Kingsway Arms Retirement Residences Inc.
TSX VENTURE : KWA

July 03, 2015 19:54 ET

Kingsway Arms Retirement Residences Inc. Announces Agreement to Sell Aurora Assets

TORONTO, ONTARIO--(Marketwired - July 3, 2015) - Kingsway Arms Retirement Residences Inc. (TSX VENTURE:KWA) (the "Company" or "Kingsway") is pleased to announce that it has entered into an agreement to sell substantially all of its Aurora Assets. On May 12, 2015, the Company executed an Agreement of Purchase and Sale (the "APS") with an arm's length party (the "Purchaser") with respect to sale of the Company's retirement centre in Aurora, Ontario (the "Sale Transaction"). This retirement centre comprises substantially all the assets of the Company.

On July 2, 2015, the Purchaser completed its due diligence and confirmed its desire to proceed with the Sale Transaction. The purchase price for the Aurora Assets is $5,400,000, subject to adjustments in accordance with the provisions of the APS (the "Purchase Price"). The anticipated closing date of the APS is August 28, 2015. Further details of the transaction are available on SEDAR in the information circular and supplement prepared and filed by the Company for the meeting of its shareholders called for July 23, 2015.

In 2008, the Company acquired the Aurora Retirement Centre in Aurora, Ontario ("Aurora"). Aurora consists principally of 53 retirement living suites and offers a range of services including independent support of dementia care (the "Aurora Assets"). The purchase price for the acquisition of the Aurora Assets was $3,673,321, with the result that the Purchase Price provides Kingsway with a 47% premium over the Company's purchase price for Aurora, and an estimated net pretax gain of approximately $2,800,000 on the sale, including recaptured depreciation expense. As at December 31, 2014, the total mortgage liability on the Aurora Assets amounted to $3,204,239.

In February 2015, the Company engaged the services of an independent licensed real estate agent who approached multiple parties. On May 12, 2015, the Company executed the APS with the Purchaser. The principal terms of the APS include the following:

  • The Purchaser has paid an initial deposit of $100,000. The Purchaser is to pay a further deposit of $300,000 (collectively, the "Deposit") when the Company is either satisfied that it has obtained all necessary consents and approvals from its shareholders for completion of the Sale Transaction, or waives satisfaction of this condition (all of which must occur by July 27, 2015). The Deposit is non-refundable, provided that the Company does not default under the APS and the Purchaser does not terminate the APS as a result of the non-fulfillment of the conditions to closing of the Sale Transaction or its decision not to waive the non-fulfillment of those conditions.
  • The adjustments to which the Purchase Price is subject include such items as are typically adjusted in transactions of purchase and sale involving Ontario commercial properties similar to the Aurora Assets.
  • The obligation of the Purchaser to complete the transaction was subject to its satisfaction, in its sole and unfettered discretion, with its due diligence review of the Aurora Assets. The Purchaser had a period of 45 days in which to complete its due diligence review that ended on June 26, 2015 and was further extended to July 2, 2015 (the "Conditional Period"). On July 2, 2015 the Purchaser advised the Company that it has completed its due diligence and is satisfied with the conditions to the closing of the Sale Transaction.
  • The Sale Transaction is subject to a real estate brokerage commission of 2.5% of the Purchase Price and related legal costs associated with the transaction.

The Sale Transaction will be submitted to the approval of shareholders at the Annual and Special Meeting of Shareholders that is scheduled for July 23, 2015 at 9:30 a.m. at 11 King Street West, Suite 700, Toronto, Ontario, M5H 4C7 (at the offices of Collins Barrow LLP). The Sale Transaction has received conditional approval of the TSX Venture Exchange, and is subject to final approval.

In connection with the Sale Transaction, management of the Company intends to use the proceeds to discharge the two outstanding mortgages of the Company and make payments in respect of real estate fees, legal fees, other transactional expenses, other arm's-length fees and setoff costs. The Company estimates that the net balance available after all such discharges and payments are made will be approximately $1,650,000.

After the conclusion of the Sale Transaction, the Company will continue to evaluate its opportunities with a view towards continuing to build shareholder value. These opportunities may include a dividend distribution, raising additional (new) capital into the Company for the pursuit of other business opportunities, acquiring a new business entity or other options to be determined.

Safe Harbor Statement:

This press release contains forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. In particular, factors that could cause actual results to differ materially from those in forward-looking statements include: our inability to obtain additional financing on acceptable terms; risks that our facilities will not gain widespread market acceptance; inability to compete with others who provide comparable facilities. Forward-looking statements speak only as of the date made and are not guarantees of future performance. We undertake no obligation to publicly update or revise any forward-looking statements. When used in this document, the words "believe", "expect", "anticipate", "estimate", "project", "plan", "should", "intend", "may", "will", "would", "potential", and similar expressions may be used to identify forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Kingsway Arms Retirement Residences Inc.
    Mr. Dan Amadori
    Chair, Board of Directors
    416.644.4361