Urbanfund Corp.

March 03, 2008 09:54 ET

Urbanfund Corp. Announces Property Acquisition and Confirms Private Placement Details

TORONTO, ONTARIO--(Marketwire - March 3, 2008) -


Urbanfund Corp. ("Urbanfund") (TSX VENTURE:UFC) is pleased to announce that its board of directors approved the proposed acquisition of: (a) 305 North Front Street, Belleville, Ontario (the "Belleville Property"); and (b) 476-480 Wonderland Road South, London, Ontario (the "London Property", together with the Belleville Property, the "Properties") from Westdale Construction Co. Limited ("Westdale").

Urbanfund entered into a non-binding letter of intent with Westdale on December 15, 2006 and an option to purchase agreement dated February 20, 2007 (the "Option to Purchase"), a press release in respect of which was issued by Urbanfund on February 20, 2007. Pursuant to the Option to Purchase, Urbanfund was granted an option to purchase up to 40% of Westdale's interest in four (4) centres located in Belleville, London, Ottawa and Toronto, Ontario. In its management information circular dated July 6, 2007 for the annual and special meeting of Urbanfund shareholders held on August 7, 2007, Urbanfund disclosed its intention to amend the Option to Purchase to purchase a 100% interest in each of the Belleville Property and the London Property.

The Belleville Property is comprised of a one-storey commercial plaza building with a site area of approximately 5.5 acres and some 68,866 square feet of gross floor area. North Front Centre is located on North Front Street which is considered the main north-south artery in Belleville as it links downtown to Highway 401 and to the large power centre and other retail malls to the north of the city. The plaza has a total of 16 units and tenants include Sobey's (Price Chopper), Bank of Nova Scotia and Fabricland.

The London Property is comprised of a one-storey commercial plaza with a site area of approximately 2.1 acres and some 16,000 square feet of net rentable area. The Mall is located in the southwest part of the City of London on Wonderland Road at the intersection of Teeple Terrace. The plaza has a total of 5 tenants with the anchor tenant being Fabricland. Other tenants include a convenience store, an automotive tire shop, a beauty salon and a bank kiosk.

The purchase price for the Properties is anticipated to be approximately $10,183,945.00, subject to adjustments for transactions of this nature, broken down as follows: (a) $7,775,366.00 for the Belleville Property; and (b) $2,408,579.00 for the London Property. The purchase price will be satisfied by payment in cash and a vendor take-back mortgage in the amount of $1,000,000. The Vendor take-back mortgage is on market terms, has an open 5.75% interest rate and can be repaid at any time without penalty.

Urbanfund and Westdale propose to enter into an amending agreement whereby the parties will amend the terms of the Option to Purchase whereby they will terminate Urbanfund's option to purchase interests in the Ottawa and Toronto properties as set out above and increase Urbanfund's option to purchase with respect to the Belleville Property and London Property from 40% to 100% (the "Amending Agreement"). Pursuant to the terms of the Amending Agreement, Westdale will provide Urbanfund with an undertaking and indemnity to be responsible for any and all environmental issues relating to the Properties which exist as of the closing date of the transaction and which were disclosed or referenced in the environmental reports commissioned on the Properties by Urbanfund as part of its due diligence on the Properties. Urbanfund will also enter into a Property Management Agreement with Westdale, which will be consistent with industry rates and shall be for a 3 year term, with a fee of 3.0% of Gross Revenue excluding realty taxes.

Westdale is a control block holder of Urbanfund and its largest shareholder. Consequently, Westdale is a "related party" within the meaning of National Instrument 61-101 (the "Instrument") and its predecessor, Ontario Securities Commission Rule 61-501. By virtue of Westdale being a "related party" to Urbanfund within the meaning of the Instrument, the proposed acquisition of the Properties (the "Proposed Acquisition") constitutes a "related party transaction" and is subject to the requirements of the Instrument.

To effect the Proposed Acquisition, Urbanfund was required to obtain approval by a majority of the votes cast by affected holders of common shares and series A first preferred shares, each voting separately as a class, excluding the votes attached to the common shares and series A First preferred shares that are beneficially owned or over which control or direction is exercised by Westdale, Ronald S. Kimel and other "interested parties" as defined in the Instrument, at a meeting of holders of that class of securities called to consider the Proposed Acquisitions (the "Minority Approval"). Urbanfund obtained such Minority Approval at its annual and special meeting of shareholders held on August 7, 2007.

The Proposed Acquisition is exempt from the Instrument's formal valuation requirement pursuant to section 5.5(b) of the Instrument, on the basis that no securities of the Corporation are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS market operated by PLUS Markets Group plc.

The Board of Directors was apprised of the Proposed Acquisition at the time of entering into the Option to Purchase and was provided with periodic status updates with respect to the Proposed Acquisition by the Corporation's President and Chief Executive Officer, who was given with the mandate to negotiate the transaction with Westdale. No special committee of the Board of Directors was appointed, rather, the entire Board of Directors (other than Ronald S. Kimel, who was conflicted given his role as a shareholder and officer of Westdale) was involved in the review and approval process. The Board of Directors were provided with a report on the Properties prepared by the President and Chief executive officer which detailed the results of the physical due diligence process, lease review, future management of the Properties and the determination of the purchase price. After discussion, the Board of Directors determined unanimously (Ronald S. Kimel abstaining) to proceed with the Proposed Acquisition on the terms disclosed herein.

Closing of the Proposed Acquisition is anticipated to occur forthwith in early March 2008. Closing of the Proposed Acquisition is subject to the execution of definitive documentation and approval of the TSX Venture Exchange. The Proposed Acquisition is anticipated to be beneficial for Urbanfund as it will provide Urbanfund with a stable cash flow from assets that have proven management in place. Additionally, the ownership of 100% of these assets will provide Urbanfund with a solid platform for future growth.

The cash component of the Proposed Acquisition purchase price will paid in part with the net proceeds received by Urbanfund from its private placement offering of common shares (the "Offering") that closed on February 15, 2008. Pursuant to the Offering, Urbanfund issued 28,804,000 common shares (the "Shares") at a price of $0.30 per Share (the "Issue Price"), for gross proceeds of $8,641,200. The Offering was placed on a best efforts, private placement basis by a syndicate of agents led by Blackmont Capital Inc. and including M Partners Inc. (collectively, the "Agents"). The Agents received a cash commission of $233,884, representing 7% of the total gross proceeds of the Offering received from subscribers other than Urbanfund insiders who participated in the Offering. No commission was paid in respect of subscriptions by Urbanfund insiders.

The Shares issued pursuant to the Offering are subject to resale restrictions for a period of four months and a day from the closing of the Offering under applicable securities legislation.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Statements

This press release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to Urbanfund. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include such risks and factors as are detailed from time to time in Urbanfund's periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Actual results may differ materially from those currently anticipated. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included herein are made as of the date hereof and Urbanfund does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise.

The TSX Venture Exchange does not accept responsibility for the adequacy or the accuracy of this release.

Contact Information

  • Urbanfund Corp.
    Mr. Mitchell Cohen
    President and Chief Executive Officer
    (416) 703-1877 x225