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Empire and Sobeys Announce Agreement to Sell 68 Canada Safeway Properties to Crombie REIT for $990 Million and Empire Announces

Empire and Sobeys Announce Agreement to Sell 68 Canada Safeway Properties to 
Crombie REIT for $990 Million and Empire Announces $150 Million Equity 
Investment in Crombie REIT 
NOT FOR DISTRIBUTION IN THE U.S. 
STELLARTON, NS, July 24, 2013 /CNW/ - Empire Company Limited ("Empire" or the 
"Company") (TSX: EMP.A) and its wholly-owned subsidiary, Sobeys Inc. 
("Sobeys"), have announced that Sobeys has reached a definitive agreement to 
sell 68 properties (the "Properties") representing approximately 3.0 million 
square feet of gross leasable area to Crombie Real Estate Investment Trust 
("Crombie REIT") for an aggregate purchase price of $990 million in cash, 
subject to certain customary adjustments (the "Sale Leaseback Transaction"). 
All the properties are located in Western Canada, with 39.6 percent of the 
Properties' gross leasable area located in British Columbia, 42.6 percent in 
Alberta, 4.8 percent in Saskatchewan and 13.0 percent in Manitoba. 
On June 12, 2013, Empire and Sobeys announced that Sobeys had reached a 
definitive agreement with Safeway Inc. to acquire substantially all of the 
assets of Canada Safeway Limited ("Canada Safeway") for a cash purchase price 
of Cdn. $5.8 billion, subject to a working capital adjustment, plus the 
assumption of certain liabilities. That announcement disclosed Sobeys' 
intention that financing for the acquisition included a $1.0 billion sale 
leaseback of acquired real estate assets and that Crombie REIT had a right of 
first offer in respect of any real estate sales undertaken by Sobeys. The 
Sale Leaseback Transaction announced today is the conclusion of that 
negotiation process. The proceeds from this transaction will be used to 
assist in the financing of the acquisition of Canada Safeway by Sobeys. 
Paul D. Sobey, President and CEO of Empire stated, "We are pleased to announce 
this Sale Leaseback Transaction between Sobeys and Crombie REIT. The sale 
proceeds will be used by Sobeys to assist in the funding of the Canada Safeway 
acquisition which provides Sobeys with a much stronger presence in Western 
Canada and allows them to benefit from increased economies of scale. The Sale 
Leaseback Transaction provides Crombie REIT with an attractive portfolio of 
assets. Empire is pleased to announce that it will purchase $150 million of 
Crombie Class B Limited Partnership units." 
As a condition of closing, wholly-owned subsidiaries of Sobeys, as tenant, 
will enter into fully net leases for each of the Properties (the "Sobeys 
Leases") with any third party tenants occupying any portion of any Properties 
becoming a tenant of Sobeys. The aggregate annual basic rent under all the 
Sobeys Leases is $57.1 million increasing annually by 1.5 percent per year, 
with such increases being phased in over time and applied to 20 percent of the 
Properties in each year following closing. The leases will be fully net to 
the landlord, such that Sobeys shall be responsible for all property taxes, 
insurance, maintenance and structural repairs during the term of the lease, 
and will otherwise provide for retail food store and any other lawful retail 
use subject to certain customary limitations, acting reasonably. Each lease 
will be based on an initial term of three years and thereafter alternate 
between successive terms of two years and three years until an outside date 
for each Property of between 15 years and 20 years after the date of the 
Sobeys Leases (the "Outside Date"), which Outside Date may be extended at 
Sobeys' option by up to ten consecutive further periods of five years each. 
Crombie REIT has announced that in order to partially finance the Sale 
Leaseback Transaction it has entered into an agreement to sell to a syndicate 
of underwriters on a bought deal basis approximately $225 million of 
subscription receipts which are convertible into Crombie REIT trust units, and 
$75 million principal amount of extendible convertible debentures which are 
exchangeable into Crombie REIT trust units. In satisfaction of its pre-emptive 
rights under Crombie REIT's offering, a wholly-owned subsidiary of Empire has 
agreed to purchase $150 million of Crombie Class B Limited Partnership units 
at the same price per unit as the Crombie REIT subscription receipts on a 
private placement basis. Each Crombie Class B Limited Partnership unit is 
convertible into one Crombie REIT trust unit. Empire's additional investment 
in Crombie REIT is expected to be completed upon the closing of the Sale 
Leaseback Transaction at which time the Crombie REIT subscription receipts 
will be exchanged into Crombie REIT trust units. 
The Company expects to fund Empire's additional investment in Crombie REIT 
from proceeds from the exercise of the over-allotment option, if any, in 
respect of the Company's $1.6 billion subscription receipt offering announced 
earlier today and drawing on its revolving credit facility. As a result of 
Empire's additional investment in Crombie REIT, its ownership interest in 
Crombie REIT is expected to be reduced from 42.7 percent to approximately 42.1 
percent (from 40.8 percent to approximately 39.3 percent on a fully diluted 
basis). 
The Sale Leaseback Transaction is conditional upon the satisfaction of certain 
customary conditions, as well as upon: (i) the closing of the Canada Safeway 
acquisition; (ii) regulatory approval; (iii) the receipt of Crombie REIT 
unitholder approval, including minority approval for a related party 
transaction; and (iv) Sobeys providing to Crombie REIT an unlimited 
environmental indemnity with respect to each of the Sale Leaseback Properties 
in respect of which Crombie REIT has not been able to complete its customary 
environmental due diligence. The Sale Leaseback Transaction includes 
procedures under which individual properties may be removed by either party 
for reasons which include regulatory or environmental concerns as well as 
procedures under which properties removed may be replaced, and must be 
replaced if the removal of properties causes the aggregate purchase price for 
the Sale Leaseback Transaction to fall below $900 million. The Sale Leaseback 
Transaction is expected to close concurrently with the closing of the Canada 
Safeway acquisition. 
FORWARD-LOOKING INFORMATION 
This news release contains forward-looking information reflecting management 
of the Company's expectations regarding the possible sale of properties by 
Sobeys to Crombie REIT. The forward-looking statements in this news release 
are subject to a number of risks and uncertainties that could cause actual 
events or results to differ materially from current expectations. No assurance 
can be given that the sale of properties to Crombie REIT will be completed, or 
the timing of the closing of such sales. Some of the factors that could 
affect the closing of the Sale Leaseback Transaction include: (i) those 
relating to Crombie REIT obtaining appropriate financing and unitholder 
approval; (ii) the need to obtain relevant regulatory approval for the 
acquisition of substantially all of the assets and select liabilities of 
Canada Safeway by Sobeys, including the satisfaction of other closing 
conditions; and (iii) other risks as described in detail from time to time in 
documents filed by Empire or Sobeys with security regulatory authorities in 
Canada. 
Neither the Company nor Sobeys undertakes to update any forward-looking 
statements that may be made from time to time by them or on their behalf other 
than as required by applicable securities laws. 
This news release shall not constitute an offer to sell or the solicitation of 
an offer to buy, nor shall there be any offer, solicitation or sale of the 
securities in any state in which such offer, solicitation or sale would be 
unlawful. 
ABOUT EMPIRE 
Empire Company Limited (TSX: EMP.A) is a Canadian company headquartered in 
Stellarton, Nova Scotia. Empire's key businesses include food retailing and 
related real estate. With over $17 billion in annual sales and approximately 
$7.1 billion in assets, Empire and its subsidiaries directly employ 
approximately 47,000 people. 
Additional financial information relating to Empire, including the Company's 
Annual Information Form, can be found on the Company's website at 
www.empireco.ca or at www.sedar.com. 
ABOUT SOBEYS 
Proudly Canadian, with headquarters in Stellarton, Nova Scotia, Sobeys has 
been serving the food shopping needs of Canadians for 106 years. A 
wholly-owned subsidiary of Empire Company Limited (TSX: EMP.A), Sobeys owns or 
franchises more than 1,300 stores in all 10 provinces under retail banners 
that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods, as well as 
Lawton's Drug Stores, in addition to over 260 retail fuel locations. Sobeys 
and its franchise affiliates employ more than 95,000 people. The company's 
goal is to be widely recognized as the best food retailer and workplace 
environment in Canada. More information on Sobeys Inc. can be found at 
www.sobeyscorporate.com. 
ABOUT CROMBIE REIT 
Crombie Real Estate Investment Trust is an unincorporated, open-ended real 
estate investment trust established under, and governed by, the laws of the 
Province of Ontario. The trust invests in income-producing retail, office 
and mixed-use properties in Canada, with a future growth strategy focused 
primarily on the acquisition of retail properties. Crombie REIT currently 
owns a portfolio of 176 commercial properties in nine provinces, comprising 
approximately 14.5 million square feet of gross leasable area. More 
information about Crombie REIT can be found at www.crombiereit.com. 
Paul V. Beesley Executive Vice President & Chief Financial Officer Empire 
Company Limited (902) 755-4440 
Paul Jewer Chief Financial Officer Sobeys Inc. (902) 752-8371 
SOURCE: EMPIRE COMPANY LIMITED 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/July2013/24/c9128.html 
CO: SOBEYS INC.
ST: Nova Scotia
NI: FIN FBR FOD REL FDR REL FIN MNA  
-0- Jul/24/2013 19:28 GMT
 
 
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