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Tuckamore Announces Termination of Arrangement Agreement With Triumph Acquisition LP and Provides Update on Strategic Plan

- Announces immediate steps to improve financial flexibility including extension of maturity date of senior secured credit facility to December 31, 2015 and concurrent $12.5 million private placement to Orange Capital with proceeds used to reduce senior s

TORONTO, ONTARIO -- (Marketwired) -- 07/25/14 -- Tuckamore Capital Management Inc. (TSX: TX)(TSX: TX.DB.B) ("Tuckamore" or the "Company") announced today that Tuckamore and Triumph Acquisition LP (the "Purchaser") have mutually agreed to terminate the previously announced plan of arrangement (the "Arrangement"). Consequently, the Company's special meeting of shareholders (the "Special Meeting") to be held on July 31, 2014 has been cancelled.

Pursuant to a termination agreement entered into by Tuckamore and the Purchaser, no break fee will be payable to the Purchaser in connection with the termination of the Arrangement. The Purchaser will be reimbursed for expenses incurred in connection with the Arrangement, up to a maximum of $1.5 million.

Since the announced adjournment of the Special Meeting, the Board had been in discussions with the Purchaser to improve its offer. At the same time, the Board determined that it would be prudent to explore other alternatives in the event that the Arrangement did not proceed and a special committee of independent directors was formed by the Board (the "Special Committee") on July 10, 2014 . The Company determined that absent the Arrangement, Tuckamore should focus on a plan to refinance its capital structure and specifically to obtain an extension to its outstanding senior secured credit facilities. The Company had already sought such an extension in the context of the Arrangement.

The Special Committee was tasked with considering and providing the Board with advice and recommendations relating to certain strategic matters including any potential financing transaction or refinancing or restructuring of the Company's outstanding debt. The Special Committee is advised by its independent legal counsel Cassels Brock & Blackwell LLP and its independent financial advisor MPA Morrison Park Advisors Inc.

Extension of Maturity Date of Senior Secured Credit Facility and The Private Placement

As a result of its efforts, the Company has obtained approval from the lenders under its senior secured credit facilities made available to the Company's subsidiary, Tuckamore Finance Corp., pursuant to its third amended and restated credit agreement dated as of March 9 2012 (as amended, the "Credit Agreement") to extend the maturity date thereunder from March 9, 2015 to December 31, 2015. Such extension is to be effective upon completion of the Private Placement (as defined below) and a reduction of the outstanding indebtedness under the Credit Agreement by an amount equal to the net proceeds of the Private Placement (being approximately $12 million).

Tuckamore entered into a subscription agreement (the "Placement Agreement") with Orange Capital Master I, Ltd. ("Orange Capital"), to sell $12.5 million of common shares of the Company (each a "share") to Orange Capital at a price per share which will not be less than $0.75, resulting in the issuance of no more than 16,666,667 shares (or approximately 17% of the shares of Tuckamore following completion of the transaction) (the "Private Placement"). The Company will use proceeds from the Private Placement to reduce outstanding senior indebtedness under the Credit Agreement.

Following a review of the Company's need to obtain an extension of the maturity date of its outstanding senior indebtedness and the financing alternatives available to the Company, the Special Committee recommended that the Board proceed with the Private Placement. The Board concluded that the Private Placement is in the best interests of Tuckamore and that the raising of $12.5 million of additional equity with pricing of not lower than $0.75 per share, strengthens Tuckamore's capital structure and enables the Company to seek and receive an extension of the maturity of the senior secured credit facility under the Credit Agreement. In making this decision, the Special Committee carefully considered the feedback the Company received from its stakeholders following the announcement of the Arrangement agreement including, that the Company: (a) remain independent, (b) raise equity capital to stabilize Tuckamore's capital structure while minimizing shareholder dilution, and (c) add a strategic capital partner that brings industry, financial and governance expertise. The Company will continue to use its current cash balances to satisfy working capital needs of the business, as well as to make interest payments on its outstanding debt and to satisfy excess cash flow payment requirements under its outstanding senior indebtedness.

Orange Capital is a New York-based value-oriented investment fund that invests across the capital structure. Orange Capital has a long, proven track record of investing in the North American energy sector, with a particular focus on midstream infrastructure and service providers. Orange Capital takes an active interest in governance matters and best practices for public companies as demonstrated by its recent involvement with a leading Canadian REIT, of which Daniel Lewis, the co-founder of Orange Capital, is the lead independent trustee, and Newalta Corporation.

The Placement Agreement contains an 18-month standstill provision that limits Orange Capital to owning no more than 19.9% of the outstanding shares and provides Orange Capital with the right to nominate one director and one observer to the board of directors, subject to Orange Capital maintaining certain shareholder ownership thresholds in the Company. Other than as described below in connection with the Toronto Stock Exchange ("TSX") conditional approval of the Private Placement, there are no restrictions on Orange Capital's ability to vote its shares on regular or special business of the Company and there exists no agreement or commitment, either explicit or implicit, that Orange Capital will vote according to management's recommendations at the Company's next annual general meeting of shareholders.

Consistent with the Company's decision to focus on the refinancing of its capital structure, Orange Capital has agreed to assist Tuckamore in connection with the identification and implementation of a transaction or series of transactions (collectively, the "Refinancing Transaction") to amend or extend the terms of, or to refinance, the Company's existing 8% Secured Debentures due March 23, 2016 (the "Secured Debentures"). Upon successful completion of the Refinancing Transaction, Orange Capital may receive a cash success fee on terms commensurate with customary market practice in similar circumstances (the "Success Fee"), provided that the Success Fee shall not exceed 3.0% of the then outstanding principal amount of the Secured Debentures. The quantum of the fee will be determined by the independent directors of Tuckamore based on the value provided to the Company by Orange Capital in respect of the Refinancing Transaction, considering all relevant factors, including the extent to which the terms are an improvement over the current facility, the extent of the participation, if any, by Orange Capital in the Refinancing Transaction, the operational performance of the Company and prevailing market conditions. The Success Fee shall be payable only if the Refinancing Transaction occurs within the next twelve (12) months on superior terms and conditions than those that are currently attached to the Secured Debentures. The Company is under no obligation to complete a Refinancing Transaction arranged by Orange Capital and will have the capability to pursue other refinancing options well in advance of the maturity of the Secured Debentures.

Tuckamore has received conditional approval from the TSX for the Private Placement. Among other conditions, the TSX has required that for a period of one year following closing of the Private Placement, Orange Capital will neither tender to nor vote its shares for any going private transaction, including a takeover bid, involving any of Birch Hill Equity Partners or any of its affiliates or associates and/or management of the Company, without the prior acceptance and approval of the TSX.

Governance

In order to facilitate board renewal and the addition of Orange Capital's director nominee to the Board, Director Mark A. Kinney and one additional director will not stand for re-election to the Board at the Company's next annual general meeting of shareholders. The Board is very appreciative of Mr. Kinney's faithful service to Tuckamore and thanks him for his contribution to the Board and the Company.

The Compensation and Corporate Governance Committee ("CCGC") of the Board has retained the services of a highly respected executive and board search firm, Tom Long Consulting Inc., to assist the CCGC in identifying up to three new director candidates who can bring complementary skills and experience to the Board. The Board remains committed to governance best practices including regular board renewal and enhancement.

Shareholder Rights Plan

Tuckamore has been engaged in discussions with shareholders and securities regulators about the interpretation of its shareholder rights plan and the effect that certain technical provisions of the plan may have on dissident proxy solicitations. The Board of Directors would like to remove any doubt that the plan could serve to limit dissident proxy solicitations and accordingly has taken steps to implement clarifications to these technical provisions contained in its rights plan. The revised shareholder rights plan is effective immediately but remains subject to acceptance by the TSX and to the ratification by shareholders at the annual general meeting. The TSX has deferred its consideration of the adoption of the revised shareholder rights plan until such time as it is satisfied with the response of the appropriate securities regulators and the plan has been ratified by shareholders. A copy of the revised plan will be made available at www.sedar.com.

Annual General Meeting

Tuckamore has called its annual general meeting of shareholders for shareholders of record on August 8, 2014 to be held on September 16, 2014, which is within the time period permitted by the extension for holding an annual general meeting previously obtained by the Company from the TSX. The Company will mail proxy materials to shareholders in due course and invites all shareholders to attend.

The Company acknowledges receipt of a letter seeking to requisition a meeting of shareholders of Tuckamore from Access Holdings Management Company LLC and certain other shareholders to consider the election of the requisitioning group's nominees as directors of the Company. The Company does not believe the letter constituted a proper requisition. Nonetheless, the Company has now called its annual general meeting. As shareholders are aware, Tuckamore does not currently have an advance notice by-law and therefore any shareholder who desires to do so is welcome to nominate individuals to the board of the Company for election at the annual general meeting of shareholders.

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements based on current expectations, including but not limited to Tuckamore's plans, objectives and expectations, Orange Capital's plans, objectives and expectations with respect to the Company and its business, statements regarding the completion of the Private Placement, the expected use of proceeds from the Private Placement, the extension of the maturity of the Company's senior indebtedness, the implementation of the Refinancing Transaction and the overall anticipated impact of the Private Placement. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Tuckamore's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada and available at www.sedar.com. Additional important factors that could cause actual results to differ materially include, but are not limited to: the closing of the Private Placement; the satisfaction or non-satisfaction as applicable of one or more conditions to the closing of the Private Placement; delay of, or inability to receive final approval from the TSX and any other required consents and approvals; the risk that the Private Placement may involve unexpected costs, liabilities or delays; the possible occurrence of an event, change or other circumstance that could result in termination of the Placement Agreement; and the inability to identify and/or implement the Refinancing Transaction.

Readers are cautioned that the foregoing list of important factors is not exhaustive. Although the forward-looking statements are based on what management considers to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with these statements, and management's assumptions may prove to be incorrect. Forward-looking statements are not guarantees of future performance. In light of the significant uncertainties inherent in the forward-looking information included herein, any such forward-looking information should not be regarded as representations by Tuckamore that its objectives or plans will be achieved. Investors are cautioned not to place undue reliance on any forward-looking information contained herein. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, these forward-looking statements relate to the date on which they are made. Tuckamore disclaims any intention or obligation to update or revise any forward-looking statements or the foregoing list of factors, whether as a result of new information, future events or otherwise, except to the extent required by law.

Tuckamore's Advisors

Tuckamore engaged Norton Rose Fulbright Canada LLP as its legal advisor, and Canaccord Genuity Corp. as the Company's financial advisor.

About the Company

Tuckamore has investments in 7 businesses representing a diverse cross-section of the Canadian economy.

SOURCE: Tuckamore Capital Management Inc.

Contacts:
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Media:
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Riyaz Lalani
416-907-9365
[email protected]

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