First National AlarmCap Income Fund (the "Fund") is pleased to announce that it has entered into an agreement to sell substantially all of its assets for cash consideration of approximately $62Million to Stanley Canada, a subsidiary of Stanley Black & Decker. Stanley Black & Decker an S&P 500 company, is a global industrial company with an approximately $800M Convergent/Electronic Security Solutions business.
First National AlarmCap Income Fund (the "Fund") is pleased to announce that it has entered into an agreement to sell substantially all of its assets for cash consideration of approximately $62Million to Stanley Canada, a subsidiary of Stanley Black & Decker. Stanley Black & Decker an S&P 500 company, is a global industrial company with an approximately $800M Convergent/Electronic Security Solutions business.
Since the reconstitution of the Board of the Fund in 2008, the management and directors have been reviewing various strategic alternatives for the Fund. During this time, significant amounts of debt have been paid down, various trapped income tax pools have been released for use by the Fund, and restricted growth assets have been divested. These initiatives have enabled the Fund to pursue transactions to maximize unitholder value. This transaction is the culmination of these efforts.
The Agreement provides for the sale to Stanley of 100% of the issued shares of Microtec Enterprises, which contains the operations and business assets of the Fund. The Trustees of the Fund unanimously support the Sale. Trustees and officers holding 13 percent of the units of the Fund have entered into voting and support agreements in favour of the Sale. A termination fee of $1.75M will be payable by the Fund to Stanley in certain circumstances, such as if the Sale is not completed in the event of an alternate transaction.
It is expected that the Microtec business unit will continue operations in substantially the same manner under the new ownership.
The Sale is subject to normal course regulatory approvals and Fund unitholder approval, along with other customary conditions. Closing of the Sale is anticipated to take place towards the middle of September 2011. The annual and special meeting currently scheduled for August 29, 2011 will be rescheduled to a date in the middle of September. An information circular relating to the unitholder meeting to approve the Sale is expected to be sent out in early August.
As soon as practicable following the Sale, it is expected that the Fund will be wound up and the assets of the Fund will be distributed to unitholders. The net cash proceeds to be distributed to unitholders on wind up after repayment of bank debt, transaction costs and wind up costs is estimated to be between $5.25 to $5.50 per Class A Unit. At this range, this represents approximately a 26 percent to 32 percent premium to the Fund's unit price at close on July 26, 2011. In terms of the distribution to unitholders, an advance distribution of approximately $5.00 will be made shortly after the annual meeting if (a) it is approved by the unitholders and (b) the transaction closes. The balance will be paid after the Fund is wound up. Detailed information about the transaction will be provided in the information circular that will be provided to the unitholders.
The Board of the Fund has received an opinion from BDO Canada LLP that, as of the date hereof, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by the unitholders of the Fund and the shareholder of Microtec pursuant to the Sale is fair from a financial point of view to the unitholders of the Fund and to the shareholder of Microtec.
The Fund also wishes to announce that the distribution announced on July 20, 2011 will be the paid on August 31, 2011 and that it will be suspending any further distributions pending completion of the Sale.