VANCOUVER, British Columbia, Sept. 05, 2017 (GLOBE NEWSWIRE) --
Urban Communications Inc. (TSX-V:UBN)
(“Urban” or the “Company”) announces that it has entered into a
definitive arrangement agreement dated August 31, 2017 (the
“Agreement”) with ACME Communications Canada, Inc. (“ACME”) whereby
ACME will acquire all of the issued and outstanding common shares
of Urban (the “Shares”) by way of a statutory plan of arrangement
under the Business Corporations Act (British Columbia)
(the “Arrangement”). The Arrangement is subject to customary
closing conditions, including approval by holders of Shares
(“Shareholders”), options and warrants in Urban (collectively, the
“Securityholders”), court and regulatory approvals. Assuming
the timely receipt of such approvals, the Arrangement is expected
to close in October, 2017.
The Arrangement Agreement
Under the terms of the Agreement, each Shareholder will receive
cash consideration of CA$0.07 for each Share held (the
“Consideration”), which, together with anticipated debt being
assumed at closing results in an enterprise value being paid of
CA$15.6 million on a fully-diluted in-the-money basis. Urban
presently has 109,909,941 shares outstanding and it is intended
that all of the shares are to be purchased by Acme through the
process outlined in the Agreement. The Consideration payable
to Shareholders represents a premium of 16.7% to Urban’s closing
share price on the TSX Venture Exchange (“TSX-V”) on August 31,
2017, and a 22.4% premium to Urban’s 30-day volume-weighted average
price (“VWAP”) ending on the same date. ACME is an
arms-length party to Urban.
The Agreement provides for, among other things, a
non-solicitation covenant on the part of Urban, subject to
customary “fiduciary out” provisions that entitle Urban to consider
and accept a superior proposal, a right in favour of ACME to match
any superior proposal, and, in certain circumstances, the payment
of a CA$400,000 termination fee to ACME. The Agreement also
provides for the payment of an expense reimbursement fee of
CA$400,000 in certain circumstances by ACME to Urban.
Under and subject to the terms of the Agreement, ACME has agreed
to extend a $500,000 loan to Urban as a contribution to Urban’s
working capital to assist in performing its business operations to
the completion of the Agreement.
A copy of the Agreement will be available for review on the
Company’s profile on SEDAR at www.sedar.com.
Benefits to Shareholders
The Agreement represents an opportunity for Shareholders to
realize an immediate cash premium to recent trading ranges of
Shares, being a premium of 16.7% to Urban’s closing share price on
the TSX-V on August 31, 2017, and a 22.4% premium to Urban’s 30-day
VWAP on the same date. In addition, the Consideration to be
received by Shareholders is within the fair value range considered
by Evans & Evans Inc. in a fairness opinion provided to the
Company, as described below.
John Farlinger, Chief Executive Officer of Urban, stated, “With
the announcement today of ACME’s all-cash offer for Urban, I
believe there is an opportunity for shareholders of Urban to
benefit from the immediate cash premium, while avoiding potential
near-term dilution. The decision to accept this offer was
made after careful consideration of the interests of shareholders,
creditors and employees. Given the context that significant
capital expenditures are required to enhance the Company’s market
value and the need to replace term debt of $6 million within 12
months and the substantial dilution that would entail, this
transaction has been determined to be the best value for all
stakeholders.”
Support for the Arrangement and Fairness
Opinions
A special committee (the “Special Committee”) of Urban’s board
of directors (the “Board”) was constituted in December, 2016, to
consider the Arrangement and other funding opportunities available
to the Company, and recommended acceptance of the agreement with
ACME.
The Board received a fairness opinion from Evans & Evans
Inc. (the “Evans Fairness Opinion”), a recognized and experienced
valuation firm, to the effect that, as of the date thereof, the
Consideration to be received by Shareholders under the transaction
is fair, from a financial point of view, to Shareholders other than
ACME and ACME’s affiliates.
The Board has also received continuing advice since April, 2016,
from MVP Capital, LLC, a premier investment banking firm that
specializes in telecommunications transactions in North
America. MVP analyzed this and other alternatives available
to the Company and recommended that the Company proceed with the
ACME Arrangement.
The Board, after receiving financial and legal advice and
following receipt of the Evans Fairness Opinion and a unanimous
recommendation from the Special Committee (as resolved following
receipt of the Evans Fairness Opinion and MVP process report),
unanimously determined that the Arrangement is fair, from a
financial point of view, to the Securityholders and that the
Arrangement is in the best interests of the Company and recommends
that Securityholders vote in favour of the Arrangement.
Securityholder Approval
Completion of the Arrangement will be subject to customary
closing conditions, including receipt of the required approvals at
a special meeting of Securityholders expected to be held in
October, 2017 (the “Meeting”). The Arrangement will be
subject to the approval of at least two-thirds of votes cast by
Securityholders voting as a single class.
A management information circular providing a detailed
description of the Arrangement is expected to be mailed in
September, 2017, to Securityholders in connection with the
Meeting.
Advisors and Counsel
Urban’s financial advisor in relation to the Arrangement is MVP
Capital, LLC, a division of Financial Telesis, Inc., and its legal
advisors are DS Lawyers Canada LLP.
Squire Patton Boggs (US) LLP and Siskinds LLP are acting as
legal counsel to ACME.
ABOUT ACME COMMUNICATIONS CANADA, INC.
ACME Communications Canada, Inc. has been formed to acquire
telecommunications facilities throughout Canada and is affiliated
with companies with considerable experience in providing
telecommunications services in various countries.
ABOUT URBAN COMMUNICATIONS INC.
Urban Communications Inc. (TSX-V:UBN)
one of the country’s first telecommunications company to deliver
Gigabit Internet service to the home, provides a full suite of
Internet, voice, video and broadband application products over its
300 km. state-of-the-art carrier grade fibre optic network in Metro
Vancouver and Victoria to commercial, residential and public sector
customers.
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.
Except for statements of historical fact relating to Urban
Communications Inc., certain information contained herein
constitutes “forward-looking statements” as such term is used in
applicable Canadian securities laws. Forward-looking statements
include statements that are predictive in nature, depend upon or
refer to future events or conditions, or include words such as
“expects”, “anticipates”, “plans”, “believes”, “considers”,
‘intends”, targets”, or negative versions thereof and other similar
expressions, or future or conditional verbs such as “may’, “will”,
“should”, “would” and ‘could” in particular, statements related to
the Arrangement and the expected completion thereof. We
provide forward-looking statements for the purpose of conveying
information about our current expectations and plans relating to
the future and readers are cautioned that such statements may not
be appropriate for other purposes. By its nature, this
information is subject to inherent risks and uncertainties that may
be general or specific and which give rise to the possibility that
expectations, forecasts, predictions, projections or conclusions
will not prove to be accurate, that assumptions may not be correct
and that objectives, strategic goals and priorities will not be
achieved. These risks and uncertainties include, but are not
limited to, risks related to being unable to close the Arrangement
in the time frames indicated, failure to satisfy all conditions
precedent to the Agreement including required Securityholder
approvals, approval of the TSX-V and applicable regulatory
authorities.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
Other than as specifically required by law, we undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is
made, or to reflect otherwise.
URBAN CONTACT INFO: John Farlinger, Chief Executive Officer Phone:
(604) 763-7565 jafarlinger@urbanfibre.ca