Franchise Services of North America Inc. Announces Closing of the Acquisition of Simply Wheelz, LLC by Adreca Holdings Corp.
CALGARY, Dec. 12, 2012 /CNW/ - FRANCHISE SERVICES OF NORTH AMERICA INC. ("FSNA" or the "Company") (TSX-V: FSN) announces that Adreca Holdings Corp. ("Adreca"), a subsidiary of Macquarie Capital ("Macquarie Capital"), has closed its acquisition of Simply Wheelz, LLC, the owner and operator of the Advantage® Rent A Car brand ("Advantage"), from Hertz Global Holdings, Inc. ("Hertz") today.
FSNA's previously announced acquisition of Advantage will proceed by way of merger (the "Merger") between a wholly-owned subsidiary of FSNA and Adreca. The Merger is expected to close in the first quarter of 2013 and is more fully described in the appendix to the Company's press release dated August 28, 2012.
In conjunction with its acquisition of Advantage, Macquarie Capital agreed that Adreca will also acquire on-airport concessions at an additional 13 airports from Hertz. As Advantage already operates off-airport locations servicing three of these airports, the acquisition of these on-airport concessions will represent a net increase of 10 new locations. As a result, pending the Merger, the Company may acquire up to 72 rental locations in new markets in the United States. The prospect of acquiring these additional airports was previously detailed by the Company's November 20, 2012 press release. Adreca's acquisition of these additional airports and certain other divested assets from Hertz is expected to close in stages beginning in the first quarter of 2013. Adreca will be Hertz' sole divestiture partner in conjunction with the dispositions required to be made by Hertz by the consent decree issued by the United States Federal Trade Commission, previously detailed by the Company's November 20, 2012 press release.
As previously described by the Company's August 28, 2012 press release, FSNA and Adreca have entered into a management services agreement (the "Management Services Agreement") pursuant to which FSNA will provide Adreca with certain management services in respect of Advantage and the other assets divested by Hertz pending closing of the Merger. As consideration for the services provided under the Management Services Agreement, FSNA shall be entitled to its costs plus 25% in respect of services provided by FSNA employees and to recover its costs in respect of all other services. In addition, FSNA has been issued a warrant of Adreca (the "Warrant") entitling FSNA to receive 35% of the common shares of Adreca in certain circumstances as consideration for, among other things, the services provided under the Management Services Agreement. The Warrant is only exercisable if the Merger has not been consummated by May 9, 2013 or as otherwise set out in the Merger Agreement.
Commenting on the recent developments, Thomas P. McDonnell, III, the Company's Chief Executive Officer and Chairman said, "This is a great day for FSNA, our partner Macquarie Capital, and the over 600 employees of Advantage Rent A Car. We are all excited to become North America's fourth largest car rental company, and we look forward to continuing a legacy of great service to our customers, both new and old."
FSNA is a publicly traded company listed on the TSXV. The Company and its subsidiaries own the following brands: U-Save Car & Truck Rental®, U-Save Car Sales, Rent-A-Wreck of Canada, PractiCar, Auto Rental Resource Center ("ARRC"), Xpress Rent A Car and Peakstone Financial Services.
U-Save, together with its subsidiary ARRC, has over 1,100 locations throughout the United States and is one of North America's largest franchise car rental companies. Having primarily serviced the local market for the past 30 years, the Company is expanding into the airport market with plans for the opening of airport locations in the top 30 markets in the United States and the major airports in Canada. U-Save currently services 28 airport markets in 11 different states and 7 countries. U-Save Car Sales is an expansion of the U-Save brand into the car sales market, and provides goods and services to car sales operators looking to affiliate with a national brand.
Practicar Systems Inc. (a wholly owned subsidiary of FSNA) owns the rights to the Rent-A-Wreck® and the PractiCar® trademarks for all of Canada. The Rent-A-Wreck® system operates a network of 68 franchise locations from coast-to-coast in Canada, providing a range of vehicle rental, leasing and sales options to its customers. The Rent-A-Wreck® system has been in continuous operation in Canada since 1976.
Completion of the Merger is subject to a number of conditions, including TSX Venture Exchange acceptance and approval by the Company's shareholders. The Merger cannot close until all required approvals are obtained. There can be no assurance that the transaction will be completed as proposed, or at all.
Investors are cautioned that, except as disclosed in the circular of FSNA to be prepared in connection with the Merger, any information released or received with respect to the Merger may not be accurate or complete and should not be relied upon. Trading in the securities of FSNA should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the transaction and has neither approved nor disapproved the contents of this press release.
Certain statements made in this news release are forward looking in nature, including statements made with respect to the Merger. The words "may," "could," "should," "would," "expect," "intend," "estimate," "anticipate," "believe," or "outlook" and similar expressions often identify forward-looking information. By their nature, forward-looking statements require FSNA to make assumptions and are subject to inherent risks and uncertainties. The forward-looking statements contained in this news release are based on certain key expectations and assumptions made by FSNA, including the satisfaction of conditions to the completion of the Merger. Although FSNA believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because FSNA can give no assurance that they will prove to be correct. There can be no assurance that the Merger will be completed as proposed or at all. FSNA's forward-looking statements are qualified in their entirety by these cautionary statements. In addition, the forward-looking statements are made only as of the date of this news release, and except as required by applicable law, FSNA undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Franchise Services of North America Inc.