Leon's to acquire The Brick

Press Conference in downtown Toronto on Monday, November 12, 2012 at 10:00am ET (details below)

TORONTO, Nov. 11, 2012 /CNW/ - Leon's Furniture Limited (TSX: LNF) and The Brick Ltd. (TSX: BRK) are pleased to announce that they have entered into a definitive agreement (the "Arrangement Agreement") that provides for the acquisition of The Brick by Leon's by way of plan of arrangement (the "Arrangement") for $5.40 per share (the "Share Consideration"). Leon's will also acquire all of the outstanding common share purchase warrants of The Brick for $4.40 per warrant. The total consideration payable to Brick shareholders and warrantholders is approximately $700 million.

The Share Consideration represents a premium of approximately 62% to the 20-day volume weighted average price of The Brick's common shares on the TSX as of November 9, 2012. The warrants, which have an exercise price of $1.00 and expire on May 27, 2014, had a closing price on the TSX of $2.36 on November 9, 2012. The closing price of the Brick shares on the TSX on November 9, 2012 was $3.50.

Leon's and The Brick will continue to operate as separate banners out of offices in Toronto and Edmonton. Terry Leon will remain as CEO of Leon's and will be CEO of the combined entity. Vi Konkle, President and CEO of The Brick, will continue as President of The Brick. Bill Gregson, currently Executive Chairman of the Board of The Brick, has agreed to stay on in an advisory capacity. It is anticipated that Mr. Gregson will join the Leon's Board in due course. Mark J. Leon will continue to serve as the Chairman of the Board of Leon's.

Terry Leon, President and CEO of Leon's, said, "This transaction brings together two great Canadian companies with complementary geographic footprints to strengthen our position in the home furnishings marketplace. We will apply the best practices of both companies to offer even greater value to our customers and create more opportunity for our associates. Our combined team will have access to national buying opportunities in merchandising and marketing, and a national distribution network that will enable us to greatly enhance our online shopping capabilities. We are very excited to build on the relationships we have established over the years with our respective associates, franchises, customers, shareholders, suppliers and the many communities we serve."

Vi Konkle, President and CEO of The Brick, said, "We welcome this opportunity to partner with this iconic corporation. By joining forces, we can strengthen both of our businesses, enhancing everything that has made Leon's and The Brick two of Canada's best-known retailers and preserving The Brick's roots in Edmonton."

Added Mr. Leon: "During these economic times where we have seen multiple American corporations make inroads in our country through acquisitions, it is a pleasure to see two successful Canadian retailers reach such an agreement that will better serve Canadian consumers."

As indicated, under the Arrangement, Leon's will acquire all of the outstanding common shares and common share purchase warrants of The Brick. For each common share held by a Brick shareholder, the shareholder can elect to receive as consideration $5.40 in cash per common share or 0.0054 convertible debentures of Leon's (the "Convertible Debentures"), described below, subject to the terms and conditions of the Arrangement Agreement. For each warrant, the holder of such warrant can elect to receive as consideration $4.40 in cash per warrant or 0.0044 Convertible Debentures per warrant, subject to the terms and conditions of the Arrangement Agreement.

Each of William Comrie, the founder of The Brick, Fairfax Financial Holdings Limited ("Fairfax"), Chou RRSP Fund, and Bill Gregson, the Executive Chair of The Brick's Board of Directors, who together hold approximately 66.6% of the outstanding common shares and warrants of The Brick, have entered into irrevocable voting support agreements and agreed to vote their common shares in favour of the Arrangement.

The transaction is expected to close in the first quarter of 2013, subject to certain customary conditions, including court approval, relevant regulatory approvals and the absence of any material adverse change with respect to The Brick.  The Arrangement will also be subject to (i) the approval of at least 66 2/3% of the votes cast at a special meeting of Brick shareholders and warrantholders, voting as a single class, to be called to consider the Arrangement, and (ii) the approval of at least a majority of the votes cast by Brick shareholders at such meeting.

Under the terms of the Arrangement Agreement, there will be no dividends or other distributions declared on Brick Shares pending closing.

Transaction Details

The Brick's Board of Directors, after consultation with its financial and legal advisors, and on the recommendation of the Special Committee of The Brick's Board of Directors, has determined that the Arrangement is fair to holders of common shares and warrants, respectively, and that the Arrangement is in the best interests of The Brick and recommends that shareholders and warrantholders vote in favour of the Arrangement.

The Brick's Board of Directors is not making a recommendation as to whether shareholders or warrantholders of The Brick should elect to receive Convertible Debentures as Fairfax, which currently owns approximately 37% of the outstanding common shares of The Brick, has agreed to accept as partial consideration for its shares all Convertible Debentures not otherwise elected to be received by other shareholders or warrantholders of The Brick. The Board of Directors of The Brick has not concluded whether or not the Arrangement is fair to Fairfax, and accordingly it is not recommending whether or not Fairfax should vote in favour of the Arrangement.

Scotia Capital Inc. has provided an opinion to the Special Committee of the Board of Directors of The Brick that the Arrangement is fair, from a financial point of view, to shareholders and warrantholders of The Brick.  For the purposes of rendering the opinion, Scotia Capital Inc. has relied on certain assumptions, including the fact that all shareholders and all warrantholders, other than Fairfax, are entitled to receive 100% cash consideration. At the Company's direction, Scotia Capital Inc. has not been asked to offer, nor has it offered, any opinion as to the value of the Convertible Debentures and certain other matters, and it expresses no opinion as to whether or not the Transaction is fair from a financial point of view to Fairfax.  Scotia Capital Inc.'s opinion will be included in the Information Circular (as defined below).

The Convertible Debentures will have a 3% coupon and a 10-year term, and will be convertible beginning 90 days prior to the fourth anniversary of their issuance, at a conversion rate based on $12.6379 per Leon's common share. Leon's will have the right to redeem the Convertible Debentures after the fourth anniversary of their issuance, subject to the holder's right to convert rather than have their Convertible Debentures redeemed. A maximum of $100 million of Convertible Debentures will be issued. Leon's has applied to list the Convertible Debentures and the underlying Leon's common shares on the TSX.

The terms and conditions of the Arrangement will be summarized in The Brick's management information and proxy circular, which will be filed and mailed to The Brick's shareholders in late November 2012 (the "Information Circular").

Leon's intends to finance the cash portion of the consideration from existing cash resources and $500 million in committed bank facilities fully-underwritten by CIBC and Desjardins Capital Markets. These committed bank facilities are comprised of a $400 million four-year term credit facility, and a new $100 million revolving credit facility which, if required, will be used to finance the transaction and otherwise will be available for general corporate purposes.

Advisors and Legal Counsel

CIBC World Markets Inc. is acting as financial advisor and McCarthy Tétrault LLP is acting as legal advisor to Leon's. Blake, Cassels & Graydon LLP is acting as legal counsel to The Brick and its Board of Directors. Scotia Capital Inc. is acting as financial advisor to the Special Committee of the Board of Directors of The Brick. Torys LLP is acting as legal counsel to Fairfax.

Press Conference - November 12, 2012 at 10:00am ET

The CEOs and Board Chairs from both companies will host a joint press conference tomorrow, Monday November 12^th, at 10:00am Eastern.

Location:	Leon's Furniture Toronto Downtown (at the Roundhouse)
	255 Bremner Boulevard (Parking available on Bremner Blvd. or underground in the Toronto Convention Centre parking)

About Leon's

Leon's was founded in 1909 and is one of Canada's best-known home furnishings retailers offering great value on furniture, major appliances and home electronics. Leon's has 76 stores in Newfoundland and Labrador, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, Nova Scotia, New Brunswick, and Prince Edward Island.

About The Brick

The Brick, which opened its first store in Edmonton, Alberta in 1971, has grown over the last 40 years to become one of Canada's leading retailers of household furniture, mattresses, appliances and home electronics.  The Brick has 230 stores operating under The Brick, United Furniture Warehouse, The Brick Mattress Store and Urban Brick banners.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable Canadian securities laws, including (but not limited to) statements about: completion of the proposed transaction and expected timing; financing of the transaction; strengthening the combined companies' position in the marketplace; application of best practices of both companies and offering of greater value to customers and creation of opportunities for associates; access to national buying opportunities in merchandising and marketing; enhanced online shopping capabilities; Mr. Gregson joining the Leon's Board; more competitive businesses; enhancing the businesses; preserving The Brick's roots in Edmonton; better serving Canadian consumers; and similar statements concerning anticipated future events, results, circumstances, performance or expectations, that reflect management's current expectations and are based on information currently available to management of Leon's, The Brick and their respective subsidiaries. The words "may", "will", "should", "believe", "expect", "plan", "anticipate", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms, or other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking matters. The following factors could cause actual results to differ materially from those discussed in the forward looking statements: failure to satisfy the conditions to complete the Arrangement, including the receipt of the required securityholder, court or regulatory approvals; the failure of Leon's to satisfy conditions to its acquisition financing; the occurrence of any event, change or other circumstance that could give rise to the termination of the Arrangement Agreement; retention of customers, suppliers and personnel being adversely affected by the uncertainty surrounding the Arrangement; inability to successfully integrate the operations of the two companies following completion of the transaction; and other factors discussed in documents filed with the securities commissions across Canada by Leon's and The Brick. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Leon's or The Brick to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Leon's and The Brick undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.

SOURCE: Leon's Furniture Limited

David Ryan
Longview Communications
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Nick Anstett
Longview Communications
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