HOMEQ Corporation, Canada’s only reverse mortgage provider, is pulling out all the stops to ensure that shareholders approve the company’s sale to a private equity firm.
HOMEQ filed a Management Information Circular on Tuesday that details, among other things, the reasons for the HOMEQ Board of Directors' unanimous recommendation that shareholders should vote for the sale to Birch Hill Equity Partners for cash at a price of $9.50 per share at a special meeting to be held May 28.
"The arrangement provides significant and immediate value and liquidity to HOMEQ shareholders," said Gary Samuel, Chairman of the HOMEQ Board of Directors. "Following a thorough review of the full range of strategic alternatives by a special committee of independent directors, the Board determined that the arrangement is the most attractive alternative for our shareholders."
"As part of this review process, the Board of Directors and its financial advisor determined that with the limited choices of capital available to it, the company would not be able to achieve its growth targets and deliver increased value to its shareholders."
"In the absence of a sale of its business, the company would have been forced to pursue alternative near-term financing sources in order to maintain key capital ratios during a period of growth. These sources of finance might not have been economically attractive and may have resulted in downward pressure on shareholder value. This alternative was not attractive to our shareholders, particularly when compared to the 22 per cent cash premium on offer with the arrangement," said Samuel.