Melcor REIT recommends unitholders exercise caution regarding mini-tender

Melcor Real Estate Investment Trust issued a response to the unsolicited “mini-tender” offer initiated by FC Private Equity Realty Management Corp. and Telsec Property Corporation for up to a maximum of 1,296,316 participating trust units of Melcor REIT, with the independent committee of the board of trustees of the REIT recommending holders of Units EXERCISE CAUTION regarding the Mini-Tender. Further, the Independent Committee is deeply troubled by the actions of the Dissidents and their reckless approach that has ignored several basic safeguards and Unitholder protections under Canadian securities laws and wishes to provide an update to Unitholders as it considers its legal recourse to protect Unitholders. The Independent Committee, in consultation with its financial and legal advisors, has reviewed the Dissidents’ Mini-Tender and considered numerous factors in reaching its recommendation. Consideration of the Mini-Tender has also been weighed in the context of the previously announced plan of arrangement with Melcor Developments (MODVF). Although the Mini-Tender proposes the same consideration of $4.95 per Unit as the Arrangement, unlike the Arrangement, the Mini-Tender is only narrowly available to a small fraction of Unitholders and available only on a “first-come, first-served” basis; whereas under the Arrangement, ALL Unitholders will receive $4.95 per Unit. Unitholders are also cautioned that the Dissidents have criticized the $4.95 consideration under the Arrangement while simultaneously offering the exact same amount under the Mini-Tender. Accordingly, it can be inferred from the Dissidents’ actions that $4.95 is not good enough for them, but it is good enough for other Unitholders. The Dissidents have structured the Mini-Tender to pressure Unitholders who support the Arrangement to tender their Units to the Mini-Tender out of fear that, if the Dissidents are successful in defeating the Arrangement, ALL Unitholders will have lost the opportunity to receive $4.95 for their Units. Since the Mini-Tender is only open to a maximum of 10% of Units, Unitholders are essentially tendering to a lottery in hopes of receiving the same consideration as the Arrangement, but if the Dissidents achieve their desire of defeating the Arrangement, the vast majority of Unitholders will likely see their Units return to similar trading levels seen before the announcement of the Arrangement. Moreover, Unitholders are warned that the Mini-Tender is highly conditional and can be withdrawn, varied or extended for any reason and at any time given the extremely broad and discretionary conditions attached to the Mini-Tender. The Dissidents’ Mini-Tender is prejudicial to Unitholders’ interests and is designed to create uncertainty to entice Unitholders to act quickly, in a manner that may be contrary to their own interests.