Franchise Services of North America Inc. provides update on Advantage asset sale
TSX-V Trading Symbol: FSN
RIDGELAND, MS, April 25, 2014 /PRNewswire/ - FRANCHISE SERVICES OF NORTH AMERICA INC. ("FSNA" or the "Company") (FSN.V) provides the following update on the previously announced proposed sale of certain assets used in connection with the business of the Company's wholly-owned subsidiary, Simply Wheelz LLC ("Simply Wheelz"), which does business as Advantage Rent A Car ("Advantage").
The Catalyst Capital Group, Inc. (on behalf of one or more funds managed by it) ("Catalyst") was selected as the prevailing purchaser in an auction of the Advantage assets conducted in accordance with bidding procedures approved by the United States Bankruptcy Court for the Southern District of Mississippi (the "Court") in the Simply Wheelz insolvency proceedings. Catalyst had previously been approved by the Court as a secured lender in the proceedings.
Catalyst has confirmed that it will assume 41 United States airport concession agreements used in the Advantage business from Simply Wheelz and the Company (the "Catalyst Asset Sale") pursuant to an asset purchase agreement entered into among Catalyst, Advantage and the Company and approved by the Court. Catalyst will also assume certain leases, executory contracts, personal property and intellectual property used in connection with the Advantage business.
Pursuant to the terms of the asset purchase agreement approved by the Court, the consideration for the Catalyst Asset Sale will be a credit bid of US$46 million against the debtor-in-possession credit facility provided by Catalyst to Simply Wheelz, plus the assumption of certain liabilities of the Advantage business by Catalyst asociated with such concession agreements. No finder's fee will be paid in connection with the Catalyst Asset Sale. The Catalyst Asset Sale is currently scheduled to close on or around April 30, 2014.
The Company further announces that, in accordance with bidding procedures approved by the Court, Avis Budget Car Rental, LLC ("Avis") and The Hertz Corporation ("Hertz") have been selected as successful bidders for 22 United States airport concession agreements used in the Advantage business and not included in the Catalyst Asset Sale.
Pursuant to binding term sheets agreed to by the respective parties and approved by the Court: (i) Avis will assume 12 United States airport concession agreements (together with related leases and executory contracts) (the "Avis Asset Sale") for consideration of approximately US$6 million in cash, plus the assumption of certain liabilities of the Advantage business associated with such concessions; and (ii) Hertz will assume 10 United States airport concession agreements (together with related leases and executory contracts) (the "Hertz Asset Sale") for consideration of approximately US$200,000 in cash, plus the assumption of certain liabilities of the Advantage business associated with such concessions by Hertz and the continued right of Advantage and Catalyst to use Hertz's vehicle fleet for April, May and June 2014, which the parties agreed has a value of approximately $3.5 million.
The Avis Asset Sale and the Hertz Asset Sale are currently expected to be completed in the second quarter of 2014. However, the Company cautions that there are a number of procedural matters and arrangements with third parties that will need to be completed before such sales are likely to be consummated.
No finder's fee will be paid in connection with the Catalyst Asset Sale, the Avis Asset Sale or the Hertz Asset Sale. The Catalyst Asset Sale, the Avis Asset Sale and the Hertz Asset Sale together consistute a sale of substantially all of the assets of Simply Wheelz.
Simply Wheelz filed for bankruptcy protection under the United States Bankruptcy Code on November 5, 2013.
FSNA is a publicly traded company listed on the TSX Venture Exchange. The Company and its subsidiaries own the following brands: Advantage Rent A Car, U-Save Car & Truck Rental® ("U-Save"), 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 900 locations throughout the United States and is one of North America's largest franchise car rental companies. U-Save currently services 19 airport markets in 13 different states. Although primarily based in the United States, U-Save has 18 international locations in Mexico, Greece, the Middle East, Latin America, and the Caribbean.
Practicar Systems Inc. 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 61 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.
Certain statements made in this news release are forward-looking in nature, including statements concerning the ability of Simply Wheelz to complete the Catalyst Asset Sale, the Avis Asset Sale and the Hertz Asset Sale and the time at which such sales might be completed; the assets being purchased by Catalyst, Avis and Hertz under the Catalyst Asset Sale, the Avis Asset Sale and the Hertz Asset Sale, respectively;and the liabilities being assumed by Catalyst, Avis and Hertz under the Catalyst Asset Sale, the Avis Asset Sale and the Hertz Asset Sale, respectively. 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 with respect to the ability of the Company to obtain third party and regulatory approvals required to complete the Catalyst Asset Sale, the Avis Asset Sale and the Hertz Asset Sale on a timely basis, or at all. 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. These forward-looking statements also involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of FSNA to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. If any such risks actually occur, they could materially and adversely affect FSNA's business, financial condition or results of operations. 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 securities 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.