- EQUITY FINANCIAL HOLDINGS INC. should be followed!
SMOOTHWATER CAPITAL CORPORATION launched a $10.25 bid to acquire EQUITY FINANCIAL HOLDINGS INC. The following was said by Reuters:
* SMOOTHWATER CAPITAL CORPORATION INCREASES PRICE TO $10.25 PER SHARE IN ITS PROPOSED ACQUISITION OF EQUITY FINANCIAL HOLDINGS INC.
* EQUITY FINANCIAL HOLDINGS INC- EQUITY CONTINUES TO HAVE RIGHT TO CONSIDER UNSOLICITED ALTERNATIVE PROPOSALS THAT COULD RESULT IN A SUPERIOR PROPOSAL
Smoothwater Capital Corporation signed an agreement to pay $9.75 per share in cash. Have a look:
TORONTO , Oct. 30, 2017 /CNW/ – Equity Financial Holdings Inc. (EQI.TO) (“Equity” or the “Corporation”), which offers residential first mortgage loans through its wholly‐owned subsidiary, Equity Financial Trust Company (“Equity Trust”), and Smoothwater Capital Corporation (“Smoothwater”) are pleased to announce that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which Smoothwater will acquire all of the issued and outstanding shares of Equity (the “Shares”), other than Shares already owned or controlled by Smoothwater, its officers, and by certain other shareholders who have agreed to remain as continuing shareholders (collectively, the “Continuing Shareholders”), by way of a plan of arrangement (the “Arrangement”).
Each Share will be acquired for $9.75 per share in cash (the “Consideration”). The price per Share implies a total equity value of approximately $93 million .
The Consideration offered to Equity shareholders (the “Shareholders”) represents a premium of 29.6% to the volume weighted average price of the Shares on the Toronto Stock Exchange for the 20 trading days ending October 30, 2017 .
The Arrangement was unanimously recommended by a special committee of the board of directors of Equity (the “Board”) composed entirely of independent directors (the “Special Committee”): F. David Rounthwaite (chair), Peter Friedmann , Brad Kipp , Michèle McCarthy and Martin Ouellet . No member of the Special Committee will be a Continuing Shareholder and any Shares owned by members of the Special Committee will be exchanged for the Consideration pursuant to the Arrangement.
The Board (with interested, non-independent directors abstaining), following receipt of the unanimous recommendation by a Special Committee, has:
- unanimously determined that the Arrangement is in the best interests of Equity and that the Arrangement is fair to the Shareholders, other than the Continuing Shareholders,
- unanimously approved the Arrangement Agreement, the Arrangement and the transactions contemplated thereby, and
- resolved to recommend that Shareholders vote in favour of the Arrangement.
Subsequent to the completion of the privatization, Smoothwater will be joined by Hennick & Company, Freycinet Ventures and certain other investors who have committed to contribute capital and take an active role to help accelerate the growth of Equity’s business in the years to come. Such investors will acquire a non-controlling interest in Equity from Smoothwater, with Smoothwater maintaining control of the privatized company.
Independent Valuation Process
The Special Committee retained Blair Franklin Capital Partners Inc. (“Blair Franklin”) as independent valuator. In arriving at its unanimous recommendation in favour of the Arrangement, the Special Committee considered several factors which will be outlined in public filings to be made in connection therewith. Blair Franklin provided the Special Committee with a formal valuation, completed under the Special Committee’s supervision, which reflected the determination that, as at October 30, 2017 , subject to the assumptions, limitations and qualifications contained therein, the fair market value of the Shares was between $9.50 and $12.00 per Share. Blair Franklin also provided an opinion to the effect that, as at October 30, 2017 , subject to the assumptions, limitations and qualifications contained therein, the Consideration to be received by the disinterested Shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to such Shareholders. Copies of the Blair Franklin valuation and fairness opinion, which should be read carefully and in its entirety, and other relevant background information will be included in the management proxy circular that will be mailed to Shareholders for the special meeting of Shareholders anticipated to be held in December 2017 to approve the Arrangement (the “Meeting”).
Stephen Griggs , CEO of Smoothwater, and Michael Jones , President & CEO of Equity, who are directors of Equity and also Continuing Shareholders, did not participate in the deliberations or directors’ vote of the Board in relation to the evaluation and approval of the Arrangement. The Continuing Shareholders collectively currently hold approximately 42.2% of the issued and outstanding shares of Equity. Certain independent Shareholders, who collectively own or exercise control or direction over approximately 26.3% of the Shares, and all directors and officers, have entered into support and voting agreements pursuant to which they have agreed, subject to the terms thereof, to vote their Shares in favour of the Arrangement. The support and voting arrangements can be terminated in the event of a “superior proposal” (as defined in the Arrangement Agreement).