Keystone North America Inc. Announces Mailing of Offering Documents
/NOT FOR DISTRIBUTION IN THE
The Directors' Circular contains, among other things, the unanimous recommendation of the board of directors of Keystone (the "Keystone Board") that Shareholders accept the Offer and tender their Keystone Shares to the Offer and the reasons for the recommendation of the Keystone Board. In reaching its conclusions, the Keystone Board, assisted by its financial and legal advisors, carefully considered all aspects of the Offer as well as the factors described in the Directors' Circular, including:
- The Offer represents the best alternative following a comprehensive
strategic review process conducted by the Keystone Board. The process
included the investigation of various strategic alternatives,
including debt and equity financings, an amended dividend policy and
the undertaking of a robust sale process conducted by the Keystone
Board that included, amongst other things, consideration of various
merger and business combination scenarios and the inclusion of North
American and international potential purchasers.
- The consideration to be paid to Shareholders pursuant to the Offer is
all cash, which provides liquidity and certainty of value to
Shareholders.
- The Offer represents a premium of approximately 34% over the 20-day
volume-weighted average price and a premium of approximately 38% over
the 50-day volume-weighted average price of the Keystone Shares on
the TSX for the period ending on October 14, 2009, the last trading
day prior to the public announcement of the signing of the support
agreement between Keystone, SCI and the Offeror dated October 14,
2009 (the "Support Agreement").
- Continued weakness in credit markets has constrained Keystone's
anticipated ability to refinance its existing senior credit
facilities on acceptable terms. In this context, the Keystone Board
instructed management and BMO Capital Markets, financial advisor to
Keystone, to investigate refinancing alternatives. Upon completion of
this review, the Keystone Board's conclusion was that, unless credit
markets change significantly, any new senior credit facilities might
be expected to be available on terms that would place limits on
future acquisitions, capital expenditures and dividends. Based on
advice from BMO Capital Markets, among other things, the Keystone
Board believes that, to execute Keystone's business plan, the
entering into of new credit facilities might also require a
recapitalization that could be dilutive to existing Shareholders and
may require a material reduction in dividends.
- BMO Capital Markets and Scotia Capital each delivered a fairness
opinion dated October 14, 2009 to the effect that, subject to the
assumptions, qualifications and limitations discussed therein and as
of the date thereof, the consideration offered under the Offer is
fair from a financial point of view to Shareholders (other than the
Offeror or any of its affiliates).
- The Offeror is a wholly-owned subsidiary of SCI, a funeral home
operator with a track record of successfully completing acquisitions.
The Support Agreement contains a covenant and guarantee from SCI
regarding the Offeror's obligations.
- The terms and conditions of the Support Agreement do not preclude an
unsolicited third party from proposing or making a superior proposal
or, provided Keystone complies with the terms of the Support
Agreement, do not preclude the Keystone Board from considering and
acting on a superior proposal, prior to the take up of Keystone
Shares by the Offeror.
"Keystone's board of directors unanimously supports this transaction as it provides Keystone's shareholders with significant value and liquidity," noted Lorie Waisberg, Chairman of Keystone.
Shareholders are urged to carefully read the Offer Circular and Directors' Circular, which contain important information about the Offer. Shareholders may obtain a copy of the Offer Circular or the Directors' Circular on the website maintained by the Canadian securities regulatory authorities at www.sedar.com.
About Keystone
Keystone, through its subsidiaries, is a leading funeral service provider in
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute "forward-looking information" within the meaning of applicable securities laws, which reflects expectations regarding future outcomes which may include, among other things, the future growth, results of operations, performance and business prospects and opportunities of Keystone. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. Such forward-looking information reflects management's and the Keystone Board's current beliefs and is based on information currently available to management and the Keystone Board. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements and information contained in this press release. In particular, this press release contains forward-looking information pertaining to the general business and strategies of Keystone, the business prospects of Keystone and the ability to refinance Keystone's existing senior credit facilities. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to the state of credit markets or other factors discussed under the heading "Risk Factors" in Keystone's Annual Information Form dated
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For further information: Steven A. Tidwell, President and Chief Executive Officer, (813) 225-4653, [email protected]
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