TORONTO, July 28, 2011 /PRNewswire via COMTEX/ —
Maple Leaf Foods Inc. (“Maple Leaf” or
the “Company”) announced today changes approved by the Board of
Directors to further enhance the Company’s governance structure. These
include a new governance agreement (the “governance agreement”) with
Michael H. McCain, the Company’s President and CEO, and McCain Capital
Corporation (“MCC”), the Company’s largest shareholder, and the
adoption of a shareholder rights plan (the “rights plan”).
“These initiatives establish an enhanced governance framework for Maple
Leaf Foods,” said James Hankinson, Chair of the Special Committee. “We
go forward with a Board and management team that are intent on building
The Special Committee was constituted to consider, report on and make
recommendations to the Board of Directors on action to be taken by the
Company, if any, in connection with a proposed reorganization
transaction of MCC and the adoption of a shareholder rights plan. The
Special Committee is comprised of all of the directors of the Company
independent of Mr. McCain and MCC.
The governance agreement with MCC, which currently holds approximately
31.3% of the Company’s common shares outstanding, and Mr. McCain was
precipitated by a proposed reorganization transaction involving MCC
that the Company understands will result in Mr. McCain, the Company’s
President and CEO, acquiring all of the shares in Maple Leaf Foods
currently held by MCC. Upon completion of that transaction, the
Company understands that Mr. McCain will beneficially own or control
44,673,922 common shares of the Company, or approximately 31.9% of the
total shares outstanding.
Under the governance agreement, MCC, and upon completion of the
re-organization, Mr. McCain will have the right to nominate that number
of directors of the Company that is proportionate to its or his
ownership interest in the Company. Accordingly, based on the current
Board size of 13, MCC or Mr. McCain, as applicable, would be entitled
to nominate four directors. All other directors on the Board, other
than one director who is affiliated with West Face Capital Inc. (“West
Face Capital”), will, except in certain circumstances, be directors
independent of management, Mr. McCain, MCC and West Face Capital.
Shareholder Rights Plan
In addition, and upon the recommendation of the Special Committee, the
Board of Directors of Maple Leaf also voted to adopt the rights plan.
The rights plan contains customary market terms for a rights plan and
includes several provisions recommended as best practice by various
governance organizations. It follows a previous plan that was allowed
to expire on December 29, 2010.
The rights plan was not adopted in response to any actual or anticipated
transaction, but rather to allow the Board of Directors of Maple Leaf
and its shareholders sufficient time to consider fully any transaction
involving the acquisition or proposed acquisition of 20 percent or more
of the outstanding common shares of the Company. The plan allows the
Board of Directors time to consider all alternatives and to ensure the
fair treatment of shareholders should any such transaction be
The rights plan, which is effective immediately, will expire on the six
month anniversary of its adoption should shareholder approval of the
rights plan not be obtained prior to that time. The Company intends to
call and hold a special meeting of shareholders to approve the rights
plan within six months. If approved by shareholders, the rights plan
will need to be reconfirmed at the third and sixth annual meeting of
shareholders held after its adoption, or it will terminate. In any
event it will terminate at the end of the annual meeting of
shareholders held in 2020. Pursuant to the governance agreement, MCC
and upon completion of the reorganization, Mr. McCain, have agreed to
vote all of their shares in favour of the adoption of the rights plan.
One right has been issued with respect to each common share of Maple
Leaf issued and outstanding as of the close of business on July 27,
2011. These rights will become exercisable only when a person,
including any party related to it, acquires or attempts to acquire 20
percent or more of the outstanding common shares of Maple Leaf without,
among other things, complying with the “permitted bid” provisions of
the rights plan or without approval of the board of directors of the
Company. Should such an acquisition occur or be announced, each right
would, upon exercise, entitle a rights holder, other than the acquiring
person and related persons, to purchase common shares of Maple Leaf at
a 50 percent discount to the market price at the time.
Under the rights plan, a “permitted bid” is a bid made to all holders of
the common shares of Maple Leaf and which is open for acceptance for
not less than 60 days. If at the end of 60 days at least 50 percent of
the outstanding common shares, other than those owned by the offeror
and certain related parties have been tendered, the offeror may take up
and pay for the shares but must extend the bid for a further 10
business days to allow other shareholders to tender.
Current shareholders of the Company that have beneficial ownership of 20
percent or more of the common shares will not trigger the application
of the rights plan provided that they do not increase their ownership
of shares except through one of the exemptions set out in the rights
plan, which includes an exemption for the proposed reorganization
involving MCC and an un-related transaction involving the purchase of
up to 549,861 common shares by Mr. McCain from Wallace McCain’s former
personal investment company.
The TSX has informed the Company that it has deferred its approval of
the rights plan until such time as shareholders have ratified the
rights plan. This deferral is typical where an issuer has adopted a
rights plan within the past three years and the issuer did not obtain
shareholder approval within six months of its adoption. The Company’s
previous rights plan, adopted on June 29, 2010, expired without the
Company obtaining shareholder approval within the requisite time frame.
A material change report and the full text of the governance agreement
and the rights plan will be available at www.sedar.com.
This press release may contain forward-looking statements. These
statements are not guarantees of future performance and involve
assumptions and risks and uncertainties that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed, implied or forecasted in such forward-looking statements.
Factors that could cause actual results or outcomes to differ
materially from the results expressed, implied or forecasted by these
forward-looking statements are discussed more fully in the Company’s
filings with the securities regulatory authorities, including its
management’s discussion and analysis, all of which are available on
SEDAR at www.sedar.com. The Company does not intend, and the Company disclaims any obligation
to update any forward-looking statements, whether written or oral, or
whether as a result of new information, future events or otherwise
except as required by law.
Maple Leaf Foods Inc. is a leading food processing company,
headquartered in Toronto, Canada. The Company employs approximately
21,000 people at its operations across Canada and in the United States,
the United Kingdom, and Asia. The Company had sales of $5.0 billion in
SOURCE Maple Leaf Foods Inc.