. Consequently, there can be no assurance that the actual results or developments anticipated by Catalyst will be realized or, even if substantially realized, that they will have the expected consequences for, or effects on, Catalyst or HBC and their respective future results and performance. Forward-looking statements in this press release are based on Catalyst’s beliefs and opinions at the time the statements are made, and there should be no expectation that these forward-looking statements will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and Catalyst disavows and disclaims any obligation to do so, except as required by applicable law.