Welcome!

News Feed Item

Tuckamore Responds To ISS Report

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.

The Reality

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.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Security, data privacy, reliability, and regulatory compliance are critical factors when evaluating whether to move business applications from in-house, client-hosted environments to a cloud platform. Quality assurance plays a vital role in ensuring that the appropriate level of risk assessment, verification, and validation takes place to ensure business continuity during the migration to a new cloud platform.
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
StackIQ has announced the release of Stacki 3.2. Stacki is an easy-to-use Linux server provisioning tool. Stacki 3.2 delivers new capabilities that simplify the automation and integration of site-specific requirements. StackIQ is the commercial entity behind this open source bare metal provisioning tool. Since the release of Stacki in June of 2015, the Stacki core team has been focused on making the Community Edition meet the needs of members of the community, adding features and value, while ...
Aspose.Total for .NET is the most complete package of all file format APIs for .NET as offered by Aspose. It empowers developers to create, edit, render, print and convert between a wide range of popular document formats within any .NET, C#, ASP.NET and VB.NET applications. Aspose compiles all .NET APIs on a daily basis to ensure that it contains the most up to date versions of each of Aspose .NET APIs. If a new .NET API or a new version of existing APIs is released during the subscription peri...
There will be new vendors providing applications, middleware, and connected devices to support the thriving IoT ecosystem. This essentially means that electronic device manufacturers will also be in the software business. Many will be new to building embedded software or robust software. This creates an increased importance on software quality, particularly within the Industrial Internet of Things where business-critical applications are becoming dependent on products controlled by software. Qua...
In addition to all the benefits, IoT is also bringing new kind of customer experience challenges - cars that unlock themselves, thermostats turning houses into saunas and baby video monitors broadcasting over the internet. This list can only increase because while IoT services should be intuitive and simple to use, the delivery ecosystem is a myriad of potential problems as IoT explodes complexity. So finding a performance issue is like finding the proverbial needle in the haystack.
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
Large scale deployments present unique planning challenges, system commissioning hurdles between IT and OT and demand careful system hand-off orchestration. In his session at @ThingsExpo, Jeff Smith, Senior Director and a founding member of Incenergy, will discuss some of the key tactics to ensure delivery success based on his experience of the last two years deploying Industrial IoT systems across four continents.