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NorRock Realty Finance Corporation Announces Update and Amendment to Proposed Reactivation Transaction

Jun 13 2013 12:00AM

Marketwire

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TORONTO, ONTARIO -- (Marketwired) -- 06/13/13 -- NorRock Realty Finance Corporation ("NorRock") (TSX VENTURE: RF.H), a company listed on the NEX board of the TSX Venture Exchange (the "Exchange"), is announcing an amendment to its proposed reactivation transaction that was previously disclosed via press release on February 27, 2013.

LaSalle Acquisition

NorRock will continue with its proposed acquisition of the commercial property (the "LaSalle Acquisition") known municipally as 695, 795 and 999 - 90th Avenue, Montreal (Borough of LaSalle), Quebec, and legally described as Lot number ONE MILLION FOUR HUNDRED AND FIFTY THOUSAND AND NINETY ONE (1 450 091) of the cadastre of Quebec, Registration division of Montreal (the "LaSalle Property").

NorRock has entered into definitive agreement with IGW Industrial Limited Partnership ("IGW Industrial") to acquire the LaSalle Property further to the previously executed letter of intent.

About IGW Industrial and the LaSalle Property

IGW Industrial is a limited partnership established in the province of British Columbia.

The LaSalle Property is a 100% freehold interest property with three multi-tenant buildings in the LaSalle industrial submarket. Comprised of a mix of industrial and office-flex space, the LaSalle Property totals 476,296 SF (square feet) of leasable space on 1,263,248 SF of land.

Tenants of the LaSalle Property are comprised of a mix of international corporations, corporate head offices for national enterprises as well as smaller privately owned companies based in Montreal. Tenants have located themselves in the LaSalle area due to its strategic location, business friendly municipal regulations and talented labour pool. Many tenants of the LaSalle Property have invested in current infrastructure and are expected to renew their respective leases.

Among the advantages that have already attracted over 1,500 businesses to the LaSalle area are its proximity to both downtown Montreal and the borough's main access roads, its public transit system, a dynamic business and association community, as well as the presence of bilingual, qualified workers. For workers, the LaSalle area offers advantages, including the considerable number of professional services, stores and other commercial establishments that are located a few streets away from their workplace, as well as easy access to and from Highway 20, Mercier Bridge, Angrignon metro station and bicycle paths.

Portfolio Acquisition

NorRock, at this time, is no longer proceeding with the letter of intent previously entered into with IGW Segregated Debt 1 Limited Partnership ("IGW Seg Debt 1") and IGW Segregated Debt 2 Limited Partnership ("IGW Seg Debt 2") to acquire indirectly a portfolio of securities (the "Securities Portfolio") (the "Portfolio Acquisition").

Highview Acquisition

NorRock has entered into a letter of intent with Highview Financial Holdings Inc. ("Highview") to become Highview's strategic capital partner and will subscribe for such number of treasury shares, such that NorRock shall own, on a fully diluted basis, 70% of the issued and outstanding shares of Highview (the "Highview Shares") upon the closing of the transaction (the "Highview Acquisition").

About Highview

Highview is a private corporation incorporated under the federal laws of Canada and is the parent company to Highview Asset Management Ltd. and Highview Wealth Practices Inc., each of which are also federally incorporated.

Highview is one of Canada's leading outsourced Chief Investment Officer (CIO) firms managing the private wealth of affluent families, the pension and investable assets of their businesses, and the foundations & endowments which they support. While the outsourced CIO industry in the United States & Europe is extremely well-established, Canada is in the early stages of growth in this important new niche segment in the Canadian asset management industry. With approximately $800 Million of client assets under its care (AUM & AUA), Highview services its clients directly and in partnership with its professional advisors. Highview is objective and transparent in architecting financial portfolios for its clients and does not engage in any related investment management businesses. Highview is only compensated through client fees for objective and experienced advice and research. Highview's client's assets are always segregated and held by third-party respected institutions.

Highview Asset Management Ltd. is licensed as a Portfolio Manager in the Provinces of Ontario and Alberta.

Highview is controlled by Gary Brent and Mark Barnicutt, each of whom are Ontario residents. Mr. Brent and Mr Barnicutt hold, directly and indirectly, approximately 70% of issued and outstanding shares of Highview.

Reactivation Transaction

The LaSalle Acquisition together with the Highview Acquisition is intended to constitute a reactivation transaction (the "Reactivation Transaction") of NorRock to enable it to list on the Exchange. The Reactivation Transaction will constitute a reverse takeover transaction ("RTO") as defined in Policy 5.2 of the Corporate Finance Manual of the Exchange.

Business Plan

Following closing of the Reactivation Transaction, it is NorRock's intention to change its business focus from being a secured lender in the commercial real estate industry to carrying on business as a merchant bank focused on creating value for shareholders by making investments in undervalued assets in various industry sectors. The initial investments and the first two transactions undertaken by NorRock will be the assets acquired pursuant to the LaSalle Acquisition and the Highview Acquisition.

NorRock will focus on investments in small- and middle-capitalization public and private companies, with emphasis on real estate, infrastructure and financial services sectors in North America. NorRock will seek to generate income primarily from its lending activities, while taking advantage of additional upside through equity participation in the companies which it finances.

Norrock intends to enter into a new management agreement with its current manager, NorRock Asset Management Ltd., to reflect the fact that upon closing of the Reactivation Transaction, Norrock will be a merchant bank and no longer an investment fund.

The Reactivation Transaction

Subject to regulatory approval:

1. NorRock will acquire the LaSalle Property (including the assumption of existing debt financing obligations of IGW Industrial related to the LaSalle Property) for an estimated purchase price of $17 million on the terms as previously disclosed.2. NorRock has assessed a value of $6 million to Highview. As Highview's strategic capital partner NorRock will be providing a combination of debt and equity capital, totaling approximately $3,500,000, to fund the long-term growth of Highview (which growth is anticipated to be derived both organically and through select acquisitions over the coming years). The current promissory note in the amount of $1,000,000, (the "Highview Note") owed by Highview to Green Tree Acquisition Corp. ("GTAC"), shall be amended, to the satisfaction of NorRock, to include an additional $550,000, to be used as working capital, as part of the overall investment in Highview. The Highview Note, as amended, is included in the aforementioned amount of funds to be advanced and shall be secured by a general security agreement(s) over all the assets of Highview and its subsidiaries and a pledge of shares of such subsidiaries (the "Security Interests") with standard anti-dilution provisions. The Highview Note and accompanying Security Interests shall be transferred from GTAC to NorRock in exchange for Class A Shares of NorRock. The Class A Shares shall be issued at a deemed issuance price of $0.25 per share, being 6,200,000 Class A Shares assuming the principal amount of the Highview Note being $1,550,000. The existing shareholders of Highview shall enter into a new shareholders' agreement with NorRock on terms satisfactory to NorRock. As part of the strategic investment in Highview, upon closing of the Highview Acquisition, NorRock will acquire the Highview Shares and shall cause Highview to implement a management equity incentive plan which will allow management, over the next few years, to earn up to an additional 15% of the issued and outstanding shares of Highview.



The proposed Reactivation Transaction will be effected by way of an RTO and an information circular will be completed detailing the terms of the Reactivation Transaction and seeking approval from shareholders of NorRock.

As previously disclosed, NorRock intends to treat the LaSalle Acquisition as a related party transaction as defined in Multilateral Instrument 61-101: Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Consequently, NorRock intends to obtain an independent valuation for, and majority of minority shareholder approval of, the LaSalle Acquisition.

NorRock also intends to treat the issuance of shares by NorRock to GTAC pursuant to the transfer of the Highview Note in connection with the Highview Acquisition as a related party transaction pursuant to MI 61-101. NorRock intends to rely on an exemption from the independent valuation requirement set out in MI 61-101; but shall seek majority of the minority shareholder approval of the transfer of the Highview Note.

GTAC is a corporation incorporated in the province of Ontario. Due to the fact that, 50% of the issued and outstanding shares of GTAC is owned by a trust of which Jacqueline Boddaert, a director and officer of NorRock, is a discretionary beneficiary, and 50% is owned by a trust of which a holding company of Adam Gant is a discretionary beneficiary, NorRock intends to treat the transfer of the Highview Note as a related party transaction and voluntary comply with the requirements of MI 61-101.

It is currently anticipated that Malvin Spooner and Gary Brent will join the board of directors of NorRock The officers will include Jacqueline Boddaert, Chief Executive Officer and Raymond Steele, Chief Financial Officer. Biographies of the two anticipated new directors of NorRock are included below.

Malvin Spooner, Director, MA, MBA, CFA - Mr. Spooner was the Founder & President of Mavrix Fund Management Inc. He developed a family of mutual funds and limited partnerships which were distributed through the major banks and MFDA dealers across Canada. He is a former director of CanRock Energy Corp. (merged with Alston Energy Inc. May 2012) and is currently a director with Metals Creek Resources Corp.

Gary Brent, Director - Gary Brent has over 35 years of experience in the asset management industry. In addition to his current role as Co-Founder & Chairman of the HighView Financial Group of Companies - an Oakville based asset management firm serving affluent families, the pensions & investable assets of their businesses, and the foundations & endowments which they support - he was previously the Chairman and Chief Investment Officer of RBC Global Private Banking, the President and Chief Executive Officer of Canada Trust Investment Management Group prior to its sale to TD Bank in 2000, as well as one of the Founding Partners, President, CEO & Vice-Chairman of TAL Private Management prior to the sale of TAL Global Asset Management to CIBC in 1995.

The Reactivation Transaction is conditional upon, among other things, receiving all necessary regulatory and third party approvals and authorizations, the receipt of an independent valuation of the LaSalle Property, approval by the shareholders of NorRock, confirmation of no material adverse change having occurred to the LaSalle Property and Highview prior to close, the completion of definitive agreements setting forth the terms and conditions for the closing of the LaSalle Acquisition and the Highview Acquisition, the completion of due diligence satisfactory to each party, and the completion of a sponsorship report satisfactory to the Exchange (or waiver by the Exchange of that requirement).

Concurrent Financing

NorRock intends to complete a brokered private placement to raise up to $10,000,000 (the "Concurrent Financing") concurrently with its Reactivation Transaction by issuing up to 40,000,000 Class A shares at $0.25 per share. Proceeds raised will be used for acquisitions and general working capital purposes.

Sponsorship

NorRock is currently confirming the terms of a sponsorship relationship for this transaction with an Exchange member firm, which will be disclosed as soon as an engagement is formalized.

Capitalization

Post-closing of the Reactivation Transaction and the Concurrent Financing, NorRock will have approximately 74.3 million Class A Shares issued and outstanding. It is anticipated that the current shareholders of NorRock will collectively own approximately 6% of the issued and outstanding voting securities; the subscribers on the Concurrent Financing will collectively own approximately 54% of the issued and outstanding voting securities; IGW Industrial will own approximately 23.2 million Class A Shares, being approximately 31% of the issued and outstanding voting securities of NorRock; and GTAC will own approximately 6,200,000 Class A Shares, being approximately 8% of the issued and outstanding voting securities. As such, IGW Industrial will be an "insider" of NorRock for purposes of applicable securities laws. IGW Industrial GP Inc., the general partner of IGW Industrial, is a subsidiary of League IGW Real Estate Investment Trust, a real estate investment trust established under the laws of the province of British Columbia.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of NorRock should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.



Contacts:
NorRock Realty Finance Corporation
Jacqueline Boddaert
CEO
416-479-9510
JBoddaert@norrock.ca
www.norrock.ca





Source: Marketwire


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