KingSett Capital withdraws OSC application about Primaris unitholder rights plan

TORONTO – An investment group led by KingSett Capital has dropped its attempt to remove a shareholder rights plan that Primaris Retail REIT (TSX:PMZ.UN) put in place to defend against a hostile takeover.

The Ontario Securities Commission said Friday that the consortium has withdrawn an application for a cease trade order related to the Primaris rights plan. Primaris announced Thursday that the so-called poison pill defence plan would be allowed to expire Feb. 4.

The KingSett group remains steadfast with its offer of $26 per unit in cash for the trust, which owns 35 retail properties across Canada, but Primaris has signed a friendly deal to be bought by H&R REIT (TSX:HR.UN).

H&R’s offer was for cash and units valued at $28 per Primaris unit when the deal was announced, although the cash portion is capped at $700 million and the value of the equity portion will fluctuate with changing market conditions.

It says it will waive the acquisition and property fees if the Primaris sale goes through, but did not say how much that would amount to.

H&R’s deal with Primaris also comes with a controversial break fee valued at $106.6 million, which includes the option to acquire the Dufferin Mall and certain other Yonge Street properties in Toronto owned by Primaris, priced at an aggregate $36.6-million discount to the appraised values.

On Thursday, KingSett criticized the fee and said it prevented the group from increasing its bid for Primaris.

Primaris units closed down seven cents at $27.20
Friday on the Toronto Stock Exchange, while H&R units lost 16 cents to $23.82, down from the $23.90 the units traded at prior to its takeover bid for Primaris.