Catalyst Capital Group Inc. will get the opportunity to press its case against a privatization of Hudson’s Bay Co. at the Ontario Securities Commission next Wednesday, less than a week before shareholders are scheduled to vote on the $1.1-billion plan.
A lawyer for HBC executive chairman Richard Baker, who is leading the majority group making the cash bid, accused Catalyst at a scheduling meeting Thursday of dragging out the OSC process as one way of trying to influence minority investors to vote against the offer, or to get the Dec. 17 special meeting on the arrangement pushed back.
For its part, Catalyst – the largest and loudest dissident HBC shareholder – said it aims to file materials supporting its case on Friday and Saturday and wants to bring an expert into the proceedings to take issue with the real estate valuations HBC had completed as part of its study of Mr. Baker’s offer.
At the end of a testy exchange, OSC vice-chairman Grant Vingoe ruled that the commission will decide next Wednesday whether Catalyst has standing to press its objections, and if it does, proceed with the hearing right away. The process could last three days, according to the schedule.
Baker group lawyer Eliot Kolers expressed his displeasure at the tight deadline to respond to Catalyst’s materials before proceedings resume next week, and said he expects the dissident to keep up its public campaign as the OSC process goes on. “This has all the hallmarks – we’re going to see a press release a day until the day of the vote,” he said.
Mr. Vingoe said Catalyst’s complaints, if not all the details, are known so it shouldn’t be too difficult to respond in time.
It is the latest flare-up involving Catalyst, the Toronto-based private-equity concern, and the majority shareholders led by Mr. Baker, who have offered $10.30 a share in cash. The bid has the blessing of the HBC board’s special committee. On Monday, the committee rejected Catalyst’s own $11-a-share proposal, saying it could not proceed because the Baker group, which has 57 per cent of the stock, would not sell.
Catalyst, which has amassed 17.5 per cent of the shares, complained to the regulator that the Baker group bid assembled using inside information unavailable to other shareholders. The group also includes Rhone Capital LLC, WeWork Property Advisors, Hanover Investments (Luxembourg) SA and Abrams Capital Management LP.
Catalyst has called the process flawed and coercive. It wants the OSC to block the Baker group bid, or force it to amend its takeover information circular to add details that it claims were misrepresented or omitted.
In its complaint, it alleges the Baker group was armed with inside details of HBC’s $1.5-billion sale of European holdings when it announced its intention to buy out the minority shareholders in June. The European deal was announced on the same day.
It also questions appraisals of HBC’s real estate, which are far lower than those completed years before the bid was announced. It specifically pointed to its flagship Saks Fifth Avenue store in midtown Manhattan, which was most recently appraised at $1.6-billion. Catalyst complained that that undervalued the location, based on previous assessment work. Catalyst lawyer Adam Chisholm said the expert witness would argue why he believes the most recent valuation is flawed.
The Baker group has shot back at Catalyst, saying shareholders should not be “misled” by Catalyst’s statement that it will seek an auction process for the company or try to advance its own bid.
“Shareholders need to understand that there is no $11 offer from Catalyst available to shareholders; there never will be, as recognized by the special committee," it said in a statement, adding it would not act in partnership with Catalyst “now or in the future.”
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Jeffrey Jones