Danier Leather Inc.

Danier Leather Inc.

January 20, 2010 14:49 ET

Danier Leather to Repurchase Up to $7 Million of Its Subordinate Voting Shares Pursuant to a Substantial Issuer Bid

TORONTO, ONTARIO--(Marketwire - Jan. 20, 2010) - Danier Leather Inc. (TSX:DL) ("Danier" or the "Corporation") announced today that it intends to make a substantial issuer bid (the "Offer") pursuant to which the Corporation will offer to repurchase for cancellation up to Cdn$7 million in value of its outstanding subordinate voting shares (the "Shares") from shareholders. The Offer will proceed by way of a modified "Dutch Auction" and the range of Offer prices will be Cdn$6.10 to Cdn$6.45 per Share. The maximum Purchase Price under the Offer represents a premium of approximately 17% over the volume weighted average trading price of the Shares on the TSX for the last 30 trading days preceding the date of this announcement.

The modified Dutch Auction tender process allows shareholders to individually select the price, within the specified range, at which they are willing to sell all or a portion of their Shares. When the Offer expires, Danier will select the lowest tendered price from within the range of prices (the "Purchase Price") allowing it to buy up to Cdn$7 million of the Shares validly tendered to the Offer. All Shares tendered at or below the selected price level will be bought at the Purchase Price, subject to pro-ration in the event that the aggregate cost to purchase all of the Shares exceeds Cdn$7 million. All Shares tendered at prices higher than the Purchase Price will be returned to shareholders. The Corporation will fund any purchases of Shares pursuant to the Offer from available cash on hand.

The Offer will be for up to approximately 24% of the total number of issued and outstanding Shares (based on a Purchase Price equal to the minimum purchase price per Share of Cdn$6.10 and 4,689,940 Shares outstanding on January 19, 2010).

The Offer will not be conditional on any minimum number of Shares being tendered to the Offer, but will be subject to other conditions customary for transactions of this nature. It is anticipated that the formal offer to purchase and issuer bid circular and other related documents (the "Offer Documents"), containing the terms and conditions of the Offer and instructions for tendering Shares will be mailed to shareholders and filed with the applicable securities regulators and available on SEDAR at www.sedar.com on or around January 29, 2010. The Offer will remain open for acceptance for at least 35 days after the date of commencement, unless withdrawn or extended by the Corporation.

The Board of Directors of Danier, on recommendation of a Special Committee of independent directors, has authorized the making of the Offer. Deloitte & Touche LLP ("Deloitte") was engaged by the Special Committee as the independent valuator to prepare a formal valuation of the Shares (the "Valuation"). The Valuation contains Deloitte's opinion that, based on the scope of its review and subject to the assumptions, restrictions and limitations provided therein, as of January 20, 2010, the fair market value per Share falls within the range of Cdn$6.10 to Cdn$6.45. A copy of the Deloitte Valuation will be attached to the Offer Documents.

In accordance with applicable Canadian securities laws, the Corporation will suspend repurchases of any Shares under its normal course issuer bid announced on May 5, 2009 until after the expiry or termination of the Offer. As a result of previous purchases under its normal course issuer bid, only 23 Shares are available to be repurchased under that normal course issuer bid.

Neither the Corporation nor its Board of Directors or Special Committee makes any recommendation to shareholders as to whether to tender or refrain from tendering their Shares to the Offer.

Shareholders are strongly urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or refrain from tendering their Shares to the Offer and, if so, how many Shares to tender and at what price or prices.

Danier is making the Offer to provide a liquidity opportunity for shareholders and because, among other things, the Special Committee and the Board of Directors and senior management of Danier believe that the Shares do not trade in volumes that provide reasonable liquidity for shareholders.

The Special Committee's recommendation to make the Offer, and the Board of Directors' decision to authorize making the Offer, were based on a number of factors, including that the Offer provides shareholders with an opportunity to realize on all or a portion of their investment in Danier should they desire liquidity, the Offer is an equitable and efficient means of distributing capital of up to approximately $7 million in the aggregate to shareholders, the deposit of Shares is optional and Shareholders are free to accept or reject the Offer, the positive impact that the purchase of Shares under the Offer could have on Danier's operating results calculated on a per Share basis and that, after giving effect to the Offer, Danier is expected to continue to have sufficient financial resources and working capital to conduct its ongoing business and operations.

Further information concerning the factors considered by the Special Committee and the Board of Directors, along with the terms and conditions of the Offer, will be contained in the Offer Documents that will be mailed to shareholders and available on SEDAR when the Offer is formally launched.

This press release is for information purposes only and is not an offer to buy or the solicitation of an offer to sell any Shares.

About Danier

Danier Leather Inc. is a leading integrated designer, manufacturer, and retailer of high-quality leather and suede clothing and accessories. The Corporation's merchandise is marketed exclusively under the well-known Danier brand name and is available at its 90 shopping mall, street-front, and power centre stores. Corporations and other organizations can obtain Danier products for use as incentives and promotions for employees, suppliers and customers through Canada Sportswear Corp. For more information about the Corporation and our products, see www.danier.com.

Forward-Looking Information

Note: This press release contains forward-looking information and forward-looking statements which reflect the current view of Danier with respect to the Corporation's objectives, plans, goals, strategies, future growth, results of operations, financial and operating performance and business prospects and opportunities. Wherever used, the words "may", "will", "anticipate", "intend", "expect", "estimate", "plan", "believe" and similar expressions identify forward-looking statements and forward-looking information. Forward-looking statements and forward-looking information should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the statements in this press release containing forward-looking statements or forward-looking information are qualified by these cautionary statements.

Forward-looking statements and forward-looking information are based on information available at the time they are made, underlying estimates and assumptions made by management and management's good faith belief with respect to future events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally. Such risks and uncertainties include, but are not limited to, fashion and apparel and leather industry risks that can affect demand for the Corporation's products and inventory markdowns, a real or perceived slowdown in the general economy which can result in a reduction in consumer spending and can affect demand for the Corporation's products, changes in consumer shopping patterns, unseasonably hot weather or severe or unusual weather, seasonality, heightened competition including new competitors and expansion of current competitors, foreign currency and interest rate fluctuations which result in increased costs, leather availability and prices, consumer demand, disruptions in the credit markets, risks associated with foreign sourcing and manufacturing, potential legal proceedings, ability to successfully implement the Corporation's business strategy, inability to renew or access or obtain replacement credit facilities, war and acts of terrorism, higher utility and fuel prices which can result in increased costs, the ability of the Corporation to attract and retain key executives and key employees, the ability of vendors to maintain, support and upgrade management information systems, catastrophic or other events that impact the use of the Corporation's head office and distribution centre, increased inflation and interest rates, changes or disruptions in the securities markets or volatility in the market price or liquidity of the Corporation's Shares, satisfaction of the conditions to the Offer, the extent to which holders of Shares determine to tender their Shares to the Offer, the anticipated benefits of the Offer, the ability of the Corporation to obtain new locations or renew or relocate existing locations at existing or favourable lease terms, changes to the regulatory and economic environment in which the Corporation operates now and in the future, including changes in accounting policies or pronouncements introduced by regulatory authorities, changes in the Corporation's tax liabilities, either through changes in tax laws or future assessments, performance of third party service providers, and decreases in sales from existing stores and any material disruption to the Corporation's operations, among other things.

Danier cautions readers that this list of factors is not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by the Corporation will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Corporation. Potential investors and other readers are urged to consider these factors carefully in evaluating forward-looking information and forward-looking statements and are cautioned not to place undue reliance on any forward-looking information or forward-looking statements.

For additional information with respect to certain of these and other risks or uncertainties, reference should be made to Danier's continuous disclosure materials filed from time to time with the Canadian Securities Regulatory Authorities, including the Company's annual information form, quarterly and annual reports and financial statements, and supplementary information, which are available on SEDAR at www.sedar.com and in the Investor Relations section of the Corporation's website at www.danier.com. Additional risks and uncertainties not presently known to the Corporation or that Danier currently believes to be less significant may also adversely affect the Corporation. Danier disclaims any intention or obligation to update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

Contact Information

  • Investor Relations Contact
    Danier Leather Inc., Jeffrey Wortsman
    President and Chief Executive Officer
    (416) 762-8175 ext. 302
    (416) 762-7408 (FAX)
    Danier Leather Inc.
    Bryan Tatoff
    Senior Vice-President, Chief Financial Officer & Secretary
    (416) 762-8175 ext. 328
    (416) 762-7408 (FAX)