Melcor REIT Moves Forward with Redemption of Debentures

Melcor REIT Announces Redemption Details for Debentures

Melcor Real Estate Investment Trust (TSX: MR.UN), based in Alberta, has recently communicated significant updates regarding the redemption of its 5.10% convertible unsecured subordinated debentures. This announcement follows the issuance of a notice to holders of these Debentures, which will facilitate a planned reduction in outstanding debt and streamline the company's financial obligations.

Understanding the Redemption Process

The redemption of the Debentures is scheduled to occur on December 12, 2024. Each $1,000 principal amount of the Debentures will be redeemed for a total of $1,023.05, which includes the principal plus accrued interest. This move is designed to provide clarity and assurance to investors holding the Debentures, reaffirming Melcor REIT’s commitment to maintaining robust financial practices.

Conversion Opportunity for Debenture Holders

Prior to the redemption date, holders will have the option to convert their Debentures into trust units at a conversion price of $8.90 per Unit. This presents a valuable opportunity for investors as they can decide whether to hold onto their Units or redeem for cash. The conversion process is available until December 11, 2024, allowing time for holders to assess their strategies.

Logistics of Conversion

Investors interested in converting their Debentures will receive approximately 112.36 Units for each $1,000 principal amount converted. It's important to note that no fractional Units will be issued; instead, investors will receive cash equivalent based on the current market price on the conversion date. This flexibility can provide beneficial outcomes for investors, depending on market conditions.

Delisting from the TSX

As Melcor REIT proceeds with the redemption and repayment of the Debentures, it anticipates that these securities will be delisted from the Toronto Stock Exchange (the TSX) shortly thereafter. This action is contingent upon receiving TSX approval as part of the ordinary course procedure, underscoring the strategic nature of this financial decision.

Support from Financial Partners

In connection with this process, Melcor REIT has secured necessary consents from their lending partners, ATB Financial and Canadian Western Bank. This essential support facilitates the company’s financial operations and strengthens its position during this transition. The lenders have acknowledged the transactions related to the Arrangement Agreement and other related funding agreements, providing the required waivers for any associated compliance issues.

About Melcor REIT

Melcor REIT operates as an unincorporated, open-ended investment trust, specializing in the ownership, acquisition, management, and leasing of quality retail, office, and industrial properties within western Canadian markets. Their portfolio is substantial, comprising 36 properties that offer approximately 3.072 million square feet of gross leasable area across various regions.

Frequently Asked Questions

What are the details of the Debenture redemption?

The Debentures will be redeemed at $1,023.05 each on December 12, 2024, with a conversion price of $8.90 per Unit available until December 11, 2024.

How many Units will I receive if I convert?

Investors will receive approximately 112.36 Units for every $1,000 principal amount of Debentures converted.

Will the Debentures continue to trade post-redemption?

No, the Debentures will be delisted from the TSX following the redemption process.

When should I submit my Conversion Notice?

Conversion Notices should be submitted before December 11, 2024, to ensure successful processing.

Who are the lenders supporting Melcor REIT?

ATB Financial and Canadian Western Bank are key lenders, having provided consent for the current financial arrangements involving the REIT.

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