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
Everywhere we turn in our industry we can find strong opinions about the direction, type and nature of cloud’s impact on computing and business. Another word that is used in every context in our industry is “hybrid.” In his session at 20th Cloud Expo, Alvaro Gonzalez, Director of Technical, Partner and Field Marketing at Peak 10, will use a combination of a few conceptual props and some research recently commissioned by Peak 10 to offer a real-world consideration of how the various categories of...
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value...
SYS-CON Events announced today that Outscale, a global pure play Infrastructure as a Service provider and strategic partner of Dassault Systèmes, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2010, Outscale simplifies infrastructure complexities and boosts the business agility of its customers. Outscale delivers a secure, reliable and industrial strength solution for its customers, which in...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus intern...
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
In order to meet the rapidly changing demands of today’s customers, companies are continually forced to redefine their business strategies in order to meet these needs, stay relevant and continue to see profitable growth. IoT deployment and development is integral in this transformation, and today businesses are increasingly seeing the value of investing their resources into IoT deployments. These technologies are able increase ROI through projects such as connecting supply chains or enabling sm...
Regardless of what business you’re in, it’s increasingly a software-driven business. Consumers’ rising expectations for connected digital and physical experiences are driving what some are calling the "Customer Experience Challenge.” In his session at @DevOpsSummit at 20th Cloud Expo, Marco Morales, Director of Global Solutions at CollabNet, will discuss how organizations are increasingly adopting a discipline of Value Stream Mapping to ensure that the software they are producing is poised to o...
This talk centers around how to automate best practices in a multi-/hybrid-cloud world based on our work with customers like GE, Discovery Communications and Fannie Mae. Today’s enterprises are reaping the benefits of cloud computing, but also discovering many risks and challenges. In the age of DevOps and the decentralization of IT, it’s easy to over-provision resources, forget that instances are running, or unintentionally expose vulnerabilities.
In his opening keynote at 20th Cloud Expo, Michael Maximilien, Research Scientist, Architect, and Engineer at IBM, will motivate why realizing the full potential of the cloud and social data requires artificial intelligence. By mixing Cloud Foundry and the rich set of Watson services, IBM's Bluemix is the best cloud operating system for enterprises today, providing rapid development and deployment of applications that can take advantage of the rich catalog of Watson services to help drive insigh...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. 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 Center, Cloud Computing, Enterprise IT, Hadoop/...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
SYS-CON Events announced today that EARP Integration will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. EARP Integration is a passionate software house. Since its inception in 2009 the company successfully delivers smart solutions for cities and factories that start their digital transformation. EARP provides bespoke solutions like, for example, advanced enterprise portals, business intelligence systems an...