CALGARY, Dec. 9 /CNW/ - Mainstreet Equity Corp. (the "Corporation") (TSX:MEQ) announces today its intention to make a substantial issuer bid (the "Offer") pursuant to which the Corporation will offer to purchase for cancellation up to 4,000,000 of its outstanding common shares ("Common Shares") from shareholders ("Shareholders") at a price of $6.25 per Common Share or an aggregate amount of up to $25,000,000, being a premium of approximately 30% to the closing price of the Common Shares on the Toronto Stock Exchange on December 9, 2008. If more than 4,000,000 Common Shares are tendered to the Offer, Mainstreet will purchase the Common Shares on a pro rata basis according to the number of Common Shares deposited, or deemed to be deposited under the terms of the Offer, by the depositing Shareholders with fractions rounded to the nearest whole Common Share. The Offer is not conditional on any minimum number of Common Shares being deposited. The purchase of Common Shares will be financed from existing cash and, to the extent required, proceeds from mortgage financing on real estate properties wholly-owned by the Corporation.
As of the date hereof, there are 13,873,473 Common Shares outstanding and, accordingly, the Offer is for up to approximately 28.8% of the outstanding Common Shares on a non-diluted basis or 28.2% of the Common Shares on a fully diluted basis. The Offer is subject to various conditions typical of transactions of this nature, including obtaining any regulatory exemption rulings that may be required. It is anticipated that the offer to purchase and issuer bid circular and other related documents (the "Offer Documents"), containing the terms of the Offer and the instructions for tendering Common Shares, will be mailed to Shareholders and filed with applicable securities regulators on or about December 15, 2008. The Offer will remain open for acceptance for at least 35 days after the date of commencement, unless withdrawn or extended by the Corporation.
The board of directors of the Corporation (the "Board") believe that the purchase of Common Shares under the Offer represents an effective and desirable use of the Corporation's available resources given the current trading price of the Common Shares on the Toronto Stock Exchange and is in the best interest of the Shareholders.
National Bank Financial, Inc. has provided an opinion to the Board that: (i) there is a liquid market, as such term is defined in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, for the Common Shares at the date hereof; and (ii) it is reasonable to conclude that, following the completion of the Offer, there will be a market for Shareholders who do not tender to the Offer that is not materially less liquid than the market for Common Shares that exists at the time of making the Offer.
Desjardins Securities Inc. ("Desjardins") has been engaged by the Corporation to act as the financial advisor in respect of the Offer to the Corporation. In addition, Desjardins has agreed to act as dealer manager under the Offer to solicit Common Shares from Shareholders.
The Corporation is also please to announce that it has completed its normal course issuer bid ("NCIB") announced on July 30, 2008. Pursuant to the NCIB, the Corporation has purchased an aggregate of 700,000 Common Shares, the maximum amount of Common Shares allowed to be purchased under the NCIB, at a price range of $4.50 to $12.43 per Common Share.
Neither the Corporation nor its Board of Directors makes any recommendation to Shareholders as to whether to tender or refrain from tendering their Common Shares to the Offer. Shareholders are strongly encouraged to review the Offer Documents carefully and to consult with their financial and tax advisors prior to making any decision with respect to the Offer.
Forward-Looking Information
Certain statements contained in this release constitute forward-looking information. These statements relate to future events or the Corporation's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to: the intention of the Corporation to commence the Offer and mail the Offer Documents to shareholders on or about December 15, 2008; the methods of financing for the Offer; and the Corporation's belief that the purchase of Common Shares under the Offer represents an effective and desirable use of the Corporation's available resources given the current trading price of the Common Shares on the Toronto Stock Exchange and is in the best interest of the Shareholders. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to Mainstreet, including information obtained from third-party industry analysts and other third party sources. The material factors and assumptions include: the Corporation being able to obtain any necessary regulatory exemptions that may be acquired, the fact that the Corporation will be able to obtain financing in the future; current and historical results of operations and performance; and no significant event occurring outside the ordinary course of business such as a natural disaster or other calamity. Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: general economic and business conditions; interest rate fluctuations; increased vacancy rates and decreased rental income cash flow; changes in competition; fluctuating energy and utility costs; credit risks; volatility in the market price of the Common Shares; the results of the Offer; the inability to obtain financing; the loss of key personnel; the extent to which the holders of Common Shares determine to tender their Common Shares to the Offer; and changes in the government regulation. Mainstreet cautions the reader that the above list of risk factors is not exhaustive. Other factors which could cause actual results, performance or achievements of Mainstreet to differ materially from those contemplated (whether expressly or by implication) in the forward-looking information are disclosed in Mainstreet's publicly filed documents, including but without limitation, the Corporation's most recent annual information form and management's discussion and analysis. The forward-looking information contained in this release is made as of the date hereof and Mainstreet is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.