On October 14, 2011, Imvescor Restaurant Group Inc. (TSX: IRG) (IRG) announced that it has entered into a subscription agreement (the Subscription Agreement) with Fairfax Financial Holdings Limited (TSX: FFH) (Fairfax) concerning a series of transactions intended to recapitalize IRG by repaying its existing 7.75% convertible extendible unsecured subordinated debentures maturing on December 31, 2011 (the Convertible Debentures) and provide additional cash to fund ongoing working capital.
Fairfax has agreed pursuant to the terms and conditions of the Subscription Agreement to invest C$10 million under the Debt and Warrant Private Placement and C$15 million under the Equity Private Placement. The Subscription Agreement provides that, under certain conditions, IRG is entitled to elect to proceed by an offering of rights to subscribe for common shares to its existing Shareholders (the Rights Offering) for gross proceeds of C$15 million, as an alternative to the Equity Private Placement. In the event the Company elects to proceed by Rights Offering, the Equity Private Placement will not occur. Fairfax has agreed, under certain circumstances, to provide a stand-by commitment to purchase all of the securities under a Rights Offering that are not acquired by the Company's existing Shareholders.
The refinancing transactions are conditional upon the approval of the Shareholders pursuant to the TSX rules and the Company's shareholder rights plan at the special meeting of the Shareholders to be held on or about November 21, 2011, consent of the senior lender of IRG, and the execution and delivery of a registration rights agreement granting Fairfax certain rights to cause IRG to file a prospectus under Canadian securities laws qualifying for distribution of all or any portion of securities held by Fairfax. In addition, Fairfax will be entitled, subject to certain conditions, to designate on the slate of nominated directors, at least 40% of the members of the Company's board of directors and the Chair of the board of directors. Fairfax will be designating such individuals to join the board of directors immediately after closing of the transactions.
The Subscription Agreement also provides for a termination plus reasonable fees and expenses incurred by Fairfax, payable to Fairfax in the event the Subscription Agreement is terminated in certain circumstances, provided that no termination fee will be payable if the refinancing transactions are not concluded due to a failure to obtain shareholder approval. It is anticipated that the closing will occur on or about December 20, 2011.
Fairfax Financial Holdings is a financial services holding company that is principally engaged in property and casualty insurance and reinsurance and the associated investment management.
Imvescor Restaurant Group, headquartered in Moncton, New Brunswick, is in the franchise business that operates four Canadian restaurant brands: Pizza Delight, Mikes, Scores and Baton Rouge.
Further information can be found on Canada News Wire.