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Rocky Mountain Dealerships Enters into Arrangement Agreement for a Going-Private Transaction

November, 02, 2020

CALGARY, ALBERTA, November 2, 2020 — Rocky Mountain Dealerships Inc. (“RME” or the “Company”) (TSX: RME) and 2223890 Alberta Ltd. (“AcquireCo”), an entity controlled by Matthew Campbell, Chairman of the Board of Directors of RME (the “Board”) and Garrett Ganden, President and CEO of RME (collectively, the "Participating Shareholders"), are pleased to announce that they have entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which AcquireCo will acquire all of the issued and outstanding common shares of RME (the “Shares”), excluding certain shares controlled by the Participating Shareholders, for $7.00 per Share in cash (the “Purchase Price”), in accordance with a series of steps under a plan of arrangement (the “Arrangement”) pursuant to the Business Corporations Act (Alberta).

The Purchase Price represents a 26.8% premium to the closing share price of the Shares on October 30, 2020, and a 25.8% premium to the 20-day volume-weighted average price of the Shares for the period ended October 30, 2020. The Arrangement values RME at $135 million on an equity basis and at $188 million on an enterprise basis, including debt (net of cash) and lease obligations, and excluding floor plan payables. Subject to ongoing review and approval by the Board, the Company expects to continue to declare and pay quarterly dividends at the current level of $0.015 per Share until completion of the Arrangement.

In response to a proposal from AcquireCo, the Board formed a special committee of independent directors (the "SpecialCommittee") to, among other things, review and evaluate the terms of the proposal from AcquireCo, to obtain and supervise the preparation of a formal valuation of the fair market value of the Shares, to obtain and supervise the preparation of a fairness opinion, to make a recommendation to the Board in respect of the proposal and to negotiate the terms and conditions of the Arrangement Agreement and related matters.

The Arrangement was unanimously recommended by the Special Committee to the Board. The members of the Board (with interested and non-independent directors abstaining), after receiving the unanimous recommendation of the Special Committee, have (i) determined that the Arrangement is fair, from a financial point of view, to the holders of Shares (other than the Participating Shareholders) and that the Arrangement is in the best interests of RME; (ii) approved the Arrangement and the Arrangement Agreement; and (iii) resolved to recommend that holders of Shares vote in favour of the Arrangement.

Certain directors and officers of RME, who collectively (including the Participating Shareholders) own or exercise control over approximately 13.6% of the outstanding Shares, have entered into support agreements with AcquireCo pursuant to which they have agreed to vote their Shares in favour of the Arrangement, subject to the provisions thereof.

Transaction Details

The Arrangement is structured as a statutory plan of arrangement under the Business Corporations Act (Alberta). Completion of the Arrangement requires approval of at least 66 2/3% of the votes cast, in person or by proxy, by holders of Shares and “majority of the minority” approval under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). For the purposes of the “majority of the minority” approval requirement, the votes cast by shareholders of AcquireCo, including the Shares held by the Participating Shareholders, who collectively own or exercise control over approximately 13.3% of the outstanding Shares, will be excluded. The Arrangement is also subject to all requisite court, regulatory and material third party approvals. The Arrangement is not subject to a financing condition.

A special meeting of holders of Shares to consider the Arrangement is expected to be held in person or virtually in December 2020. An information circular in connection with the Arrangement will be mailed to holders of Shares in November 2020.

Pursuant to the Arrangement Agreement, RME has a 35-day go-shop period, ending on December 6, 2020 (the “Go-ShopPeriod”), during which it is permitted to actively solicit, evaluate and enter into negotiations with third parties that express an interest in acquiring RME.

In the event a superior proposal is received by RME, AcquireCo has a right to match any such superior proposal. RME has also agreed to pay a termination fee of $2.575 million to AcquireCo if the Arrangement Agreement is terminated in certain circumstances prior to the end of the Go-Shop Period, and a termination fee of $5.15 million if the Arrangement Agreement is terminated in certain circumstances following the Go-Shop Period. AcquireCo has agreed to pay a reverse termination fee equal to certain transaction costs of RME, if the Arrangement Agreement is terminated in certain circumstances prior to the outside date, being February 26, 2021, subject to extension in certain circumstances.

In accordance with MI 61-101, Deloitte LLP was retained by the Special Committee to provide, under the supervision of the Special Committee, an independent formal valuation of the Shares, and has concluded that, based upon and subject to the assumptions, limitations and qualifications that will be set out in its written valuation, as at October 31, 2020, the fair market value of the Shares is in the range of $6.85 and $7.90 per share. Deloitte LLP has also provided an opinion to the Special Committee that, as at November 1, 2020, and subject to the assumptions, limitations and qualifications to be set out in Deloitte LLP's written fairness opinion, that the consideration to be received under the Arrangement is fair from a financial point of view, to the holders of the Shares, other than the Participating Shareholders.

RBC Capital Markets, the Special Committee’s financial advisor, has also provided an opinion to the Special Committee that, as at November 1, 2020, and subject to the assumptions, limitations and qualifications to be set out in RBC Capital Markets’ written fairness opinion, the consideration to be received under the Arrangement is fair from a financial point of view, to the holders of the Shares, other than the Participating Shareholders.

The formal valuation report and fairness opinion will be made available in the Company’s information circular for the special meeting of shareholders, which will be filed by the Company under its profile at www.sedar.com.

Subject to the satisfaction of all approvals and conditions to the transaction, closing is expected to occur on or about December 21, 2020.

Advisors

RBC Capital Markets was retained by the Special Committee to act as its exclusive financial advisor. Gowling WLG (Canada) LLP was retained as independent legal counsel to the Special Committee and Dentons Canada LLP was retained as legal counsel to the Company.

CIBC Capital Markets was retained by AcquireCo to act as its exclusive financial advisor. Osler, Hoskin & Harcourt LLP was retained as legal advisor to AcquireCo.

About Rocky Mountain Dealerships Inc. (TSX:RME)

RME is Canada's largest agriculture equipment dealer with branches located throughout Alberta, Saskatchewan, and Manitoba. Through its dealer network, RME sells, rents, and leases new and used agriculture equipment and offers product support and finance to its customers.

Additional information about RME is available at www.rockymtn.com and on SEDAR at www.sedar.com.

For investor and media inquiries please contact:

Jerry Schiefelbein, Chief Financial Officer
403-214-5639
jschiefelbein@rockymtn.com

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