- Agreement between Richard Baker Group and HBC amounts to nothing more than a severely undervalued share buyback at the expense of shareholders
- Catalyst and other shareholders representing approximately 28.24% of the common shares of HBC intend to vote against the agreement, representing a majority of the minority shareholders
- HBC Board and Management have shown that they are hopelessly conflicted
- Catalyst believes that a superior transaction is possible and calls on the Board to explore alternatives that would maximize value
TORONTO, Oct. 31, 2019 /PRNewswire/ - The Catalyst Capital Group Inc., on behalf of investment funds managed by it, ("Catalyst") today announced that it and other shareholders of Hudson's Bay Company (TSX: HBC) ("HBC" or the "Company") representing approximately 28.24% of HBC's total common shares outstanding intend to vote against the recently agreed transaction (the "Insider Issuer Bid") between HBC and Richard A. Baker, Governor and Executive Chairman of HBC, and certain other insiders of the Company (collectively, the "Baker Group").
Gabriel de Alba, Managing Director and Partner of Catalyst, said, "Since the announcement of the Baker Group proposal, we have held a belief that the HBC Board and its Special Committee would ensure that the interests of all shareholders would be the foundation of the process and negotiation with Richard Baker. The agreement that the Company entered into is so fundamentally conflicted, that it shows the amount of leverage Richard Baker has over the Board and Management. It is unconscionable that the Board would use shareholders' funds in a severely undervalued share buyback with massive tax leakage and dress it up as a premium transaction."
Added de Alba, "With shareholders holding approximately 28.24% of the HBC common shares now opposing the Insider Issuer Bid, we call on the Board to either demand that Richard Baker release other members of the Baker Group to consider other options or allow the Baker agreement to expire and run a true sale process. Catalyst is aware of a number of strategic investors that are interested in participating in a process that is open and not constructed to benefit an insider, and we have no doubt that the HBC Board is also aware of these interested parties. Catalyst itself is also prepared to be a participant in the process and work towards an offer to acquire the Company at terms financially superior to the Insider Issuer Bid."
Catalyst exercises control or direction over 32,326,878 common shares of HBC, representing approximately 17.49% of the 184,331,345 issued and outstanding common shares as reported by the Company in its Management's Discussion and Analysis dated September 12, 2019. Catalyst has begun to formally review steps that may be taken in opposition to the Insider Issuer Bid. Such actions include speaking with certain securityholders of the Company and other parties in order to assess support for Catalyst's position and for other reasons, and may include the solicitation of proxies from securityholders of the Company in opposition to the Insider Issuer Bid and regarding related matters and taking steps or pursuing a course of action to maximize value for all shareholders of the Company, including pursuing an alternative transaction to the Insider Issuer Bid. Depending on market conditions and other factors, Catalyst may in the future increase or decrease its control or direction over securities of the Company through open market transactions, private agreements or otherwise.
This press release is also issued pursuant to National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which requires a report to be filed on SEDAR (www.sedar.com) containing additional information with respect to the foregoing matters. To receive a copy of the early warning report filed in respect of the above matters, please contact Dan Gagnier as outlined below.
Certain statements contained in this press release, including statements regarding Catalyst and other shareholders' intention to vote against the Insider Issuer Bid and Catalyst being prepared to be a participant in the process, contain "forward-looking statements" and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "intends", "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Although Catalyst believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Material factors or assumptions that were applied in formulating the forward-looking information contained herein include the assumption that shareholders who currently oppose the Insider Issuer Bid will continue to do so, the business and economic conditions affecting HBC's operations will continue substantially in the current state, including, without limitation, with respect to industry conditions, general levels of economic activity, continuity and availability of personnel and third party service providers, local and international laws and regulations, foreign currency exchange rates and interest rates, inflation, and taxes, and that there will be no unplanned material changes to HBC's facilities, operations and customer and employee relations. Catalyst cautions that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of Catalyst and there is no assurance that they will prove correct. Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements include, among other things, actions taken by HBC or the Baker Group with respect to the Insider Issuer Bid and agreements entered into among them, industry risk and other risks inherent in the running of the business of HBC, foreign currency exchange rates and interest rates, general economic conditions, legislative or regulatory changes, changes in income tax laws, and changes in capital or securities markets. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of Catalyst's forward-looking statements. Other unknown and unpredictable factors could also impact its results. Many of these risks and uncertainties relate to factors beyond Catalyst's ability to control or estimate precisely. Consequently, there can be no assurance that the actual results or developments anticipated by Catalyst will be realized or, even if substantially realized, that they will have the expected consequences for, or effects on, Catalyst or HBC and their respective future results and performance. Forward-looking statements in this press release are based on Catalyst's beliefs and opinions at the time the statements are made, and there should be no expectation that these forward-looking statements will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and Catalyst disavows and disclaims any obligation to do so, except as required by applicable law.
SOURCE The Catalyst Capital Group Inc.