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TORONTO, ONTARIO--(Marketwired - Mar 9, 2016) - On September 28, 2015 the Board of Directors of Trez Capital Senior Mortgage Investment Corporation (the "Company) established a Special Committee of independent directors (the "Special Committee") to consider alternatives to enhance value for its shareholders. The Special Committee was authorized to oversee a review process to be undertaken in response to concerns raised by shareholders regarding the discount of the Company's share trading price relative to its book value (the "StrategicReview Process"). As part of the Strategic Review Process, on February 18, 2016 the Special Committee announced that it was pursuing a monetization process (the "Monetization Process") and discussions were ongoing with third parties who had expressed an interest in a monetization transaction involving the Company and/or its assets. The Special Committee's Strategic Review Process is continuing.
To the extent that the Monetization Process identifies a transaction that the Special Committee believes is in the best interests of all shareholders, it is the intention of the Special Committee to bring forward the proposed transaction for consideration by shareholders at the upcoming annual and special meeting scheduled for May 30, 2016. There can be no assurances at this time that the Special Committee's Strategic Review Process will result in a monetization transaction or any transaction.
On March 3, 2016, a group of shareholders of Trez Capital Mortgage Investment Corporation ("TZZ") consisting of FrontFour Capital Corp., Concerned MIC Shareholders GP Inc., Performance Income Inc. and Windsor Private Capital Inc. issued a press release (the "March 3rd Release") regarding their previously announced requisition for a shareholder meeting of TZZ. In light of the fact that Trez Capital Fund Management Limited Partnership (the "Manager") provides management services to each of the Company and TZZ under separate management agreements that contain identical termination provisions, the Special Committee wishes to provide clarity with respect to two matters referred to in the March 3rd Release.
First, the Special Committee wishes to advise shareholders that, in order to facilitate the Monetization Process previously announced by the Special Committee, the Manager has consented to an early termination of the management agreement prior to November 30, 2018 in the event that the Special Committee recommends a sale of the Company or substantially all of its assets that is approved by the shareholders (the "Early Termination Agreement"). On a termination in those circumstances, the Manager will receive a termination fee equal to three times the total fees earned by the Manager during the twelve months ending immediately prior to the date of a binding agreement in respect of a sale transaction and will have no right to any additional amounts representing the fees through to the end of November 2018.
In addition, the Company has been advised by the Manager of its position that, except in accordance with the Early Termination Agreement, the Company does not have the right to unilaterally terminate the management agreement prior to November 30, 2018, including on a wind-up of the Company that is approved by the shareholders. Although there is no current plan to wind up the Company and shareholders are not being asked to consider a wind up of the Company at this time, the Special Committee, together with its legal advisors, has been carefully reviewing the terms of the management agreement. The Special Committee's conclusions regarding the terms of the management agreement (which may or may not be consistent with the Manager's position) will inform the Special Committee's recommendation to shareholders which will be included in the proxy circular to be sent to shareholders in connection with the upcoming annual and special meeting scheduled for May 30, 2016.
Shareholders are cautioned not to rely on speculative statements and are encouraged to await the outcome of the Special Committee's Strategic Review Process and the detailed information which will be included in the proxy circular. The Special Committee is conducting its Strategic Review Process on the basis that the shareholders of the Company will have the ultimate say on the choices, if any, presented to them for approval at the upcoming annual and special meeting scheduled for May 30, 2016.
Chair of the Special Committee
T: (416) 903-0057