TransGlobe REIT defeases all 5.4% convertibles, offers to buy at 101

By Toni Weeks

San Diego, June 29 - TransGlobe Apartment Real Estate Investment Trust said in a press release that it has defeased all of its outstanding 5.4% extendible convertible unsecured subordinated debentures due Sept. 30, 2018 in connection with the completion of a previously announced privatization transaction with Starlight Investments Ltd. and PD Kanco LP, which was approved by the unitholders of the REIT at the annual and special meeting held on June 27.

Because the completion of the privatization transaction constituted a change of control under the trust indenture governing the debentures, TransGlobe is offering to repurchase them at 101 plus accrued interest by Aug. 7.

Holders that do not exercise their put rights following the deadline will continue to receive interest on the debentures until they are redeemed at par on Oct. 1, 2016.

The trust units of the REIT ceased trading on the Toronto Stock Exchange on Friday, the release said.

As previously reported, the REIT failed to receive sufficient consents to amend the indenture governing the convertibles.

The proposed amendments, had they been approved, would have permitted the trust to redeem any outstanding debentures for cash at a redemption price equal to 101% of par, plus accrued interest, upon the occurrence of a change of control, which the trust anticipated would occur with the closing of the privatization transaction.

Because TransGlobe did not obtain the needed consents, it was required to defease the debentures when the transaction closed. Due to the change of control, TransGlobe was required to offer to buy the debentures at 101% of par plus accrued interest.

TransGlobe said that consent fees will not be paid, and the debentures are no longer be convertible.

As announced on May 15, the proposed amendments to the 5.4% debentures would have required approval from the Toronto Stock Exchange and the consent of holders of at least 66 2/3% of the principal amount of the outstanding debentures as of the record date.

If the required consents had been received, the trust would have redeemed any outstanding debentures concurrently with the closing of the acquisition.

The trust was offering an early consent fee of C$5 per C$1,000 principal amount of debentures for consents delivered prior to 5 p.m. ET on June 1 or a regular consent fee of C$2.50 per C$1,000 of debentures to holders who consented after the early deadline but before 5 p.m. ET on June 15.

CIBC World Markets Inc. (866-744-2030) was soliciting dealer manager. Kingsdale Shareholder Services Inc. (866 229-8651 or 416 867-2272 outside North America) was the solicitation agent and information agent.

The Toronto-based REIT owns a portfolio of 175 residential rental properties located in urban centers in Alberta, Ontario, Quebec, New Brunswick and Nova Scotia.

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