Rocky Mountain Dealerships Inc. Announces End of Go-Shop Period and Confirms No Superior Proposal Was Submitted During the Go-Shop Period; Re-Affirms Support for Previously Announced Going-Private Transaction

December 07, 2020 8:00 AM EST | Source: Rocky Mountain Dealerships Inc.

Calgary, Alberta--(Newsfile Corp. - December 7, 2020) - Rocky Mountain Dealerships Inc. (TSX: RME) ("RME" or the "Company") today announces the expiration of the 35-day go-shop period (the "Go-Shop Period") provided for in the arrangement agreement dated November 1, 2020 (the "Arrangement Agreement") between RME and 2223890 Alberta Ltd. ("AcquireCo"), pursuant to which AcquireCo will acquire all of the issued and outstanding common shares of RME (the "RME Shares") held by RME shareholders (the "RME Shareholders"), other than certain shares held by interested parties, in exchange for $7.00 in cash (the "Cash Consideration") for each such RME Share (the "Proposed Transaction").

No Superior Offer Submitted

During the Go-Shop Period, RME and its representatives actively solicited, encouraged and initiated discussions with third parties that expressed an interest in acquiring RME, which resulted in a broad market check to ensure that value is maximized for RME Shareholders. RBC Capital Markets ("RBC"), RME's financial advisor, contacted 49 parties, including both strategic and financial buyers. Of the parties contacted, six entered into confidentiality agreements with RME and were granted access to non-public information about RME, including the Company's business plan and financial forecast. RME did not receive any acquisition proposal during the Go-Shop Period.

Board Recommendation

Following the conclusion of the Go-Shop Period, the board of directors of RME (the "Board"), at the request of AcquireCo, is reconfirming its prior recommendation that RME Shareholders vote FOR the Proposed Transaction at the special meeting of RME Shareholders to be conducted virtually on December 17, 2020. The Board also reaffirms its conclusions that the Cash Consideration is fair, from a financial point of view, to the RME Shareholders (except for the interested parties as it relates to RME Shares owned or controlled by them) and that the Arrangement and the entering into of the Arrangement Agreement are in the best interests of RME.

Reasons to Support the Transaction

  • Compelling Value Proposition and Attractive Premium: The Cash Consideration represents an attractive 27% premium to the Company's share price prior to the announcement of the Proposed Transaction.

  • Certainty of Value and Liquidity: The Proposed Transaction represents a unique opportunity for RME Shareholders to immediately monetize their investment in historically illiquid RME Shares for cash at significant premium.

  • Supported by Fairness Opinions and Independent Valuation: Each of the RBC fairness opinion (as at November 1, 2020) and the Deloitte LLP ("Deloitte") fairness opinion (as at November 1, 2020) provides that, subject to the assumptions, limitations and qualifications contained in such fairness opinion, the Cash Consideration to be received by the RME Shareholders (except for certain shares held by interested parties) pursuant to the Arrangement is fair, from a financial point of view, to such RME Shareholders. In addition, Deloitte was engaged on a fixed-fee basis to provide an independent formal valuation of the RME Shares pursuant to Multilateral Instrument 61-101, and determined that the fair market value of the RME Shares is in a range of $6.85 to $7.90 per RME Share.

  • Significant Risk if the Proposed Transaction is not Completed: There are a number of material risks to which RME is subject to relating to the Arrangement not being completed, including the following:

    • the price of the RME Shares may decline from the current market price which generally reflects a market assumption that the Arrangement will be completed, particularly as event-driven and other non-fundamental holders of RME Shares liquidate their positions;

    • trading in the RME Shares is likely to remain relatively illiquid;

    • certain costs related to the Arrangement, such as legal, accounting, financial advisory, as well as, in certain limited circumstances, as set out in the Arrangement Agreement, the Break Fee may be payable by RME if the Arrangement is not completed; and

    • RME will continue to be subject to various risks related to its ongoing business. Considering the current market conditions, if the Company continues as a public corporation there is a risk that, over time, the Company may have higher costs generally than many of its non-public competitors as well as higher debt and continued limited access to capital on a cost-competitive basis, which may adversely impact the Company's growth plans.

The Special Meeting of RME Shareholders

The special meeting of RME Shareholders will be a virtual only meeting, to be held on December 17, 2020 at 10:00 a.m. (Calgary time) (the "Meeting"). At the Meeting, RME Shareholders will vote on the proposed transaction to take the Company private. The Meeting will be held via live webcast at www.virtualshareholdermeeting.com/RCKXF2020.

For Questions or Voting Assistance Contact RME's Proxy Solicitation Agent

Laurel Hill Advisory Group
North American Toll-Free: 1-877-452-7184 (1-416-304-0211 outside North America)
Email: assistance@laurelhill.com

About Rocky Mountain Dealerships Inc. (TSX: RME)

RME is Canada's largest agriculture equipment dealer with branches located throughout Alberta, Saskatchewan, and Manitoba. Through its dealer network, RME sells, rents, and leases new and used agriculture equipment and offers product support and finance to its customers.

Additional information about RME is available at www.rockymtn.com and on SEDAR at www.sedar.com.

For investor and media inquiries please contact:
Jerry Schiefelbein, Chief Financial Officer
403-214-5639
jschiefelbein@rockymtn.com

Reader Advisory

All references to "$" are to Canadian dollars, unless otherwise indicated.

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking statements and information concerning: the holding and timing of, and matters to be considered at the special meeting of holders of RME Shares in connection with the Arrangement as well as with respect to voting at such special meeting; and potential risks to RME if the Arrangement is not completed.

Although RME believes that the expectations and assumptions on which such forward looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information as RME cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with: RME's ability to continue to manage the effect of the COVID-19 pandemic on its operations; default under the Company's credit facilities and/or the Company's senior notes due to a breach of covenants therein; the impact of events of defaults in respect of other material contracts of the Company; failure to satisfy all conditions to completion of the Arrangement; failure to receive all applicable regulatory, court, third party and other stakeholder approvals in respect of the Arrangement; global economic conditions; along with those risk and uncertainties identified under the heading "Risk Factors" and elsewhere in the Company's annual information form dated March 10, 2020 and filed on SEDAR at www.sedar.com.

The forward-looking statements and information contained in this press release are made as of the date hereof and RME does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This press release is not an offer of securities for sale in the United States.

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