|By Marketwire .||
|March 5, 2013 06:01 PM EST||
TORONTO, ONTARIO -- (Marketwire) -- 03/05/13 -- NorRock Realty Finance Corporation ("NorRock" or the "Corporation") (TSX VENTURE:RF.H) announces the release of its financial statements and management report of fund performance ("MRFP") for the year ended December 31, 2012. All capitalized terms used and not defined in this press release have the meaning given to then in the MRFP.
The Corporation reports the following operational and financial highlights.
2012 Review and Outlook
NorRock completed the sale of all of its assets to Partners Real Estate Investment Trust ("Partners REIT") (TSX:PAR.UN) on February 1st, 2012.
As a result of the asset sale to Partners REIT, NorRock substantially discontinued its business and subsequently, did not meet the original listing requirements of the Toronto Stock Exchange ("TSX"). The Corporation's Preferred shares were cancelled on February 1st, 2012 pursuant to the transaction with Partners REIT. The Corporation's Class A shares were voluntarily delisted from TSX at the close of business on March 2, 2012 and were listed for trading on NEX at the opening of the markets on March 5, 2012 with the trading symbol RF.H. The Class A Share distribution was suspended effective March 31, 2011 and remains suspended until such time as the Board or the Corporation has determined that is it economically feasible to re-establish distributions.
The Corporation contracted with the Manager and Green Tree under a management agreement dated February 1st, 2012 between the Corporation and the Manager and contracted NorRock Realty Management Services Ltd. (the "Investment Advisor") under a new investment advisor agreement. The management agreement was amended to provide that the Manager is not entitled to payment of a termination fee, is not entitled to payment of fees until completion of a transaction resulting in the Corporation holding an interest in an operating business sufficient to enable the Corporation to be listed on the TSX or the TSX Venture Exchange and provided that, at such time, the Corporation is an investment fund or mortgage investment corporation.
The investment advisor agreement replaced the original investment advisor agreement among NorRock Realty Finance G.P. Inc., NorRock Realty Finance L.P. and the Corporation dated February 22, 2008, as amended, and is substantially the same as the original investment advisor agreement save and except for the following: (1) No fees are payable from the Corporation to the Investment Advisor until the completion of a transaction which results in the Corporation holding an interest, directly or indirectly, in a business sufficient to enable the Corporation to be listed on the TSX or the TSX Venture Exchange provided that, at such time, the Corporation is an investment fund as defined in securities legislation in the provinces and territories of Canada or a mortgage investment corporation as defined by the Income Tax Act.
The partnership between NorRock Realty Finance L.P. formerly C.A.B. Realty Finance L.P. (the "Reference L.P.") and the General Partner was dissolved on January 31, 2012 as a condition precedent to the asset sale by NorRock to Partners REIT.
On February 27, 2012, the Corporation amalgamated with NorRock Realty Finance G.P. Inc. The name of the amalgamated corporation is NorRock Realty Finance Corp.
On June 15, 2012, NorRock completed a TSX Venture Exchange approved, non-brokered private offering for aggregate gross proceeds of $500,000 comprised of 2,000,000 Class A shares. The gross proceeds from the private placement were used for working capital and general corporate purposes.
NorRock has entered into two letters of intent for the acquisition of certain real estate and securities assets.
NorRock has entered into a letter of intent with IGW Industrial GP Inc. ("IGW Industrial") to acquire a commercial property (the "LaSalle Acquisition") known municipally as 695, 795 and 999 - 90th Avenue, Montreal (Borough of LaSalle), Quebec, and legally described as Lot number 1 450 091 of the cadastre of Quebec, Registration division of Montreal (the "LaSalle Property").
NorRock has entered into a second letter of intent with IGW Segregated Debt 1 Limited Partnership ("IGW Seg Debt 1") and IGW Segregated Debt 2 Limited Partnership ("IGW Seg Debt 2") to acquire indirectly a portfolio of securities (the "Securities Portfolio") (the "Portfolio Acquisition").
Subject to regulatory approval:
1. NorRock will acquire the LaSalle Property (including the assumption of existing debt financing obligations of IGW Industrial related to the LaSalle Property) for an estimated purchase price of $17 million. The estimated purchase price will be satisfied by issuing 23.2 million class A shares (the "Class A Shares"), a promissory note of $2.2 million (the "Promissory Note"), and by the assumption of indebtedness of IGW Industrial in the amount of $9 million. The foregoing amounts are estimates only. The final purchase price and the number of shares to be issued and amount of the assumption of debt by NorRock in satisfaction therefore are subject to adjustment on or prior to closing to reflect ongoing repayment and related activities up to the closing date of the transaction. The Class A Shares shall be issued at a deemed issuance price of $0.25 per share. The Promissory Note will bear interest at 2% per annum, payable quarterly, and shall have a maturity date of August 1, 2016.
2. NorRock will acquire indirectly the Securities Portfolio for an estimated purchase price of $6.3 million. The estimated purchase price will be satisfied by issuing 25.3 million Class A Shares. The Class A Shares shall be issued at a deemed issuance price of $0.25 per share. IGW Seg Debt 1 and IGW Seg Debt 2 will distribute the Class A Shares received on the Portfolio Acquisition to their various unit holders.
The LaSalle Acquisition, together with the Portfolio Acquisition, are intended to constitute a reactivation transaction (the "Reactivation Transaction") of NorRock to enable it to list on the TSX Venture Exchange. The Reactivation Transaction will constitute a reverse takeover transaction ("RTO") as defined in Policy 5.2 of the Corporate Finance Manual of the TSX Venture Exchange.
The Reactivation Transaction is conditional upon, among other things, receiving all necessary regulatory and third party approvals and authorizations, the receipt of an independent valuation of the LaSalle Property and the Securities Portfolio, approval by the shareholders of NorRock, confirmation of no material adverse change having occurred to the LaSalle Property and the Securities Portfolio prior to close, the completion of definitive agreements setting forth the terms and conditions for the closing of the LaSalle Acquisition and the Portfolio Acquisition, the completion of due diligence satisfactory to each party, and the completion of a sponsorship report satisfactory to the TSX Venture Exchange (or waiver by the Exchange of that requirement).
NorRock intends to complete a brokered private placement to raise up to $1,000,000 (the "Concurrent Financing") concurrently with its Reactivation Transaction by issuing up to 4,000,000 Class A shares at $0.25 per share. Proceeds raised will be used for general working capital purposes.
Following closing of the Reactivation Transaction, it is NorRock's intention to change its business focus from being a secured lender in the commercial real estate industry to carrying on business as a merchant bank focused on creating value for shareholders by making investments in undervalued assets in various industry sectors. The initial investments and the first two transactions undertaken by NorRock will be the assets acquired pursuant to the LaSalle Acquisition and the Portfolio Acquisition.
Cash on Hand
At December 31, 2012, the Corporation had approximately $63,000 cash on hand.
Distributions to Shareholder
In 2012, aggregate cash distributions declared and paid per Preferred share were $0.1484. Aggregate distributions declared and paid per Class A share were $6.4228 and were in the form of Partners REIT units. Both distributions were a result of the above-mentioned transaction with Partners REIT.
Net Asset Value
The net book value per Class A share under Canadian Generally Accepted Accounting Principles ("GAAP") as at December 31, 2012 was $0.002. In accordance with National Instrument 81-106 - Investment Fund Continuous Disclosure ("NI 81-106") requirements under the heading "Canadian GAAP to NI 81-106 NAV Differences", NAV at December 31, 2012 was $0.002.
For detailed information on financial results please refer to the Corporation's financial statements and management report of fund performance for the period ending December 31, 2012 available under the Corporation's profile on SEDAR (www.sedar.com).
The Corporation is a mutual fund corporation under the Income Tax Act (Canada), incorporated under the laws of Ontario. The Manager is a wholly-owned subsidiary of Green Tree Capital Management Corp., an Ontario based private holding company.
Certain statements included in this news release constitute forward-looking statements including statements identified by the words "plan", "will" and "intend", and similar expressions or the negative thereof. The forward-looking statements are not historical facts but reflect the Corporation's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Readers are cautioned not to place undue reliance on forward-looking information. The Corporation undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information except as required by law.
Neither TSX Venture Exchange nor its Regulator Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.