Melcor Developments Ltd. to Acquire Melcor Real Estate Investment Trust for $4.95 per Trust Unit

EDMONTON, Alberta, Sept. 12, 2024 (GLOBE NEWSWIRE) --

• Melcor REIT Unitholders will receive $4.95 in cash per Trust Unit
• The transaction represents a premium of 61.3% to the REIT’s 30-day volume weighted average unit price on the TSX
• Melcor REIT’s 5.10% convertible unsecured subordinated debentures, with a maturity date of December 31, 2024, will be paid out in cash upon closing of the Transaction
• The REIT will have a 30-day “go-shop” period during which it is permitted to solicit superior proposals
• The REIT's Board of Trustees unanimously recommends that Unitholders vote in favour of the transaction
  

Melcor Developments Ltd. ("Melcor" or the “Company”) (TSX: MRD) and Melcor Real Estate Investment Trust ("Melcor REIT" or the "REIT") (TSX: MR.UN) today announced that they have entered into an arrangement agreement (the “Arrangement Agreement”) under which Melcor will acquire its unowned equity interest (approximately 45%) in Melcor REIT Limited Partnership (“REIT LP”) for $4.95 per unit in cash consideration (the “REIT LP Sale”). Melcor’s unowned equity interest in REIT LP comprises all REIT LP’s outstanding Class A LP Units (approximately 13.0 million units). The REIT will use the proceeds from the REIT LP Sale to repurchase and cancel (collectively with the REIT LP Sale, the “Transaction”) all of the REIT’s outstanding participating trust units (“Trust Units”).

Holders of Trust Units (the “REIT Unitholders”) will receive $4.95 per Trust Unit in cash (the “Consideration”), representing a premium of 46.0% to the REIT’s closing unit price on September 12, 2024, the last trading day prior to the announcement of the Transaction, and a 61.3% premium to the 30-day volume weighted average unit price. Additionally, on or about the closing of the Transaction, Melcor will cause the redemption of, and will pay out in cash, all $46.0 million (plus any accrued and unpaid interest) of the REIT’s 5.10% convertible unsecured subordinated debentures having a maturity date of December 31, 2024 (the “Debentures”).

The REIT's Board of Trustees (the “REIT Board”), based on the recommendation of a special committee of independent trustees of the REIT Board (the "REIT Independent Committee"), has unanimously recommended that unitholders (the "Unitholders") vote in favour of the Transaction. BMO Capital Markets, financial advisor to the REIT, and Ventum Financial Corp. (“Ventum Capital Markets”), independent financial advisor and independent valuator to the REIT Independent Committee, have each rendered fairness opinions to the effect that, as at September 12, 2024, subject to the assumptions and limitations described therein, the Consideration to be received by the REIT Unitholders pursuant to the Transaction is fair, from a financial point of view. In addition, Ventum Capital Markets delivered its independent formal valuation pursuant to which it concluded that, as at September 12, 2024, that, subject to the assumptions and limitations described therein, the fair market value of the Trust Units is in the range of $3.50 to $5.00 per Trust Unit.