|By Marketwired .||
|July 2, 2014 07:33 AM EDT||
TORONTO, ONTARIO -- (Marketwired) -- 07/02/14 -- Tuckamore Capital Management Inc. (TSX:TX)(TSX:TX.DB.B) ("Tuckamore" or the "Company") today responded to a report published by Institutional Shareholder Services ("ISS") in respect of the previously announced proposal (the "Arrangement") pursuant to which Birch Hill Equity Partners ("Birch Hill"), together with certain members of Tuckamore's management, have agreed to acquire all of the common shares of the Company (each a "share") for cash consideration at a price of $0.75 per share. Shareholders have been asked to vote on the Arrangement at the upcoming special meeting of shareholders to be held on July 15, 2014.
"As directors, we have a duty to present an offer such as this to shareholders for their consideration, and we have a duty to give it due consideration and make a recommendation to shareholders. We have done that, and judged this offer to provide immediate and certain value that is in the best interests of all shareholders," said Douglas Brown, Chairman. "The value of the $0.75 per share offer to shareholders includes the cash consideration, an opportunity for liquidity, and the elimination of the financing and operational risks in our business. No superior bid, nor fully-funded alternate plan that protects shareholder value, has been presented to the Board since the announcement of the Birch Hill offer."
"We do feel however, that it is important to correct and respond to the factual and analytical errors in the market, including in ISS' analysis and recommendation to shareholders of Tuckamore. ISS did not meet with Tuckamore, nor did we have an opportunity to comment on this report prior to publication. In our view, the ISS report confuses the concept of equity value with enterprise value, uses inappropriate metrics, and ignores the depth and breadth of the value maximization process undertaken by the Board. We believe these are major flaws that lead directly to ISS' incorrect recommendation," continued Mr. Brown.
Tuckamore believes that ISS' analysis was flawed in a number of material respects including:
Break Fee: ISS makes the error of calculating the break fee based on the equity value of Tuckamore, rather than the enterprise value which would be more appropriate for a highly leveraged company like Tuckamore. The purchaser of Tuckamore will have to assume approximately $280 million of debt (including capital leases) and the restrictive covenants on that debt, in addition to paying the cash consideration shareholders. When properly calculated, the break fee is equal to approximately 2% of Tuckamore's total enterprise value - a percentage that the Board, based on advice from its financial advisor, believes is in line with Canadian transactions over the past 5 years. Furthermore, the Board does not believe that a break fee of less than 2 cents to less than 7 cents per share on a fully diluted basis, is an impediment to a superior offer.
Equity Value vs. Enterprise Value: ISS twice makes the error in its analysis of confusing equity value with enterprise value. In particular, ISS makes the "apples to oranges" comparison of the attempted sale of ClearStream (which represented 78% of Tuckamore's revenues and almost all of its EBITDA) for "$200 M plus" of enterprise value with the approximately $70 million equity value of the Birch Hill offer. An appropriate comparison would be to Tuckamore's enterprise value of approximately $322 million.
In addition, the "auction" of ClearStream which involved engaging with over 20 possible purchasers, did not result in a transaction.
The Rights Offering: ISS asserts that the current cash offer which values Tuckamore's equity at approximately $70 million is too low vs. the $100 million rights offering proposed to the Board. This is a serious error. The rights offering proposal valued Tuckamore's equity at $24 million, and could have resulted in dilution of 80% to existing shareholders.
The "Auction Process": ISS concludes that Tuckamore's Board did not conduct an auction. This is an incorrect statement that ignores the lengthy and comprehensive value-maximization process undertaken by the Board that began in late 2012. As detailed over several pages in Tuckamore's management information circular, the Board proactively sought buyers for ClearStream and considered a variety of proposals from various parties. This process was undertaken with great care to ensure limited employee and customer uncertainty. The Birch Hill offer was announced on May 5, 2014, and to date not a single alternative superior offer has been made.
Valuation: ISS cites the $0.60 to $0.81 per share fair market valuation provided by PricewaterhouseCoopers ("PwC"), as evidence that the $0.75 per share cash offer is inadequate. The offer price is in fact above the midpoint of the range provided by PwC. The range provided by PwC, is just that - a range of possible values where fair market value may be found for Tuckamore's shares.
Financial Advisor: ISS incorrectly identifies PwC as Tuckamore's financial advisor. Canaccord Genuity acted as Tuckamore's financial advisor. PwC, as noted above, was appointed to provide an independent valuation in accordance with MI 61-101.
In January 2014, Tuckamore's shares were trading at $0.30, the same as the historical average for the last 5 years. Its debt was trading at an approximate 16% discount to par, which reflected the market's significant concern about the serious financing risks facing the Company. The only serious proposal the Board had received valued Tuckamore's equity at $24 million and required shareholders to accept up to 80% dilution and a discount to the trading price. Today, 6 months later, the Board has delivered an all cash offer to shareholders for their consideration. Not only does it represent a meaningful premium of over approximately 85% to where the stock had traded in the two months prior to the announcement of the deal, but it offers certain liquidity for a stock that has been illiquid for years due to the ever present financial risks associated with the capital structure.
On July 15th, shareholders will have an opportunity to choose between the cash offer of $0.75, that values Tuckamore's equity at approximately $70 million, or to remain a standalone entity. The Board encourages shareholders to consider all of the facts when making their decision.
Your Vote is Very Important
The Arrangement represents an important milestone in our Company's history. To receive the premium for your shares and avoid future financing and operational risks associated with Tuckamore's business, please cast your vote today in favour of the Arrangement Resolution. Your vote is important regardless of how many shares you own.
If you have any questions or need assistance in voting your proxy, please contact our proxy solicitor Kingsdale Shareholder Services at 1-888-518-1561 (toll free within North America) or 416-867-2272 (collect calls accepted), or by email at [email protected].
About the Company
Tuckamore has investments in 7 businesses representing a diverse cross-section of the Canadian economy.
About Birch Hill's Investment
The investment will be part of Birch Hill Fund IV with over $1 billion in committed capital.
As operational failure becomes more acceptable to discuss within the software industry, the necessity for holding constructive, actionable postmortems increases. But most of what we know about postmortems from "pop culture" isn't actually relevant for the software systems we work on and within. In his session at DevOps Summit, J. Paul Reed will look at postmortem pitfalls, techniques, and tools you'll be able to take back to your own environment so they will be able to lay the foundations for h...
Oct. 13, 2015 11:15 PM EDT Reads: 251
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in high-performance, high-efficiency server, storage technology and green computing, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block Solutions® for Data ...
Oct. 13, 2015 11:00 PM EDT Reads: 273
Containers are revolutionizing the way we deploy and maintain our infrastructures, but monitoring and troubleshooting in a containerized environment can still be painful and impractical. Understanding even basic resource usage is difficult - let alone tracking network connections or malicious activity. In his session at DevOps Summit, Gianluca Borello, Sr. Software Engineer at Sysdig, will cover the current state of the art for container monitoring and visibility, including pros / cons and li...
Oct. 13, 2015 11:00 PM EDT Reads: 341
Containers are all the rage among developers and web companies, but they also represent two very substantial benefits to larger organizations. First, they have the potential to dramatically accelerate the application lifecycle from software builds and testing to deployment and upgrades. Second they represent the first truly hybrid-approach to consuming infrastructure, allowing organizations to run the same workloads on any cloud, virtual machine or physical server. Together, they represent a ver...
Oct. 13, 2015 10:45 PM EDT Reads: 278
SYS-CON Events announced today the Containers & Microservices Bootcamp, being held November 3-4, 2015, in conjunction with 17th Cloud Expo, @ThingsExpo, and @DevOpsSummit at the Santa Clara Convention Center in Santa Clara, CA. This is your chance to get started with the latest technology in the industry. Combined with real-world scenarios and use cases, the Containers and Microservices Bootcamp, led by Janakiram MSV, a Microsoft Regional Director, will include presentations as well as hands-on...
Oct. 13, 2015 10:30 PM EDT Reads: 228
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Oct. 13, 2015 10:15 PM EDT Reads: 181
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, will discuss the impact of technology on identity....
Oct. 13, 2015 09:00 PM EDT Reads: 504
This week, the team assembled in NYC for @Cloud Expo 2015 and @ThingsExpo 2015. For the past four years, this has been a must-attend event for MetraTech. We were happy to once again join industry visionaries, colleagues, customers and even competitors to share and explore the ways in which the Internet of Things (IoT) will impact our industry. Over the course of the show, we discussed the types of challenges we will collectively need to solve to capitalize on the opportunity IoT presents.
Oct. 13, 2015 08:30 PM EDT Reads: 165
SYS-CON Events announced today that Spirent Communications, the leader in testing navigation and positioning systems, will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Spirent Communications enables innovations in communications technologies that help connect people. Whether it is service provider, data centers, enterprise IT networks, mobile communications, connected vehicles or the Inte...
Oct. 13, 2015 08:00 PM EDT Reads: 280
Today’s connected world is moving from devices towards things, what this means is that by using increasingly low cost sensors embedded in devices we can create many new use cases. These span across use cases in cities, vehicles, home, offices, factories, retail environments, worksites, health, logistics, and health. These use cases rely on ubiquitous connectivity and generate massive amounts of data at scale. These technologies enable new business opportunities, ways to optimize and automate, al...
Oct. 13, 2015 07:00 PM EDT Reads: 287
WebRTC converts the entire network into a ubiquitous communications cloud thereby connecting anytime, anywhere through any point. In his session at WebRTC Summit,, Mark Castleman, EIR at Bell Labs and Head of Future X Labs, will discuss how the transformational nature of communications is achieved through the democratizing force of WebRTC. WebRTC is doing for voice what HTML did for web content.
Oct. 13, 2015 07:00 PM EDT Reads: 1,505
Through WebRTC, audio and video communications are being embedded more easily than ever into applications, helping carriers, enterprises and independent software vendors deliver greater functionality to their end users. With today’s business world increasingly focused on outcomes, users’ growing calls for ease of use, and businesses craving smarter, tighter integration, what’s the next step in delivering a richer, more immersive experience? That richer, more fully integrated experience comes ab...
Oct. 13, 2015 06:15 PM EDT Reads: 1,234
For almost two decades, businesses have discovered great opportunities to engage with customers and even expand revenue through digital systems, including web and mobile applications. Yet, even now, the conversation between the business and the technologists that deliver these systems is strained, in large part due to misaligned objectives. In his session at DevOps Summit, James Urquhart, Senior Vice President of Performance Analytics at SOASTA, Inc., will discuss how measuring user outcomes –...
Oct. 13, 2015 06:00 PM EDT Reads: 556
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet condit...
Oct. 13, 2015 04:00 PM EDT Reads: 730
SYS-CON Events announced today that Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, will keynote at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Oct. 13, 2015 03:15 PM EDT Reads: 260