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GENTRA INC. BOARD APPROVES PLAN OF ARRANGEMENT

 TORONTO, July 9 /PRNewswire/ -- Gentra Inc. (formerly Royal Trustco Limited) today announced that its board of directors has approved a Plan of Arrangement designed to implement the sale transaction with Royal Bank of Canada and to make certain changes in Gentra's outstanding debentures and preferred shares. Gentra and Royal Bank entered into definitive agreements on June 18, 1993 providing for the purchase by Royal Bank, subject to conditions, of certain of Gentra's Canadian and international operating subsidiaries.
 James W. Miller, president and chief executive officer of Gentra said: "We are pleased to have brought this arrangement forward on the timetable set out at our annual meeting. Although I am sure that each class of our securityholders can find something in the plan not entirely to their liking, and may well voice these concerns, our objective is to be fair to all classes. I am convinced that the plan accomplishes that objective and our independent committee, our board of directors and two extremely reputable investment dealers, Burns Fry and S.G. Warburg, feel the same way. I am also pleased that the plan offers Gentra's securityholders the opportunity to realize value for their investment over time."
 Gentra's Plan of Arrangement must be approved by the Ontario Court (general division) before it becomes effective. The court will be asked to authorize the holding of meetings of Gentra's debentureholders and shareholders to vote on the Plan. Gentra will apply to the court at 145 Queen Street West, Toronto on July 12, 1993 for instructions as to the holding of such meetings.
 Gentra expects that, with the approval of the court, an information circular fully describing the Plan of Arrangement and the effect of the Royal Bank transaction on Gentra will be mailed to all securityholders by July 21.
 Under the transaction, Royal Bank has agreed to purchase: (1) the shares of Gentra's principal Canadian and international operating subsidiaries, including Gentra's two registered trust company subsidiaries in Canada, The Royal Trust Company and Royal Trust Corporation of Canada, and Gentra's banking and trust company subsidiaries in Jersey, Isle of Man, Switzerland, Austria, Liechtenstein, Hong Kong, Singapore, Barbados, British Virgin Islands and Cayman Islands, and (2) certain other assets of Gentra and its subsidiaries. In addition Royal Bank will assume all deposit and treasury liabilities and acquire certain assets of Gentra's United Kingdom banking subsidiary, Royal Trust Bank, London. In the result, the bank has agreed to acquire and assume all third party deposit obligations of Gentra worldwide.
 The purchased businesses include the estates, trust and agency, investment management, pension, trust and custodial and mutual fund businesses, and a substantial part of the financial intermediation businesses, currently carried on by Gentra's Canadian and international operating subsidiaries. The names "Royal" and "Royal Trust" and other trade marks and intellectual property used in the businesses of Gentra and its subsidiaries will also be included in purchased businesses.
 The definitive agreements contemplate a closing date which is the later of Sept. 1, 1993 and the first day of the month following the month in which all required court and regulatory approvals are obtained.
 The purchase price payable for the purchased businesses will be equal to the aggregate of the following:
 (i) the amount by which the sum of the net book values of the
 assets which constitute the purchased businesses exceeds
 the sum of all of the liabilities of the purchased
 businesses, which as at March 31, 1993 would have been
 approximately $1,400 million; and
 (ii) an additional amount, based on an agreed formula to reflect
 certain adjustments, which Gentra estimates would be
 approximately $258 million if determined today.
 Certain businesses, assets and liabilities of Gentra and its subsidiaries that are not to be acquired by Royal Bank will be retained by Gentra or purchased by Gentra from the businesses acquired by Royal Bank at the time of closing.
 Under the definitive agreements, Royal Bank will provide Gentra with financing of up to $200 million to facilitate Gentra's purchase of the excluded businesses. This financing facility will be secured by a floating charge on the Canadian excluded assets being acquired by Gentra.
 Trilon Financial Corporation will provide a further $100 million of financial assistance to Gentra to facilitate the purchase of the excluded businesses. This facility will be secured by a pledge of the shares of certain of Gentra's U.S. subsidiaries and a second floating charge on the Canadian excluded assets.
 The transactions contemplated under the definitive agreements are subject to a number of conditions, including regulatory and court approvals.
 The material terms of the Plan of Arrangement approved by Gentra's board of directors which affect Gentra securityholders are as follows:
 -- all currencies and coupons will remain unchanged, and all
 principal and interest payments will be made in cash.
 -- all senior debt will be paid at the earlier of its scheduled
 maturity date and Dec. 31, 1995, with mandatory
 redemptions of 10 percent by Dec. 31, 1994 and a further
 40 percent by June 30, 1995. All redemptions, including any
 voluntary redemptions, will be pro rata among outstanding
 series.
 -- all subordinated debt will be due and payable on May 29, 1998.
 Gentra will be permitted to make voluntary redemptions pro
 rata among outstanding series.
 -- preferred shareholders will be provided with a one-time
 option, exercisable within 45 days after the effective time of
 the Plan of Arrangement, to retract their preferred shares and
 receive in exchange a new class of junior subordinated debt,
 on the basis of $10 of junior subordinated debt for each $25
 face amount of cumulative preferred shares with no credit for
 accrued and unpaid dividends, and $7 of junior subordinated
 debt for each $25 face amount of non-cumulative preferred
 shares.
 -- the junior subordinated debt received by preferred
 shareholders who retract their shares will be subordinate to
 the senior and subordinated debt, will be due and payable on
 Dec. 31, 2001 and will bear interest at a fixed rate of
 7-1/2 percent. Interest will roll up, on a semi-annual
 compounding basis, and not be paid until after the
 subordinated debentures have been repaid in full; thereafter,
 interest shall be paid semi-annually.
 -- Gentra's common shares will be unchanged.
 -- so long as the senior or subordinated debt remains
 outstanding, Gentra will be restricted to carrying on the
 business of realizing the assets owned by it and will be
 prohibited from using its cash resources other than for, or in
 connection with, such purposes.
 -- so long as any of the senior, subordinated or junior
 subordinated debt remains outstanding, Gentra will be
 prohibited from paying any dividends on or purchasing or
 otherwise returning capital in respect of its preferred or
 common shares.
 The Plan of Arrangement also provides that the Gentra board of directors shall be reduced to nine members. A majority of the board shall be constituted by directors who are not existing board members and who are independent of Trilon and its related companies.
 Prior to being considered by Gentra's board of directors the Plan of Arrangement and Gentra's future plans to realize on its assets were reviewed in detail by an independent committee made up of independent directors. The independent committee received advice from independent financial advisors (Burns Fry) and legal advisors (Davies, Ward & Beck).
 The Independent Committee reported to the board of directors that it believes the Plan of Arrangement is fair to the holders of senior debt, subordinated debt, preferred shares and common shares. The Independent Committee's report was based on a number of factors, including the opinion of Burns Fry that the Plan of Arrangement is fair from a financial point of view to the holders of senior debt, subordinated debt, preferred shares and common shares.
 The board will receive a similar fairness opinion from its financial advisor, S.G. Warburg. The Burns Fry and Warburg's fairness opinions will be included in the information circular which will be mailed to all Gentra securityholders.
 Gentra believes that it will be able to repay all of its senior and subordinated debt by their respective maturities provided for in the Plan of Arrangement. Gentra does not intend to wind up or liquidate after its debt has been repaid but will continue to operate as a going concern. The value to be realized by preferred and common shareholders from their holdings will be dependent upon, among other things, the assets remaining after repayment of debt and the nature of Gentra's business after the subordinated debt is repaid.
 The Ontario Court will be asked to sanction the calling of separate meetings of Gentra's senior debtholders (to be held on Aug. 16), subordinated debtholders (to be held on Aug. 19), preferred shareholders (to be held on Aug. 17) and common shareholders (to be held on Aug. 18). The record date for the meetings is July 16, 1993. Although the court will retain an overriding discretion with respect to the final approval of the plan, it will be asked to hold that the Plan is passed by each meeting if the resolution receives two thirds of the votes cast at each meeting. It is intended that the court be approached for its final order on Aug. 30, 1993. Based on this timing, the effective time of the Plan of Arrangement, including closing of the Royal Bank transaction, would occur on Sept. 1, 1993.
 -0- 7/09/93
 /For further information: Gentra Inc. Public Affairs, Sheila


Robb, Managing Partner (416) 981-6655; Gentra Inc. Public Affairs, Lorraine McAlpine, Partner (416) 981-6458/
 (GTA.)


CO: Gentra Inc. ST: Ontario IN: FIN SU: RCN

SH -- NY061 -- 0002 07/09/93 15:01 EDT
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Publication:PR Newswire
Date:Jul 9, 1993
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