Click here to close now.

SYS-CON MEDIA Authors: Liz McMillan, Esmeralda Swartz, Hovhannes Avoyan, Elizabeth White, Adrian Bridgwater

News Feed Item

Tuckamore Responds To ISS Report

TORONTO, ONTARIO -- (Marketwired) -- 07/02/14 -- Tuckamore Capital Management Inc. (TSX:TX)(TSX:TX.DB.B) ("Tuckamore" or the "Company") today responded to a report published by Institutional Shareholder Services ("ISS") in respect of the previously announced proposal (the "Arrangement") pursuant to which Birch Hill Equity Partners ("Birch Hill"), together with certain members of Tuckamore's management, have agreed to acquire all of the common shares of the Company (each a "share") for cash consideration at a price of $0.75 per share. Shareholders have been asked to vote on the Arrangement at the upcoming special meeting of shareholders to be held on July 15, 2014.

"As directors, we have a duty to present an offer such as this to shareholders for their consideration, and we have a duty to give it due consideration and make a recommendation to shareholders. We have done that, and judged this offer to provide immediate and certain value that is in the best interests of all shareholders," said Douglas Brown, Chairman. "The value of the $0.75 per share offer to shareholders includes the cash consideration, an opportunity for liquidity, and the elimination of the financing and operational risks in our business. No superior bid, nor fully-funded alternate plan that protects shareholder value, has been presented to the Board since the announcement of the Birch Hill offer."

"We do feel however, that it is important to correct and respond to the factual and analytical errors in the market, including in ISS' analysis and recommendation to shareholders of Tuckamore. ISS did not meet with Tuckamore, nor did we have an opportunity to comment on this report prior to publication. In our view, the ISS report confuses the concept of equity value with enterprise value, uses inappropriate metrics, and ignores the depth and breadth of the value maximization process undertaken by the Board. We believe these are major flaws that lead directly to ISS' incorrect recommendation," continued Mr. Brown.

Tuckamore believes that ISS' analysis was flawed in a number of material respects including:

Break Fee: ISS makes the error of calculating the break fee based on the equity value of Tuckamore, rather than the enterprise value which would be more appropriate for a highly leveraged company like Tuckamore. The purchaser of Tuckamore will have to assume approximately $280 million of debt (including capital leases) and the restrictive covenants on that debt, in addition to paying the cash consideration shareholders. When properly calculated, the break fee is equal to approximately 2% of Tuckamore's total enterprise value - a percentage that the Board, based on advice from its financial advisor, believes is in line with Canadian transactions over the past 5 years. Furthermore, the Board does not believe that a break fee of less than 2 cents to less than 7 cents per share on a fully diluted basis, is an impediment to a superior offer.

Equity Value vs. Enterprise Value: ISS twice makes the error in its analysis of confusing equity value with enterprise value. In particular, ISS makes the "apples to oranges" comparison of the attempted sale of ClearStream (which represented 78% of Tuckamore's revenues and almost all of its EBITDA) for "$200 M plus" of enterprise value with the approximately $70 million equity value of the Birch Hill offer. An appropriate comparison would be to Tuckamore's enterprise value of approximately $322 million.

In addition, the "auction" of ClearStream which involved engaging with over 20 possible purchasers, did not result in a transaction.

The Rights Offering: ISS asserts that the current cash offer which values Tuckamore's equity at approximately $70 million is too low vs. the $100 million rights offering proposed to the Board. This is a serious error. The rights offering proposal valued Tuckamore's equity at $24 million, and could have resulted in dilution of 80% to existing shareholders.

The "Auction Process": ISS concludes that Tuckamore's Board did not conduct an auction. This is an incorrect statement that ignores the lengthy and comprehensive value-maximization process undertaken by the Board that began in late 2012. As detailed over several pages in Tuckamore's management information circular, the Board proactively sought buyers for ClearStream and considered a variety of proposals from various parties. This process was undertaken with great care to ensure limited employee and customer uncertainty. The Birch Hill offer was announced on May 5, 2014, and to date not a single alternative superior offer has been made.

Valuation: ISS cites the $0.60 to $0.81 per share fair market valuation provided by PricewaterhouseCoopers ("PwC"), as evidence that the $0.75 per share cash offer is inadequate. The offer price is in fact above the midpoint of the range provided by PwC. The range provided by PwC, is just that - a range of possible values where fair market value may be found for Tuckamore's shares.

Financial Advisor: ISS incorrectly identifies PwC as Tuckamore's financial advisor. Canaccord Genuity acted as Tuckamore's financial advisor. PwC, as noted above, was appointed to provide an independent valuation in accordance with MI 61-101.

The Reality

In January 2014, Tuckamore's shares were trading at $0.30, the same as the historical average for the last 5 years. Its debt was trading at an approximate 16% discount to par, which reflected the market's significant concern about the serious financing risks facing the Company. The only serious proposal the Board had received valued Tuckamore's equity at $24 million and required shareholders to accept up to 80% dilution and a discount to the trading price. Today, 6 months later, the Board has delivered an all cash offer to shareholders for their consideration. Not only does it represent a meaningful premium of over approximately 85% to where the stock had traded in the two months prior to the announcement of the deal, but it offers certain liquidity for a stock that has been illiquid for years due to the ever present financial risks associated with the capital structure.

On July 15th, shareholders will have an opportunity to choose between the cash offer of $0.75, that values Tuckamore's equity at approximately $70 million, or to remain a standalone entity. The Board encourages shareholders to consider all of the facts when making their decision.

Your Vote is Very Important

The Arrangement represents an important milestone in our Company's history. To receive the premium for your shares and avoid future financing and operational risks associated with Tuckamore's business, please cast your vote today in favour of the Arrangement Resolution. Your vote is important regardless of how many shares you own.

If you have any questions or need assistance in voting your proxy, please contact our proxy solicitor Kingsdale Shareholder Services at 1-888-518-1561 (toll free within North America) or 416-867-2272 (collect calls accepted), or by email at [email protected].

About the Company

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

About Birch Hill's Investment

The investment will be part of Birch Hill Fund IV with over $1 billion in committed capital.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Ras...
SYS-CON Events announced today the DevOps Foundation Certification Course, being held June ?, 2015, in conjunction with DevOps Summit and 16th Cloud Expo at the Javits Center in New York City, NY. This sixteen (16) hour course provides an introduction to DevOps – the cultural and professional movement that stresses communication, collaboration, integration and automation in order to improve the flow of work between software developers and IT operations professionals. Improved workflows will res...
The best mobile applications are augmented by dedicated servers, the Internet and Cloud services. Mobile developers should focus on one thing: writing the next socially disruptive viral app. Thanks to the cloud, they can focus on the overall solution, not the underlying plumbing. From iOS to Android and Windows, developers can leverage cloud services to create a common cross-platform backend to persist user settings, app data, broadcast notifications, run jobs, etc. This session provide...
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Soha will exhibit at SYS-CON's DevOps Summit New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Soha delivers enterprise-grade application security, on any device, as agile as the cloud. This turnkey, cloud-based service enables customers to solve secure application access and delivery challenges that traditional or virtualized network solutions cannot solve because they are too expensive, inflexible and operational...
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch ...
Health care systems across the globe are under enormous strain, as facilities reach capacity and costs continue to rise. M2M and the Internet of Things have the potential to transform the industry through connected health solutions that can make care more efficient while reducing costs. In fact, Vodafone's annual M2M Barometer Report forecasts M2M applications rising to 57 percent in health care and life sciences by 2016. Lively is one of Vodafone's health care partners, whose solutions enable o...
SYS-CON Events announced today that Ciqada will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Ciqada™ makes it easy to connect your products to the Internet. By integrating key components - hardware, servers, dashboards, and mobile apps - into an easy-to-use, configurable system, your products can quickly and securely join the internet of things. With remote monitoring, control, and alert messaging capability, you will mee...
of cloud, colocation, managed services and disaster recovery solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. TierPoint, LLC, is a leading national provider of information technology and data center services, including cloud, colocation, disaster recovery and managed IT services, with corporate headquarters in St. Louis, MO. TierPoint was formed through the strategic combination of some of t...
While not quite mainstream yet, WebRTC is starting to gain ground with Carriers, Enterprises and Independent Software Vendors (ISV’s) alike. WebRTC makes it easy for developers to add audio and video communications into their applications by using Web browsers as their platform. But like any market, every customer engagement has unique requirements, as well as constraints. And of course, one size does not fit all. In her session at WebRTC Summit, Dr. Natasha Tamaskar, Vice President, Head of C...
Public Cloud IaaS started it's life in the developer and startup communities and has grown rapidly to a $20B+ industry, but it still pales in comparison to how much is spent worldwide on IT: $3.6 trillion. In fact, there are 8.6 million data centers worldwide, the reality is many small and medium sized business have server closets and colocation footprints filled with servers and storage gear. While on-premise environment virtualization may have peaked at 75%, the Public Cloud has lagged in ado...
Dave will share his insights on how Internet of Things for Enterprises are transforming and making more productive and efficient operations and maintenance (O&M) procedures in the cleantech industry and beyond. Speaker Bio: Dave Landa is chief operating officer of Cybozu Corp (kintone US). Based in the San Francisco Bay Area, Dave has been on the forefront of the Cloud revolution driving strategic business development on the executive teams of multiple leading Software as a Services (SaaS) ap...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
ProfitBricks, the provider of painless cloud infrastructure IaaS, today released its SDK for Ruby, written against the company's new RESTful API. The new SDK joins ProfitBricks' previously announced support for the popular multi-cloud open-source Fog project. This new Ruby SDK, which exposes advanced functionality to take advantage of ProfitBricks' simplicity and productivity, aligns with ProfitBricks' mission to provide a painless way to automate infrastructure in the cloud. Ruby is a genera...
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applicatio...