Park Lawn Company Limited Announces Intention to Seek Private Company Designation

TORONTO, Jan. 20, 2020 /CNW/ - Park Lawn Company Limited (the "Corporation") (CSE Symbol: PRL) has postponed the Special meeting of Shareholders scheduled for November 21, 2019 which meeting has now been reset for February 4, 2020. The reason for the postponement is due to the fact that the Board of Directors decided to retain an independent business valuator to provide its opinion on the fairness of the proposed cash payout to shareholders of the Corporation for fractional shares resulting from the proposed consolidation of its shares. The Board of Directors was of the view that an opinion from an independent valuator will provide further assurance to shareholders and the Board as to the fairness of the cash consideration to be paid for pre-consolidation shares of the Corporation.

At the Special Meeting of Shareholders the shareholders will consider

In order to become effective, the Consolidation Resolution must be passed by the affirmative vote of not less than 66 2/3 % of the votes cast on the matter and must also be passed by a "majority of the minority" shareholders voting on the matter.

In order to become effective, the Delisting and Ceasing to be a Reporting Issuer Resolution must be passed by a majority of the votes cast on the matter and also by a "majority of the minority" shareholders voting on the matter.

For purposes of "majority of the minority" approval, directors, officers and insiders of the Corporation and their respective associates and affiliates may not vote. Accordingly, 702,470 (or approximately 70%) of the 1,002,425 issued and outstanding Common Shares of the Corporation will be excluded for the purposes of determining whether majority of the minority approval has been obtained.  A table identifying the holders of these excluded Common Shares and their respective holdings is contained in the Management Information Circular mailed to shareholders.

The purpose of the Consolidation is to reduce the number of shareholders to below 50, which is a condition that must be met in order for the Corporation to be eligible to become a private company.  If approved, the Consolidation will result in the fractional shares of 134 shareholders being eliminated, with each of these 134 shareholders being entitled to receive cash consideration of $12.93 for each pre-consolidation Common Share held by them. Post-consolidation, only 34 of the current shareholders of the Corporation will continue to hold Common Shares and be shareholders of the private company. 

As a background note, the Board of Park Lawn has had numerous discussions over the years regarding the poor performance of the stock price and the lack of liquidity in the stock given the low volumes of trading.  The Corporation had conducted 3 years of Normal Course Issuer Bid ("NCIB") offers, and there was enthusiastic response from shareholders to the opportunity to sell shares as there was an inability to sell shares at a reasonable volume on the Stock Exchange.  The available shares under the NCIB were readily taken up leaving some of the larger shareholders concerned that they would never be able to sell their shares at a reasonable price given the low trading volume of the shares. Unfortunately the only viable recourse for shareholders wishing to sell additional shares was the annual offer to purchase shares through a NCIB. 

The Board had a focussed discussion on this matter at a board meeting of August 27, 2019, and concluded that it would be fair to all shareholders if we could find a way to offer a fair price to all shareholders.  It was agreed that the preferred course of action would be to privatize the Corporation. With no obvious benefit to shareholders or the Corporation of being a publicly traded corporation, it made sense to privatize the Corporation and eliminate the costs associated with a publicly traded company.  The Board concluded that management should undertake further inquires and have discussion with the Corporation's lawyers. 

Although a formal valuation has not been obtained in reliance on the exemption provided in section 4.4(1)(a) of MI 61-101 as its shares are listed on the Canadian Stock Exchange, Management prepared an internal evaluation in preparation for the Consolidation and the Delisting and Ceasing to be a Reporting Issuer transactions and reviewed same with the Board of Directors of the Corporation, which led to a $11.60 per pre-consolidation Common Share price.  Management arrived at the $11.60 per pre-consolidation Common Share price by taking the current market value of the cash and liquid investments of the Corporation and for illiquid investments taking a net asset value approach based on a discounted cash flow analysis, and where appropriate applying a price to net asset value multiple using comparable companies analysis based on metrics of such comparable public companies. A Special Shareholder Meeting was then called for November 21, 2019. However, at its meeting of November 13, 2019 the Board unanimously agreed to postpone the Special Shareholder Meeting and to retain an independent valuator to provide its opinion as to the fair value of a pre-consolidation share and thus provide further assurance to shareholders and the Board as to the fairness of the pre-consolidation Common Share price.  The Board also agreed to establish a Fairness Opinion Committee with a mandate to seek proposals from a number of independent firms who could conduct a Fairness Opinion, select a firm and negotiate terms of engagement.  At its meeting of November 26, 2019 the Board unanimously approved the recommendation of the Committee to retain Grant Thornton to prepare the Fairness Opinion.

The Fairness Opinion Committee was composed of four members of which two are directors who are Certified Financial Analysts who collectively have extensive experience in the retention of external valuation advisors and conducting  Fairness Opinions, one of whom is an independent director. The two other members were the President and CFO of the Corporation.

Members of the Committee met as a committee or with Grant Thornton on 11 occasions throughout the engagement, including meetings to provide due diligence information to Grant Thornton. Grant Thornton reviewed the records of the Corporation and its assets, liabilities and operations. Following its review, Grant Thornton and the Committee engaged in discussions and as a result of these discussions the Committee selected the price of $12.93 per pre-consolidation Common Share.

On December 16, 2019 the Fairness Opinion Committee made its recommendation to the Board to accept the Fairness Opinion prepared by Grant Thornton and to increase the offer price to shareholders consistent with the results of the Fairness Opinion i.e. to $12.93 per pre-consolidation share.  The Board unanimously approved the recommendations.  The Board also unanimously approved a revised Management Information Circular which includes the Fairness Opinion and a Notice of Special Meeting of Shareholders to be held on February 4, 2020.

The $12.93 per pre-consolidation Common Share price represents a 50% premium to the highest market price paid by the Corporation to purchase Common Shares pursuant to its Normal Course Issuer Bid in June 2019.

The Board of Directors, consisting of 7 members, 3 of whom are independent, considered the following factors and accepted unanimously that $12.93 per pre-consolidation Common Share represents and constituted a fair price. Factors considered were:

Please refer to the Corporation's Profile on SEDAR for the Notice of the Special Meeting of Shareholders to be held on February 4, 2020, the Management Information Circular and other materials related thereto which were mailed to all registered shareholders of the Corporation.

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Park Lawn Company Limited