The Exchange Transaction
LREIT intends to make a proposal to the holders of the Debentures (the "Debentureholders") pursuant to which all of the Debentures will be settled and all claims of the Debentureholders thereunder will be extinguished in exchange for Trust Units, including the payment, in the form of Trust Units, of the accrued and unpaid interest owing on the Debentures on the closing date of the Exchange Transaction on the basis of a deemed price of
In the event that the Exchange Transaction is approved, upon completion of the Exchange Transaction the current Debentureholders, as of the date hereof, will hold approximately 96.96% of the issued and outstanding Trust Units. Accordingly, the Exchange Transaction would effectively transfer control of LREIT from the current holders of Trust Units to the Debentureholders.
The Exchange Price
The price at which the Trust Units are being issued in payment of the principal amount of the outstanding Debentures and the interest accrued thereon is the lowest price permitted by the
Advantages and Background to the Exchange Transaction
If LREIT were to be forced into insolvency upon the maturity of the Debentures, given the amount of indebtedness of LREIT with security that ranks ahead of the Debentures, management of LREIT believes that the Debentureholders would not receive any payment for their Debentures. By converting the Debentures and all outstanding interest thereon into Trust Units pursuant to the Exchange Transaction, the Debentureholders may have the opportunity to participate in a possible recovery of LREIT in the future. In the view of the management of LREIT, merely extending the maturity date of the Debentures five years past
Key Steps to the Exchange Transaction
LREIT has applied to the TSXV for approval of the listing of the Trust Units to be issued as a result of the Exchange Transaction. The listing will be subject to LREIT satisfying all of the requirements of the TSXV. The Trust Units will continue to trade on the TSXV under the symbol "LRT.UN". LREIT will apply to have the Debentures delisted following the completion of the Exchange Transaction.
The current terms of the Debentures are set forth in the first supplemental trust indenture between
A special meeting (the "Meeting") of the Debentureholders be held at the offices of
The Trust Indenture defines the term "Extraordinary Resolution" as a resolution proposed to be passed at a meeting of Debentureholders (including an adjourned meeting) duly convened for the purpose and held in accordance with the provisions of Article 14 of the Trust Indenture at which the holders of not less than 25% in principal amount of the Debentures then outstanding, are present in person or represented by proxy and passed by the favourable votes of holders of not less than 66 2/3% of the principal amount of the Debentures represented at the meeting and voted on a poll upon such resolution. At the Meeting, the Debentureholders will be asked to consider and, if deemed advisable, to approve, with or without amendment, an Extraordinary Resolution approving the Exchange Transaction.
In the event that LREIT becomes aware that the Exchange Transaction will result in the creation of a new "Control Person" or "Insider", as those terms are defined by the TSXV, LREIT will not deliver any Trust Units to such new Control Person or Insider until such time as all requirements of the TSXV with respect to the creation of a new Control Person or Insider have been satisfied.
Further information about the Exchange Transaction and the Meeting will be provided in an information circular expected to be distributed to Debentureholders in the near future, as well as in other LREIT continuous disclosure filings available on SEDAR (www.sedar.com), or from LREIT on request.
ABOUT LREIT
LREIT is a real estate investment trust, which is listed on the
Neither the
Certain statements contained in this press release are "forward-looking statements" that reflect the expectations of management regarding the Exchange Transaction. Readers are cautioned not to place undue reliance on forward-looking information. All statements other than statements of historical fact contained herein are forward-looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward looking statements involve significant risks and uncertainties. A number of factors that could cause actual results to differ materially from the results discussed in forward-looking statements are discussed in LREIT's management discussion and analysis for the six-month period ended
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. Forward-looking statements are made as of the date hereof, or such other date specified in such statements, and neither LREIT nor any other person assumes any obligation to update or revise such forward-looking statements to reflect new information, events or circumstances, except as expressly required by applicable securities law.
SOURCE
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