Heavy Equipment Guide Logo

This ad will close in 15 seconds

WesternOne to wind up operations; sells rental, heat business to United Rentals

WesternOne to wind up operations; sells rental, heat business to United Rentals

WesternOne Inc. has entered into a definitive agreement with United Rentals of Canada, Inc. pursuant to which United Rentals has agreed to acquire WesternOne's equipment rentals and heat business and substantially all of the related assets for a base cash purchase price of Cdn$120 million on a cash free, debt free basis. The actual purchase price and transaction value are subject to working capital and other adjustments in accordance with the Agreement. 

A Special Committee of the board of directors of WesternOne oversaw an extensive strategic review process starting in 2016 and considered a number of alternatives to maximize shareholder value. This process initially resulted in the sale of WesternOne's modular rental and construction division in 2017 and now in the proposed sale of its remaining division. 

"Following careful review of this transaction by the Special Committee in consultation with our external financial and legal advisors, we believe it is the best option for WesternOne and its shareholders." said Peter Blake, CEO of WesternOne. "The midpoint of the range of anticipated proceeds to ultimately be paid to shareholders exceeds the 20-day volume weighted average share price by approximately 42% which represents an attractive result for our shareholders." 

After considering the recommendations of the Special Committee, the transaction has been approved unanimously by WesternOne's board of directors, which has determined that the transaction is in the best interests of WesternOne and its shareholders and recommends that shareholders vote in favour of approving the transaction at a special meeting of shareholders, which is expected to be scheduled for November 28, 2018. Evans & Evans, Inc., an independent financial advisor to the Special Committee, has provided an opinion that, subject to the assumptions and limitations upon which the opinion is based, the consideration to be received by WesternOne in this transaction is fair from a financial point of view. 

The transaction must be approved by shareholders holding at least 66⅔% of shares voted in person or by proxy at the Meeting.   
Each of WesternOne's directors and senior officers and the company's largest shareholder groups, which collectively hold approximately 38% of the outstanding common shares of WesternOne, have entered into a voting support agreement with United Rentals pursuant to which they have agreed to vote their respective common shares in favour of approving the transaction. 

The completion of this proposed transaction is subject to several conditions including, among others: receipt of the above-referenced shareholder approval; WesternOne obtaining certain third party consents required for the assignment and transfer of assets and contracts; there not being in effect on the closing date any order restraining, enjoining or otherwise prohibiting or making illegal the completion of the transaction; and the absence of any material and adverse change with respect to the Business including there being no claim pending by any governmental authority in respect of competition or other regulatory matters that would reasonably be expected to prevent the consummation of the transaction. 

The Agreement includes non-solicitation provisions, as well as the requirement of WesternOne to pay an alternative transaction fee of Cdn$10 million if the Agreement is terminated at a time when a third party acquisition proposal is outstanding. The Agreement does not allow WesternOne to enter into an agreement with respect to an alternative transaction. 

The terms and conditions of the transaction, as well as details of the expected distributions to shareholders, will be disclosed in more detail in WesternOne's information circular that is anticipated to be mailed to shareholders as of the record date expected to be October 25, 2018. In the event of a postal strike that prevents mailing, WesternOne intends to discuss other options with its regulators and issue a further news release as necessary. If shareholder and other approvals are obtained, it is anticipated that the proposed transaction will be completed on or about November 30, 2018 and in any event no later than December 31, 2018. 

Copies of the Agreement and of the Information Circular for the Meeting will be filed with Canadian securities regulators and will be available on the SEDAR profile of WesternOne at www.sedar.com. In addition, investors and shareholders may obtain free copies of the documents WesternOne files with Canadian securities regulators by directing a written request to WesternOne, Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2 Attention: Corporate Secretary or to [email protected] Investors and shareholders of WesternOne are urged to read the Information Circular and the other relevant materials when they become available because such materials will contain important information about the transaction. 

The completion of the proposed transaction will allow WesternOne to wind-up its operations and return to its shareholders the net proceeds of the sale of the Business, after repayment of all bank debt and other liabilities including the outstanding convertible debentures, taxes and transaction related expenses as part of a Court approved liquidation process. 

At the Meeting, shareholders will also be asked to approve a plan of liquidation for WesternOne. While there is no guarantee as to the net amount of distributions to shareholders following the sale of the Business, WesternOne currently estimates, after repayment of all Obligations, to distribute in aggregate a per share amount in the range of approximately Cdn$2.20 to Cdn$2.43. A decision in respect of the timing and the amount of any distribution will be made by the liquidator to be appointed following completion of the sale of the Business under supervision of the Court. An initial distribution is expected in the first quarter of 2019, with a possible final distribution at the conclusion of the liquidation. 

Following the completion of the sale of the Business, the common shares and convertible debentures of WesternOne are expected to cease trading and, pursuant to a voluntary application to be made to the Toronto Stock Exchange, be delisted. It is a term of the plan of liquidation that following the implementation of the liquidation and delisting from the TSX, all transfers of common shares and debentures thereafter will be void unless made with the explicit sanction of the liquidator. 

Company info

Suite 910, 925 West Georgia Street
Vancouver, BC
CA, V6C 3L2


Read more

Related Articles