CALGARY and VANCOUVER, Oct. 22 /CNW/ - British Columbia) Proprietary Industries Inc. (TSX: "PPI") and Quest Capital Corp. (TSX: "QC") announced today that Proprietary and Quest have terminated their previously announced Subscription and Support Agreement pursuant to which Quest, or purchasers designated by Quest, were to subscribe on a private placement basis for approximately 14.96 million Proprietary common shares (or approximately 24.9% of the number of issued and outstanding Proprietary common shares on a non- diluted basis) and Proprietary was to make a substantive issuer bid for approximately 40 million of its issued and outstanding shares.
As a result, the Proprietary board of directors has terminated the special meeting of shareholders of Proprietary previously scheduled for November 2, 2004 and has terminated and withdrawn its substantial issuer bid made on September 28, 2004.
Proprietary and PPI Acquisition Corp. also announced that they have also entered into a Support Agreement pursuant to which PPI Acquisition Corp. will make an offer (the "Offer") to purchase all of the issued and outstanding Proprietary common shares at a price per share of Cdn$0.64 in cash. This represents a 52.38% premium to the market price of the Proprietary shares on September 9, 2004, immediately prior to the first public announcement of a transaction involving Proprietary. A copy of the Support Agreement will be available from the Sedar website at www.sedar.com.
PPI Acquisition Corp. is a private company. Quest is the largest single shareholder of PPI Acquisition Corp. holding approximately 27% of its shares. No other shareholder of PPI Acquisition Corp. holds more than 10% of its shares.
Holders of approximately 28.7% of the Proprietary common shares have entered into deposit agreements pursuant to which they have irrevocably agreed to tender their shares to the Offer.
The Offer will be subject to customary conditions, including a minimum deposit condition of at least a majority of the Proprietary common shares, including those shares held at the time of expiry of the Offer by PPI Acquisition Corp. and its affiliates and associates. Proprietary has been advised that PPI Acquisition Corp. does not intend to pursue a squeeze out transaction or going private transaction following the expiry of the Offer. The Offer will be made by means of an offer and take-over bid circular to be mailed to Proprietary shareholders.
Each of Dundee Securities Corporation and Canada Capital Limited has provided an opinion to the Special Committee of the Proprietary board of directors that the Offer is fair, from a financial point of view, to shareholders of Proprietary other than PPI Acquisition Corp.
Under the terms of the Support Agreement with PPI Acquisition Corp., Proprietary has agreed not to solicit or negotiate with any other potential bidders. Proprietary has agreed to reimburse PPI Acquisition Corp. for any reasonable out-of-pocket fees and expenses it incurs in connection with the matters contemplated in this Agreement up to a maximum amount of $450,000. In addition, PPI Acquisition Corp. will receive a break fee of approximately $0.0167 cents per share under certain circumstances.
The revised offer from Northern Financial Corporation of $0.35 cash and a variable principal amount in Northern debentures of, at the option of Northern, either $0.45 if the debentures are paid for entirely in Northern common shares or $0.28 if the debentures are paid entirely in cash, is open for acceptance until midnight (Toronto time) on November 1, 2004. Proprietary shareholders who have tendered their shares to the Northern offer must withdraw them by midnight (Toronto time) on November 1, 2004 if they wish to take advantage of the PPI Acquisition Corp. Offer.
The Board of Directors has unanimously determined that the PPI Acquisition Corp. Offer is superior from a financial point of view to the revised Northern offer. This determination was reached after considering a number of factors and after receiving legal and financial advice, the financial opinions of Dundee Securities Corporation and Capital Canada Limited, and the unanimous recommendation of the Special Committee. The Board of Directors of Proprietary will be recommending in its directors' circular in response to the revised Northern offer that shareholders reject the revised Northern offer and not tender their Proprietary shares to such offer.
About Proprietary:
Proprietary is based in Calgary, Alberta and listed on the Toronto and Swiss Stock Exchanges trading under the symbol PPI. Proprietary is a principal merchant bank that owns, manages and deals in a portfolio of financial, natural resource and real estate interests.
Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward- looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Corporation's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.
The Toronto Stock Exchange and the SWX Swiss Exchange have neither approved nor disapproved the information contained herein.
/For further information: Mr. Graham Garner, Executive Vice President, Proprietary Industries Inc., Tel: (403) 266-6364, Fax: (403) 266-6365, Suite 227, 200 Barclay Parade SW, Calgary, Alberta, T2P 4R5, Website: www.proprietaryinc.com, E-Mail: info(at)proprietaryinc.com; To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports(at)cnw./
