Capital BLF Inc. Welcomes Mathieu Duguay as its New President and
CEO, Daniel Blanchette as its New CFO and Cogir as Property Manager
CAPITAL BLF INC. ALSO ANNOUNCES OTHER CHANGES TO ITS BOARD OF
DIRECTORS, MANAGEMENT TEAM AND THE MANAGEMENT OF ITS ASSETS AND
PROPERTIES
MONTREAL, Dec. 14, 2012 /CNW/ - (TSXV: BLF) Capital BLF
Inc. (the "Corporation"), announced that a series of
transactions forming part of a reorganization of the management of
its assets and properties were completed today
("Reorganization").
Changes to Senior Management and the Board of
Directors
Mathieu Duguay
was appointed the new President and CEO and member of the Board
(Frank Dottori resigned as a
director). As a consequence, Claude
Blanchet resigned as President and CEO and was appointed
Chairman of the Board (Pierre
Laflamme resigned as Chairman but will remain a director).
Daniel Blanchette was appointed the
new CFO and member of the Board (Pierre L.
Martel resigned as CFO and a director and was appointed
Vice-President, Finance). Marc
Marois resigned as Chief of Operations, was appointed
Vice-President, Investment and Asset Management and will remain as
a director.
New Directors and Executive Officers of the
Corporation
Mathieu
Duguay - President and Chief Executive Officer and
Director
Mathieu Duguay is
Cogir's Executive Vice-President and 50% partner. Mr. Duguay has
acquired over 15 years of experience working with Cogir. Over the
years, Mr. Duguay has gained extensive knowledge and expertise of
the real estate industry, including in respect of property and
asset management, acquisition, development and financing
activities.
Claude
Blanchet - Chairman of the Board and Director
Claude Blanchet
has more than 30 years of experience in the residential and
commercial real estate industry. He was President, CEO and Vice
President of the Board of Ashton Hill Financial Inc.
(TSX-V:AHF-VN), Chairman of the Board and CEO of Société Générale
de Financement du Québec and President and CEO of Fonds de
Solidarité des Travailleurs du Québec (F.T.Q.). During his career,
Mr. Blanchet is or was a director of various public and private
companies, including Dacha Capital Inc. (TSX:DAC), Saputo Inc.
(TSX:SAP), Cascades Inc. (TSX:CAS) and Domtar Inc. (TSX:DTC).
Daniel
Blanchette - Chief Financial Officer and
Director
Daniel
Blanchette, CFA, received a Masters in Finance from the
University of Sherbrooke. He started
his career in real estate in 2000 working for a subsidiary of the
Caisse de dépôt et placement du Québec. Since 2000, Mr. Blanchette
has assisted and advised several private companies and other
institutions on a wide range of real estate assets and transactions
both in Canada and
internationally, including acquisitions of real estate properties
and portfolios, acquisitions of public and private companies,
structured finance, real estate development, performance and risk
analysis and several feasibility studies.
Marc Marois
- Vice-President, Investment and Asset Management and
Director
Marc Marois has
more than 15 years of experience in the real estate business as an
owner and a knowledgeable manager. Over the years, he has built a
portfolio composed of multi-residential and commercial properties
in the greater metropolitan area of Québec City. He operates a
property management company which provides services to investors in
relation to property acquisitions, investment opportunities'
assessment, strategic planning for value creation, financing,
property management and conversion of rental properties into
condominiums. Marc was previously the Chief of Operations of the
Corporation overseeing acquisitions of multi-residential properties
in the Province of Québec.
Reorganization of Asset and Property
Management
The other steps of the Reorganization that were
completed today include, among others, the replacement of Multigest
Management Inc. ("Multigest") (a corporation controlled by
Claude Blanchet, Marc Marois and Pierre
L. Martel), by First Investor, L.P. ("First
Investor") (a limited partnership controlled by Mathieu Duguay, Marc
Marois and Claude Blanchet)
as the Corporation's new asset and property manager, the entering
into by the Corporation of a new conditional asset management
agreement with First Investor (the "New Asset Management
Agreement") and a new conditional property management agreement
(the "New Property Management Agreement") with Société de
gestion Cogir s.e.n.c. ("Cogir") .
Multigest assigned today its current asset and
property management agreements with the Corporation (the
"Multigest Management Agreements") to First Investor and the
Multigest Management Agreements were amended to provide for, among
other things, the new management team for the Corporation as
further described above. Upon closing of the next equity financing
of the Corporation raising at least $5,000,000 in gross proceeds (the "Next Equity
Financing") (provided it occurs within the next two years), the
Multigest Management Agreements will be automatically
terminated.
In addition, the property management agreement
between Gestion Marc Marois Inc. ("Gestion Marois") and the Corporation (the
"Gestion Marois Agreement") was assigned by the Corporation
to First Investor and Gestion Marois
was appointed by First Investor as a property manager of the
current and future properties of the Corporation located in the
greater metropolitan area of Québec City. Upon closing of the Next
Equity Financing (provided such closing occurs within the next two
years), the Gestion Marois Agreement will be automatically assigned
by First Investor to Cogir.
The Corporation and First Investor also entered
into the New Asset Management Agreement. The New Asset Management
Agreement will only come into force and be effective if and when
the Next Equity Financing closes (provided such closing occurs
within the next two years). Under the New Asset Management
Agreement, First Investor will be acting only as the asset manager
of the Corporation. The terms and conditions of the New Asset
Management Agreement are further described below.
The Corporation and Cogir entered into the New
Property Management Agreement which will only come into force and
be effective if and when the Next Equity Financing closes (provided
such closing occurs within the next two years). Under the New
Property Management Agreement, Cogir will be acting as the property
manager of the properties of the Corporation. The terms and
conditions of the New Property Management Agreement are further
described below.
Under a non-competition agreement (the
"Non-Competition Agreement") entered into today by the
Corporation with Cogir, Société Immobilière SYM Inc.
("SYM"), Mathieu Duguay,
Daniel Blanchette, Claude Blanchet and Marc
Marois and certain of the affiliates of Claude Blanchet and Marc
Marois (collectively, the "Restricted Parties"), the
Restricted Parties have agreed, subject to certain exceptions, not
to compete with the Corporation within Canada and not to solicit its tenants. The
terms and conditions of the Non-Competition Agreement are further
described below.
Acquisition of Common Shares by SYM
In parallel to the Reorganization, SYM, a
wholly-owned corporation of Mathieu
Duguay, acquired today an aggregate of 5,960,000 common
shares of the issued and outstanding common shares of the
Corporation pursuant to two private transactions. SYM acquired
1,542,510 common shares from M. Claude
Blanchet and 4,417,490 common shares from Fonds immobilier
de solidarité FTQ II, s.e.c. ("FIS"). The common shares sold
by Claude Blanchet and FIS
represented a proportion equal to approximately 41% of their
respective pre-transaction common share holdings. As a result of
these acquisitions, FIS, SYM and Claude Blanchet now own,
respectively, approximately 20.56% (down from 35.4%), 19.96%
(up from 0%) and 7.18% (down from 12.3%) of the issued and
outstanding common shares of the Corporation.
Financing Undertakings of Mathieu Duguay and SYM
Mathieu Duguay
and SYM both have confirmed that they would participate in the Next
Equity Financing (provided closing of such equity financing occurs
within the next two years). They also confirmed they would provide
mezzanine financing of up to $5,000,000 to the Corporation if and when it
could be required for the growth of the Corporation's portfolio of
properties on reasonable commercial terms that are not less
advantageous to the issuer than if such financing were obtained
from a person dealing at arm's length. Any such mezzanine financing
from Mathieu Duguay or SYM would not
include any equity component.
Capital BLF Inc.
The principal business of the Corporation is
acquiring, holding, developing, maintaining, improving, leasing,
managing or otherwise dealing with income-producing multi-unit
residential properties located throughout Canada and in such other jurisdictions, from
time to time. The Corporation currently owns nine properties in
Montréal, Dorval and Québec
City.
Société de gestion COGIR s.e.n.c.
Cogir has approximately 2,500 employees. The
partnership manages more than 100 properties located in Québec,
Ontario and Nova Scotia. At the residential level, Cogir
manages more than 15,000 apartment units, including senior citizen
residences located in Québec and Ontario. Cogir also manages more than 8
million square feet of commercial, industrial and office real
estate properties. Cogir is a general partnership controlled by
Mathieu Duguay and another private
partner.
About the New Asset Management
Agreement
If and when the New Asset Management Agreement
becomes effective, First Investor will manage and supervise the
asset management operations of the Corporation and its affiliates
under the New Asset Management Agreement. First Investor will
initially provide the services of Claude
Blanchet, as chairman of the Board of the Corporation,
Mathieu Duguay, as President and CEO
of the Corporation, Daniel
Blanchette, as CFO of the Corporation and Marc Marois, as Vice-President, Investment and
Asset Management of the Corporation, each in a policy-making
function typical of persons acting in such positions. First
Investor may also provide alternative or additional personnel to
serve as management of the Corporation and its affiliates, subject
to the approval of the independent directors of the
Corporation.
First Investor will also provide the Corporation
and its affiliates with comprehensive advisory, asset management
and administrative services, as applicable, including but not
limited to the following: (i) advising the directors of the
Corporation and making recommendations on strategic matters, (ii)
identifying, evaluating, recommending and assisting in the
structuring of transactions and investment opportunities, (iii)
analyzing and assisting in the prospective purchases and sale of
properties, (iv) making recommendations concerning the raising of
funds, (v) arranging for the financing, refinancing or
restructuring of the properties, (vi) monitoring income and
investments, (vii) preparing all reports reasonably requested,
(viii) preparing business plans, implementing such plans and
monitoring financial performance, (ix) advising and assisting with
investor relations strategies and activities and * maintaining the
books and financial records of the properties and submitting all
necessary income tax returns.
In connection with the services to be provided
by First Investor under the New Asset Management Agreement, the
following amounts will be paid to First Investor, in cash: (a) a
base annual management fee calculated and payable on a monthly
basis in arrears on the first day of each month equal to the sum of
(i) 0.35% of the historical purchase price of the properties; and
(ii) the cost of any capital expenditures incurred by the
Corporation or its affiliates in respect of those properties as of
the date of the New Asset Management Agreement; (b) an incentive
fee payable by the Corporation for each fiscal year equal to 15% of
the Corporation's FFO Per Share (as such term is defined in the New
Asset Management Agreement) in excess of the FFO (as such term is
defined in the New Asset Management Agreement) determined prudently
by the independent directors on or about the effective time or as
soon as possible thereafter on the basis, among other things, of
the latest annual budget approved by the independent directors, as
adjusted yearly on the basis of 50% of the increase in the weighted
average consumer price index; (c) a capital expenditure and
development fee equal to an amount to be negotiated by First
Investor and the Corporation from time to time in relation to
significant capital expenditures, construction or development
projects of the Corporation, which fee is not to exceed the fair
market value for comparable services; and (d) an acquisition fee
equal to 0.75% of the purchase price by the Corporation or any of
its affiliates for the purchase of a property and payable upon
closing of the acquisition.
Unless terminated in accordance with its terms,
the New Asset Management Agreement will remain in force for an
initial term of ten years from the date it becomes effective and
will be renewable for three additional terms of five years each. At
least sixteen months prior to the end of the initial term and each
renewal term, the Corporation, in consultation with its independent
directors, shall review the performance by First Investor of its
duties. If the independent directors determine that First Investor
has not been meeting its obligations, they may resolve to submit to
a vote of shareholders the termination of the New Asset Management
Agreement at the end of the initial term or renewal term and if it
is approved by at least a simple majority of the votes cast by the
shareholders, the Corporation will have the right to terminate the
New Asset Management Agreement by providing First Investor with at
least twelve months' prior written notice.
From and after the completion of the fiscal year
in which the Corporation reached a market capitalization of
$500,000,000, in the event a party
unrelated to, and that is not an affiliate of the Corporation,
acquires directly or indirectly, (i) the beneficial ownership of,
or Control or direction over, more than 66⅔ % of the Shares or (ii)
all or substantially all of the properties of the Corporation,
then, in either case, the Corporation shall have the right to
terminate this Agreement, at its sole discretion, effective
immediately prior to or at the same time as the consummation of
such transaction by paying First Investor a termination fee equal
to the incentive fee as if all the properties of the Corporation
had been sold on the date of the consummation of the transaction or
the series of transactions plus a payment of three years' asset
management fees based on the highest total fees payable in any of
the three completed fiscal years immediately preceding the fiscal
year in which the transaction or series of connected transactions
falls.
The preceding description is qualified in its
entirety by reference to the full text of the New Asset Management
Agreement which will be made available on SEDAR at
www.sedar.com.
About the New Property Management
Agreement
If and when the New Property Management
Agreement becomes effective, Cogir will manage and supervise the
day-to-day operations and management (including leasing) of all
aspects of the Corporation's properties and shall provide the
Corporation with all services necessary and incidental in respect
of the economic and efficient operation of those properties. Among
other things, Cogir will: (a) develop and implement plans
concerning the moving into the properties and moving out of the
properties of all tenants and supervise the same so as to minimize
disturbance to the operations; (b) supervise the establishment and
maintenance of a suitable scheme of liaison between each of the
tenants and the Corporation; (c) be responsible for giving all
notices required to be remitted to tenants; (d) collect in trust
all rent and additional charges and other amounts from time to time
payable by the tenants in respect of their leases, including
additional rent, security deposits, incidental charges and real
estate taxes; (e) establish and maintain suitable records and
systems to manage all billings to tenants; (f) with the prior
written approval of the Corporation, commence, prosecute and
defend, as appropriate, any action and proceedings to take any
legal action which are necessary and available by law; (g) select
the accountants, lawyers and other professionals necessary or
appropriate to be retained in connection with the operation of the
properties; (h) ensure compliance by the Corporation and the
tenants with all of the terms and conditions of all restrictions,
agreements and obligations entered into or imposed upon the
Corporation; (i) at the expenses of the Corporation, pay all
carrying charges and other expenses relating to the operation of
the properties in a timely manner; (j) maintain at all times the
books and records, and prepare the reports and budgets; (l) prepare
operating and preventative maintenance schedules; (m) supervise and
direct the making of all repairs to the properties and alterations
and redecoration which may become necessary or desirable; (n)
arrange for and supervise adequate and appropriate security for the
protection of the properties; and (o) use its best efforts to
obtain tenants to lease premises in the properties.
In connection with the services to be provided
by Cogir under the New Property Management Agreement if and when it
becomes effective, the following amounts will be paid to Cogir: (a)
a property management fee equal to 4% of the Corporation's gross
operating revenue per year payable in monthly instalments or such
lower percentage thereof as agreed from time to time between the
Corporation and Cogir; (b) for the retail and office portions of
any property, a leasing fee based on, among other things, the type
of lease and the size of the premises; (c) a capital expense
supervision fee amounting to a variable percentage of the cost of
the work in accordance with the amount of capital work to be
performed; and (d) a bad debt recovery fee equal to 40% of the
total amount of any bad debt recovered by Cogir for tenants that
vacated their unit without paying rent.
Unless terminated in accordance with its terms,
the New Property Management Agreement shall remain in effect for a
term of ten years and will be renewable for three additional terms
of five years each. At least sixteen months prior to the end of the
initial term and each renewal term, the Corporation, in
consultation with its independent directors, shall review the
performance by Cogir of its duties. If the independent directors
determine that Cogir has not been meeting its obligations, they may
resolve to submit to a shareholders vote the termination of the New
Property Management Agreement at the end of the initial term or
renewal term and if it is approved by at least a simple majority of
the votes cast by the shareholders, the Corporation will have the
right to terminate the New Property Management Agreement by
providing Cogir with at least twelve months' prior written
notice. If the New Asset Management Agreement is terminated in
accordance with its terms, the Corporation will have the right to
terminate the New Property Management Agreement by giving a six
months' prior written notice.
From and after the completion of the fiscal year
in which the Corporation reached a market capitalization of
$500,000,000, in the event a party
unrelated to, and that is not an affiliate of the Corporation,
acquires directly or indirectly, (i) the beneficial ownership of,
or Control or direction over, more than 66⅔ % of the Shares or (ii)
all or substantially all of the properties of the Corporation,
then, in either case, the Corporation will have the right to
terminate the New Property Management Agreement, at its sole
discretion, effective immediately prior to or at the same time as
the consummation of such transaction by paying Cogir a termination
fee equal to a payment of three years' property management fees
based on the highest total fees payable in any of the three
completed fiscal years immediately preceding the fiscal year in
which the transaction or series of connected transactions
falls.
The preceding description is qualified in its
entirety by reference to the full text of the New Property
Management Agreement which will be made available on SEDAR at
www.sedar.com.
About the Non-Competition Agreement
The Corporation entered into the Non-Competition
Agreement with the Restricted Parties whereby the Restricted
Parties agreed that, subject to certain exceptions set forth in the
Non-Competition Agreement (such as senior citizen residences in the
case of (a), (b) or (c) described below), he or it will not,
directly or indirectly: (a) create, promote, take part in, invest
in, have ownership interest in or lend money to guarantee the
obligations of, any publicly-held investment vehicle listed on an
exchange in North-America which
primarily invests in multi-unit residential properties; (b)
acquire, invest or have ownership interest in (i) multi-unit
residential properties or (ii) any person or entity who (A)
primarily owns or controls multi-unit residential properties, (B)
primarily has financial or other direct economic interests in or in
respect of * multi-unit residential properties or (y) any person or
entity who primarily owns or controls multi-unit residential
properties; (c) permit the use of the name(s) of any or all of the
Restricted Parties in respect of the foregoing; (d) encourage any
person who is an employee, representative, entrepreneur,
consultant, client, manager, supplier or agent of the Corporation
or its affiliates with respect to the foregoing, to (i) leave their
respective positions with the Corporation or its affiliates, (ii)
cease providing the Corporation with their services; or (iii)
otherwise terminate all affiliations with the Corporation or its
affiliates; (e) solicit any specific tenant to vacate or not renew
their lease with respect to any multi-unit residential property
owned, directly or indirectly, by the Corporation or an affiliate
of the Corporation in favour of a multi-unit residential property
in which any of the Restricted Parties has an ownership or
operating interest during the occupancy of such tenant at such
property of the Corporation or an affiliate of the Corporation; and
(f) preferentially market or lease space in any multi-unit
residential property in which any of the Restricted Parties has an
ownership or operating interest that is not an multi-unit
residential property of the Corporation or an affiliate of the
Corporation, over space in any multi-unit residential property of
the Corporation.
In addition, the Corporation has a right of
first refusal to acquire multi-unit residential properties, if at
any time a Restricted Party wishes to make an investment, either
directly or indirectly, in a multi-unit residential property. The
Corporation will, subject to certain exceptions, have the right of
first opportunity, which must be exercised within certain
pre-defined time periods set out in the Non-Competition Agreement,
to deliver a notice advising such Restricted Party whether it is
interested in pursuing such investment. If, within the applicable
time period, a majority of independent directors vote against the
Corporation electing to pursue an investment opportunity, the
applicable Restricted Party will be free to acquire or invest in
such property.
The restrictions remain in force in respect of
each Restricted Party for a different period which is generally
aligned with their involvement in the Corporation, Cogir and First
Investor.
The preceding description is qualified in its
entirety by reference to the full text of the Non-Competition
Agreement which will be made available on SEDAR at
www.sedar.com.
Forward-Looking Information
This press release contains forward-looking
statements. Often, but not always, forward-looking statements can
be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "estimates", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved. Forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Corporation to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Examples of such statements include the
intention to complete an equity financing within the next two
years. Accordingly, readers should not place undue reliance on
forward looking statements. The factors identified above are not
intended to represent a complete list of the factors that could
affect the Corporation.
There can be no assurance that an equity
financing will be completed at all. Investors are cautioned that
any information released or received with respect to such
transactions may not be accurate or complete and should not be
relied upon.
The TSXV has in no way passed upon the merits of
the proposed transaction and has neither approved nor disapproved
the contents of this press release.
Neither the TSXV nor its Regulation Services
Provider (as that term is defined in policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this release.
The assignment agreements for the Multigest
Management Agreements and the Gestion Marois Agreement, the New
Asset Management Agreement and the New Property Management
Agreement will also be available on SEDAR at www.sedar.com.
SOURCE CAPITAL BLF INC.