The Catalyst Capital Group Inc plans on voting against the recently announced agreement to take Canadian retailer Hudson’s Bay private by a group of shareholders led by Executive Chairman Richard Baker. Catalyst is against the deal because the Canadian private equity firm feels it’s a “severely undervalued share buyback” at the expense of shareholders. As previously reported, a group of Hudson’s Bay shareholders offered C$10.30 per share in cash for the 43 percent of shares it does not own in the retailer. Catalyst currently holds an approximate 28.24 percent share of HBC’s total common shares.
TORONTO, Oct. 31, 2019 /CNW/ – The Catalyst Capital Group Inc., on behalf of investment funds managed by it, (“Catalyst”) today announced that it and other shareholders of Hudson’s Bay Company (TSX: HBC) (“HBC” or the “Company”) representing approximately 28.24% of HBC’s total common shares outstanding intend to vote against the recently agreed transaction (the “Insider Issuer Bid”) between HBC and Richard A. Baker, Governor and Executive Chairman of HBC, and certain other insiders of the Company (collectively, the “Baker Group”).
Gabriel de Alba, Managing Director and Partner of Catalyst, said, “Since the announcement of the Baker Group proposal, we have held a belief that the HBC Board and its Special Committee would ensure that the interests of all shareholders would be the foundation of the process and negotiation with Richard Baker. The agreement that the Company entered into is so fundamentally conflicted, that it shows the amount of leverage Richard Baker has over the Board and Management. It is unconscionable that the Board would use shareholders’ funds in a severely undervalued share buyback with massive tax leakage and dress it up as a premium transaction.”
Added de Alba, “With shareholders holding approximately 28.24% of the HBC common shares now opposing the Insider Issuer Bid, we call on the Board to either demand that Richard Baker release other members of the Baker Group to consider other options or allow the Baker agreement to expire and run a true sale process. Catalyst is aware of a number of strategic investors that are interested in participating in a process that is open and not constructed to benefit an insider, and we have no doubt that the HBC Board is also aware of these interested parties. Catalyst itself is also prepared to be a participant in the process and work towards an offer to acquire the Company at terms financially superior to the Insider Issuer Bid.”
Catalyst exercises control or direction over 32,326,878 common shares of HBC, representing approximately 17.49% of the 184,331,345 issued and outstanding common shares as reported by the Company in its Management’s Discussion and Analysis dated September 12, 2019. Catalyst has begun to formally review steps that may be taken in opposition to the Insider Issuer Bid. Such actions include speaking with certain securityholders of the Company and other parties in order to assess support for Catalyst’s position and for other reasons, and may include the solicitation of proxies from securityholders of the Company in opposition to the Insider Issuer Bid and regarding related matters and taking steps or pursuing a course of action to maximize value for all shareholders of the Company, including pursuing an alternative transaction to the Insider Issuer Bid. Depending on market conditions and other factors, Catalyst may in the future increase or decrease its control or direction over securities of the Company through open market transactions, private agreements or otherwise.