The Securities Portfolio consists of two portfolios and six tranches of commercial mortgage-backed securities with an aggregate face value of $10,167,562. The mortgages are secured by various non-residential properties located in Canada. The tranches of securities have S&P ratings of B, B-, and unrated.
The LaSalle Acquisition together with the Portfolio Acquisition are 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.
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 Portfolio 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 will retain Green Tree Capital Management Corp. ("Green Tree"), a company established under the laws of the Province of Ontario, wherein Green Tree will be engaged to provide administrative services as well as the individuals to fill the senior management positions of NorRock. The terms of the management agreement have not been finalized but it is expected they will be at market rates for comparable services.
Green Tree owns approximately 20% of the issued and outstanding Class A Shares of NorRock. 50% of the shares of Green Tree are owned by Green Tree 2010 Trust. A holding company of Adam Gant and League Assets Corp. are beneficiaries of Green Tree 2010 Trust.
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. The estimated purchase price will be satisfied by issuing 23.2 million class A shares (the "Class A Shares"), a promissory note of $2.2 million (the "Promissory Note"), and by the assumption of indebtedness of IGW Industrial in the amount of $9 million. The foregoing amounts are estimates only. The final purchase price and the number of shares to be issued and amount of the assumption of debt by NorRock in satisfaction therefore are subject to adjustment on or prior to closing to reflect ongoing repayment and related activities up to the closing date of the transaction. The Class A Shares shall be issued at a deemed issuance price of $0.25 per share. The Promissory Note will bear interest at 2% per annum, payable quarterly, and shall have a maturity date of August 1, 2016.2. NorRock will acquire indirectly the Securities Portfolio for an estimated purchase price of $6.3 million. The estimated purchase price will be satisfied by issuing 25.3 million Class A Shares. The Class A Shares shall be issued at a deemed issuance price of $0.25 per share. IGW Seg Debt 1 and IGW Seg Debt 2 will distribute the Class A Shares received on the Portfolio Acquisition to their various unit holders.