WESTCAP INVESTMENTS CORP. COMPLETES CONVERSION INTO R&R REIT
Westcap Investments Corp. has effected its plan of arrangement transaction pursuant to which, among other things, the shareholders of the company have exchanged their shares for units of R&R Real Estate Investment Trust on the basis of one unit (or, if a shareholder so elected, one special voting unit of R&R accompanying a limited partnership unit of R&R Limited Partnership, referred to as a Class B LP unit) for every one unit, and the REIT has completed the $8.5-million (U.S.) acquisition of a Red Roof Inn located at 827 Elkridge Landing Rd., Linthicum Heights, Anne Arundel county, Maryland, 21090, as its qualifying transaction (as that term is defined in TSX Venture Exchange Policy 2.4 -- capital pool companies) as consideration for the issuance by R&R (U.S.) Limited Partnership of 51,408,895 Class B limited partnership units that are exchangeable for the equivalent number of units.
As part of the plan and acquisition, the company also completed a brokered private placement (sold on a commercially reasonable-efforts basis, with Raymond James Ltd. acting as lead agent) of 11,111,111 common shares at 18 cents per share for gross proceeds of approximately $2-million. As part of the plan, all such shares were transferred to the REIT and exchanged for units on a one-to-one basis.
It is expected that final approval of the transactions referred to above will be granted by the TSX Venture Exchange shortly. The REIT will be listed as a Tier 1 real estate issuer on the TSX-V. It is expected that the units will commence trading on the TSX-V on or around Thursday, Aug. 28, 2014, under the symbol "RRR" concurrently with the delisting of the company's shares from the TSX-V.
Following completion of the transactions referred to above, R&R will have 21,011,111 units issued and outstanding, of which 4.25 million units will be subject to escrow as noted below.
About the transactions
The REIT indirectly acquired the property for a purchase price of $8.5-million (U.S.), excluding closing costs and adjustments and a property improvement plan. The purchase price has been satisfied by the issuance of 51,408,895 U.S. Class B LP units to RRI BWI LLC and R-Roof Assets LLC, the vendors of the property.
The closing of the acquisition occurred following the plan becoming effective, pursuant to which, among other things, the company's shareholders exchanged their shares for units on the basis of one share for every one unit. The plan was effected following the receipt of both shareholder and court approvals to implement the plan.
Subsequent to the acquisition, an R&R subsidiary entered into a franchise agreement with Red Roof Franchising LLC that will allow the hotel property to carry on business as a hotel branded as a "Red Roof Inn."
Tier 1 issuer status
As the REIT will be listed as a Tier 1 issuer, 25 per cent of the escrowed securities will be eligible for release on the date the TSX-V issues its final exchange bulletin, as well as six months, 12 months and 18 months thereafter.
In accordance with the policies of the TSX-V, R&R confirms that the number of units, Class B LP units and U.S. Class B LP units to be subject to escrow will be 65,758,895 units, representing approximately 79.69 per cent of the outstanding units, assuming conversion of all outstanding Class B LP units and U.S. Class B LP units. The 51,408,895 U.S. Class B LP units issued to the vendors are subject to a TSX-V Form 5D value security escrow agreement. In addition, 4.25 million units remain subject to the current CPC escrow agreement.
Additional information regarding the transactions is available on R&R's issuer profile on SEDAR.