TORONTO, Nov. 20 /CNW/ - Canadex Resources Limited (the "Company") (TSX:CDX) announces that it has entered into a definitive support agreement ("Support Agreement") pursuant to which Student Transportation of America Ltd. ("STA") will offer to acquire (the "Offer") all of the outstanding common shares ("Common Shares") of the Company for cash consideration of $5.72 per Common Share and all of the outstanding Class A preferred shares ("Preferred Shares") of the Company for cash consideration of $1.00 per Preferred Share.
The consideration under the Offer represents a 35% premium over the market price of the Common Shares as of April 27, 2007, the day prior to the announcement of the strategic review process by the Company, and a 12% premium over the closing market price of the Common Shares on November 19, 2007.
The board of directors of the Company, based on the recommendation of its special committee of independent directors, has unanimously resolved to recommend that holders of Common Shares and Preferred Shares accept the Offer. Sun Pac Foods Limited and John Riddell, who collectively hold 35% of the outstanding Common Shares and 70% of the outstanding Preferred Shares, have agreed to tender all Common Shares and Preferred Shares that they own to the Offer. KPMG Corporate Finance is acting as financial advisor to Canadex and has provided the board of directors with a fairness opinion that the consideration to be received by holders of the Common Shares and Preferred Shares pursuant to the Offer is fair from a financial point of view.
The Support Agreement provides for the payment by the Company of a break fee equal to $1.4 million in certain circumstances, and reimbursement by the Company of STA's expenses up to $500,000 under certain other circumstances. The Support Agreement also provides for reimbursement by STA of the Company's expenses up to $500,000 under certain circumstances. In addition, the Support Agreement includes a non-solicitation covenant on the part of the Company and a right in favour of STA to match any competing offers.
The Offer will be conditional upon acceptance by holders of not less than 66 2/3% of the Common Shares and Preferred Shares as well as receipt of all necessary regulatory approvals and other customary conditions, including the entering into of non-competition and/or employment agreements with certain members of management. A take-over-bid circular containing the terms of the Offer will be mailed to the holders of Common Shares and Preferred Shares, together with a directors' circular and other related documents, on or before December 11, 2007. The Offer, unless extended, will expire 36 days from its commencement, subject to receipt of any required regulatory approvals.
STA is the fourth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. STA has become a leading school transportation and management company by aggregating operations through the consolidation of existing providers and conversion of in-house operations. STA currently operates more than 5,000 school vehicles in North America. For more information, please visit www.sta-ips.com. The cash consideration under the Offer will be financed with cash balances on hand at the time of closing and STA's existing credit facility.
Canadex Resources Limited Profile
The Company is a transportation and energy company consisting of two distinct and separately managed business segments. The school bus division is one of the largest independent school bus operators in Ontario and its energy division holds minority non-operating positions in oil and gas investments in the U.S.
