Liquor Barn board of trustees unanimously recommends acceptance of enhanced offer
Liquor Stores Income Fund (TSX: LIQ.UN) and Liquor Barn Income Fund (TSX: LBN.UN) announced on May 26th that they have entered into a support agreement pursuant to which Liquor Barn has agreed to support an enhanced Liquor Stores offer to acquire all of the outstanding trust units of Liquor Barn and the board of trustees of Liquor Barn has agreed to recommend acceptance of the enhanced offer to its unitholders. The transaction establishes Liquor Barn's enterprise value at approximately $222 million, based on the closing price of Liquor Stores' trust units on May 25, 2007.
The enhanced terms of the Liquor Stores offer include an increase in the exchange ratio to 0.57 of a unit of Liquor Stores for each unit of Liquor Barn. The increased exchange ratio currently values the Liquor Barn units at $12.45, a premium of 48.2% above the closing price of the Liquor Barn units of $8.40 on the Toronto Stock Exchange on April 9, 2007, the day before Liquor Stores announced and commenced the offer. In addition, under the increased exchange ratio Liquor Barn unitholders will realize a 10.3% distribution increase following completion of the offer. The closing price of Liquor Stores units on the Toronto Stock Exchange on May 25 was $21.84. Liquor Barn has approximately 14 million units outstanding (including exchangeable and subordinated limited partnership units and options to purchase Liquor Barn units).
"Unitholders of both Liquor Stores and Liquor Barn can be pleased with the terms of this enhanced offer," said Irv Kipnes, Chief Executive Officer of Liquor Stores. "We urge Liquor Barn unitholders to tender their units to our offer and participate in the future growth of a larger, stronger trust and the leading independent liquor store retailer in Alberta and British Columbia."
Robert King, Chairman of the board of trustees of Liquor Barn, said: "After having conducted a thorough review of the strategic alternatives available to Liquor Barn, we are pleased to be able to unanimously recommend this enhanced offer to our unitholders. Based on our evaluation of the enhanced offer, including the opinion of our independent financial advisors, we believe that this transaction is in the best interests of our unitholders. The terms of the agreed offer provide fair value today and significant potential for the future."
In addition to entering into a support agreement with Liquor Barn, Liquor Stores has also entered into a support agreement with The Frosty Mug Pub Ltd., Paul Esposito's Restaurant (Abbotsford) Ltd. and Paul Esposito (together, the "Esposito Group"). The Esposito Group, which is a founding unitholder of Liquor Barn, owns, in the aggregate, 10,200 Liquor Stores units and 674,168 Liquor Barn special voting units representing approximately 4.9% of the outstanding Liquor Barn voting units. The Esposito Group, together with the other founding unitholders of Liquor Barn who have agreed to support the offer, own, in the aggregate, 86,845 Liquor Barn units and 1,724,831 Liquor Barn special voting units representing approximately 13% of the outstanding Liquor Barn voting units.
Pursuant to the support agreement, Liquor Stores has agreed to extend the expiry time of the offer to 10:00 p.m. (Edmonton time) on June 7, 2007. The offer was scheduled to expire at 10:00 p.m. (Edmonton time) on May 28, 2007.
Full details of the enhanced Liquor Stores offer are included in a Notice of Change, Variation and Extension from Liquor Stores that will be filed on SEDAR (www.sedar.com) and that will be made available on Liquor Stores' website (www.liquorstoresincomefund.ca) and on Liquor Barn's website (www.liquorbarn.ca). The Notice of Change, Variation and Extension will be mailed shortly to Liquor Barn unitholders.
Liquor Barn's board of trustees has unanimously determined that the consideration per unit under the enhanced offer is fair and in the best interests of Liquor Barn and its unitholders and, accordingly, unanimously recommends that unitholders tender their units to the enhanced offer. Liquor Barn's financial advisor, TD Securities Inc., has provided an opinion to the board that the consideration to be received by Liquor Barn unitholders in connection with the enhanced offer is fair, from a financial point of view, to such unitholders.
Under the support agreement, Liquor Barn has agreed to cease any ongoing discussions, and not to solicit or engage in any further discussions relating to a competing proposal, except in limited circumstances and provide Liquor Stores with a right to match any third party offer. The agreement also requires Liquor Barn to pay a break fee of $6.5 million in certain circumstances and waive its unitholder rights plan on the business day preceding the expiry date of the offer. -Liquor Stores Income Fund and Liquor Barn Income Fund
Comment and add to the story without registration, but keep the comments meaningful please. Links are not accepted.
