An anonymous director reports
VALUE CAPITAL TRUST AND AIP YIELD FUND LP ENTER INTO LETTER OF INTENT TO COMPLETE QUALIFYING TRANSACTION
Value Capital Trust and AIP Yield Fund LP have entered into a letter of intent dated Dec. 18, 2020, which outlines the terms and conditions pursuant to which Value and AIPYF will complete a transaction that will result in a reverse take-over of Value by AIPYF. The proposed transaction will be an arm's-length transaction and, if completed, will constitute Value's qualifying transaction (as such term is defined in TSX Venture Exchange Policy 2.4).
Value was organized as a valid trust formed under the laws of the province of Alberta by a declaration of trust on March 16, 2017, as amended and restated on April 30, 2017, and has a head office in Calgary, Alta. The units of Value are currently listed on the TSX-V and Value is a reporting issuer in the provinces of British Columbia, Alberta and Ontario. Value currently has 11.6 million Value units issued and outstanding as well as options exercisable for 1,021,180 Value units.
AIPYF is a limited partnership organized under the Limited Partnerships Act (Ontario) as of March 14, 2019, and has a head office in Toronto, Ont. AIPYF finances the construction of, acquires and manages light industrial flex multitenant properties being developed across North America. AIPYF holds the exclusive rights to purchase all completed AllTrades Industrial Properties Inc. properties being developed across North America, including six facilities under development in the Dallas and Fort Worth, Tex., submarkets with a projected completion value of approximately $81-million (U.S.).
Proposed transaction summary
It is currently anticipated that the proposed transaction will be completed by way of a three-cornered amalgamation or other similarly structured transaction whereby a subsidiary of Value Capital and AIPYF will amalgamate, such transaction structure subject to corporate, securities and tax advice of each of Value Capital and AIPYF. Pursuant to the proposed transaction, Value has agreed to acquire, directly or indirectly, all 100,000 issued and outstanding AIPYF units and purchase all the assets of AIP Eagle Court LLC at a price of $5.5-million (U.S.) for a combination of cash and assumption of the permanent mortgage.
It is anticipated that the issuer resulting from the proposed transaction will list as a Tier 1 real estate issuer on the TSX-V. In order to align the value of the Value units with the value per AIPYF unit at which the proposed transaction will be completed, it is anticipated that Value will consolidate the Value units on the basis of one postconsolidation Value unit for each 30 existing Value units. The Value units will have an implied valuation of 12.5 U.S. cents per unit on a preconsolidation basis in accordance with the terms of the proposed transaction. Outstanding convertible securities of Value will be correspondingly adjusted and will be convertible into units of the resulting issuer following closing.
Pursuant to the proposed transaction, holders of AIPYF units will receive one unit of the resulting issuer on a postconsolidation basis for each AIPYF unit held, with an implied valuation of $3.75 (U.S.) per AIPYF unit so exchanged.
The LOI was negotiated at arm's length and is effective as of Dec. 18, 2020, and the proposed transaction is expected to close on or before March 1, 2021, or such other date as Value and AIPYF may mutually agree. Upon completion of the proposed transaction, Value will convert to reporting in U.S. currency.
Bridge loan and break fee
In accordance with the terms of the LOI, Value will apply for TSX-V approval in respect of a bridge loan in the amount of $225,000 proposed to be provided to AIPYF in accordance with TSX-V Policy 2.4. In the event that the proposed transaction is not completed, the LOI provides that AIPYF will pay Value the amount of $50,000 as a broken deal fee. AIP Eagle Court, the sole owner of the completed AllTrades Eagle Court Lewisville, Tex., facility, and AllTrades will provide a signature guarantee to Value for the combined amount of $275,000 to cover the repayment of the bridge loan and the broken deal fee.
In connection with and as a condition to the proposed transaction, AIPYF intends to complete an equity financing of AIPYF units in connection with a majority arm's-length private placement to be completed prior to the closing of the proposed transaction, which will be completed on terms determined by AIPYF, provided that the private placement is completed in accordance with Section 4.2(h) of TSX-V Policy 5.4 to provide value for AIPYF. Further details in relation to the private placement will be provided by in a subsequent news release.
Sponsorship of a qualifying transaction of a capital pool company is required by the TSX-V unless exempt in accordance with the policies of the TSX-V. It is expected that Value will apply for an exemption from the sponsorship requirements pursuant to the policies of the TSX-V.
Trading in the Value units will remain halted until such time as the proposed transaction is completed.
We seek Safe Harbor.
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