newswire.ca
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CHIP REIT trustees recommend unitholders approve treasury issuance in circular mailed today
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VANCOUVER, July 30 /CNW/ - Canadian Hotel Income Properties
Real Estate Investment Trust
HOT.un
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Canadian Hotel Income Properties Real Estate Investment Trust (CHIP REIT)
announced today that it has mailed a Management Information Circular and
Trustees' Circular in respect of the Special Meeting of Unitholders to be held
August 30, 1999 to obtain approval of the treasury issuance of 5,000,000 CHIP
REIT units, at a price of $10 per unit, to BII Acquisition Limited Partnership
(``Belkorp LP').
The $50 million treasury issuance is one component of a $100 million
investment (the ``Belkorp Transaction') in CHIP REIT by Belkorp LP, an
affiliate of Belkorp Industries Inc. The other component is an offer to
acquire 5 million units of CHIP REIT at $10.00 cash per unit. The offer, open
until September 2, 1999, was mailed to CHIP REIT unitholders on July 26, 1999.
The Trustees of CHIP REIT recommend that unitholders vote in favour of
the treasury issuance, and have identified the following factors as being most
relevant:
- TD Securities Inc., independent financial advisors to the Special
Committee of the Board of Trustees, has determined that the amount of
consideration to be received by CHIP REIT from the treasury issuance is
fair from a financial point of view
- The Trustees believe that the Belkorp Transaction is superior to other
alternatives available to CHIP REIT
- Proceeds from the treasury issuance in combination with the related
additional debt capacity and CHIP REIT's current cash and debt capacity
will amount to approximately $129 million for future growth and
portfolio enhancement
- The treasury issuance and offer represent a significant financial
commitment to the future of CHIP REIT in a climate of restricted
capital markets financing at a premium to CHIP REIT's unit price
The Trustees are not making a recommendation as to whether unitholders
should tender their units under the offer.
``The Trustees believe that there is long term value to unitholders in
the continued growth and development of CHIP REIT's hotel portfolio upon
completion of the treasury issuance,' said Rhys T. Eyton, Chairman, President
and CEO of CHIP REIT. ``In these circumstances, we consider it inappropriate
to recommend that unitholders tender their units.'
CHIP REIT was Canada's first hotel real estate investment trust and has a
focus on mid-market and upscale full-service hotels. Through upgrades,
repositioning and franchising, CHIP REIT and its wholly owned hotel manager,
CHIP Hospitality, improve the operating performance of the properties within
the portfolio to create value for investors. CHIP REIT currently owns and
operates 36 hotels with close to 8,000 rooms. CHIP REIT units trade on The
Toronto Stock Exchange under the symbol HOT.un.
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For further information: Kevin Grayston, Executive Vice President &
Chief Financial Officer (604) 685-0011, fax (604) 685-0019, www.chipreit.com <http://www.chipreit.com> |
