Livingston underwhelmed by Mullen proposal

TORONTO — With two suitors knocking on the door, unitholders of Livingston International Income Fund have about a week to decide their future.

About two weeks ago, the Mullen Group made an all-stock bid for the customs and brokerage firm, which was expected to rival a previous bid made by the Canada Pension Plan Investment Board and Sterling Partners.

After a review, the Livingston’s board of trustees and the Special Committee have recommended the company’s unitholders vote in favour of the CPPIB/Sterling bid at special meeting, currently scheduled for Nov. 24.

Under Mullen’s proposal, Mullen would acquire all of the outstanding trust units of Livingston on the basis of 0.566 of a common share of Mullen for each unit.

The Special Committee of Livingston had previously advised Mullen that it was not in a position to consider whether the Mullen proposal might be a "superior proposal" in compared with the acquisition agreement between CPPIB/Sterling and Livingston. According to Livingston, the reason is Mullen’s unwillingness to pay the $3.5 million in expenses and the $6.5 million escrow break fee payment required by the CPPIB/Sterling acquisition agreement, after being advised that such payments would be a necessary condition to Livingston entering into a definitive agreement with Mullen.

Furthermore, Mullen has refused provide a cash alternative and/or a minimum exchange value in its all-share offer. The Special Committee expects that it is unlikely that Livingston unitholders would support the Mullen proposal as it currently stands.

Under the CPPIB/Sterling acquisition agreement, Livingston’s trustees have agreed to support the transaction unless a proposal that they consider to be a "superior proposal" is made and that CPPIB/Sterling would be unwilling to match.

Any change in recommendation by Livingston’s board of trustees of the CPPIB/Sterling transaction could lead to a $10 million break fee (including $3.5 million in expense reimbursement) payable by Livingston to CPPIB/Sterling.

Unitholders are advised that the offer by Mullen includes a plan of arrangement that has not yet been reviewed in detail by Livingston from a tax or commercial perspective. Although Mullen is party to a confidentiality agreement, it is not subject to any standstill obligations in favour of Livingston.

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