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Hudson's Bay Company Confirms Conditional TSX Listing Approval for Rhône Capital, WeWork Property Advisors and WeWork Companies Transactions
Multi-Faceted Strategic Relationship Provides Significant Benefits to Shareholders
Transaction Overview and Benefits
As previously disclosed, the series of interconnected transactions with
Enhances financial flexibility: This transaction will provide HBC with enhanced liquidity and financial flexibility and will significantly strengthen HBC's balance sheet in a difficult retail environment. HBC expects that these transactions will result in an aggregate of
Drives value for shareholders: Demonstrates HBC's ability to successfully monetize its valuable real estate assets in the near- and longer-term while creating opportunities to improve productivity and utilization across its real estate portfolio. WeWork's occupancy of select department stores further enhances the credit profile of these world class assets.
Positions HBC to define the future of retail: This strategic one-of-a-kind alliance positions HBC to establish leadership in experiential retailing, and to continue to adapt to the rapidly evolving retail environment in partnership with two highly regarded organizations.
HBC notes that, contrary to certain claims and assertions made since the announcement of the transactions:
Rhôneis Acquiring a Minority Equity Stake that Does NOT Represent Control of HBC. The mandatory convertible preferred shares to be issued to Rhôneare priced at C$12.42, a premium to the closing price of C$11.75for HBC's common shares on October 23, 2017. HBC expects that Rhônewill hold a 21.8% voting and equity interest in HBC upon closing, or an approximately 30.0% voting and equity interest if the preferred shares are held to their 8-year maturity and assuming no changes in dividends currently payable on HBC's common shares, in both cases calculated on an as converted basis. Upon closing, Rhônewill have the right to nominate two members of HBC's board of directors for election. Rhôneis NOT Required to Support Shareholder Nominees. Rhôneis providing a limited and customary voting covenant to support director nominees recommended by HBC's Board. It will not be required to vote for any person nominated by any shareholder.
- HBC Will NOT Have Any Other Voting Agreements with its Shareholders. Other than the limited
Rhônevoting covenant described above, HBC will not have voting agreements with any shareholder with respect to director elections or any other company proposal. Effective on closing of the Rhôneequity investment, HBC will release its other shareholders from their existing voting covenants that committed those shareholders to vote for directors put forward for election by HBC.
- Majority of HBC Shareholders Have Already Approved These Transactions. HBC obtained written consent in support of the
Rhôneinvestment from sophisticated long-term shareholders representing well over 50% of the outstanding common shares of HBC. These shareholders will not obtain any benefit from, or be affected by, the Rhôneinvestment in any manner other than such benefits and effects that all shareholders of HBC derive from the transactions.
- HBC's Board Unanimously Determined These Unique Transactions Were in the Best Interests of HBC and its Stakeholders. These unique transactions were carefully considered by HBC's Board of directors, the majority of which are independent directors. The Board unanimously determined that these transactions were in the best interests of HBC and its stakeholders and after receiving advice from its financial and legal advisors, unanimously approved these transactions.
- Rhône's Preferred Shares are Mandatorily Convertible After 3 Years. The preferred shares can be converted by the holder at any time, and HBC can force earlier conversion of the preferred shares into common shares if after 3 years, HBC's stock price is at least 125% of the applicable conversion price for 45 trading days in any 60 consecutive trading day period, and after 6 years, if HBC's stock is at least 100% of the applicable conversion price. After 8 years, the preferred shares will automatically convert into common shares based on the then-accreted value.
Regulatory Detail and Timing
HBC has received confirmation from the
It is currently anticipated that the
HBC is a diversified global retailer focused on driving the performance of high quality stores and their all-channel offerings, growing through acquisitions, and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in
HBC's leading banners across
HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the
Certain statements made in this news release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements with respect to HBC's global, multi-faceted strategic relationship with
Although HBC believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond HBC's control and the effects of which can be difficult to predict: (a) the failure to obtain or satisfy, in a timely manner or otherwise, required regulatory approvals and other conditions of closing necessary to complete the transactions; (b) the failure to obtain or satisfy, in a timely manner or otherwise, conditions of closing necessary to complete the sale of the Lord &
HBC cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect its results. For more information on the risks, uncertainties and assumptions that could cause HBC's actual results to differ from current expectations, please refer to the "Risk Factors" section of HBC's Annual Information Form dated
The forward-looking statements contained in this news release describe HBC's expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
Unless otherwise indicated, figures in this news release assume U.
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