Last updated on April 18, 2014 at 7:15 EDT

ShawCor Enters Into Agreement With Its Controlling Shareholder To Eliminate Its Dual Class Share Structure

January 14, 2013


TORONTO, Jan. 14, 2013 /PRNewswire/ – ShawCor Ltd. (TSX: SCL.A, SCL.B)
(“ShawCor” or the “Company”) announced today that the Board of
Directors of ShawCor, after careful analysis, consideration and advice
from the special committee of independent directors (the “Special
Committee”), and advice from independent financial and legal advisors,
has unanimously approved and the Company has entered into a definitive
agreement with respect to a reorganization proposal negotiated by the
Special Committee with ShawCor’s controlling shareholder (the
“Controlling Shareholder”). The Chair and the Vice-Chair abstained from
voting on the transaction.

The proposed reorganization is to be implemented pursuant to a
court-approved plan of arrangement under the Canada Business Corporations Act. The shareholders’ meeting to consider the arrangement is expected to
take place in late March of this year. The arrangement will require a special resolution of
ShawCor shareholders approving the transaction in addition to approvals
required under applicable securities laws.

The arrangement also requires approval by the Ontario Superior Court of
Justice at a hearing to be held following the shareholders’ meeting. If
approved, the arrangement is expected to close late in the first
quarter of 2013 or early in the second quarter.

The Special Committee retained TD Securities Inc. (“TD Securities”) to
act as its financial advisor and to provide an independent fairness
opinion, and received independent legal advice from Stikeman Elliott
LLP. Kingsdale Shareholder Services Inc. has been retained as proxy
solicitation agent.

Terms of the Transaction

The reorganization proposal contemplates the elimination of ShawCor’s
dual class share structure through the purchase of all of the Class A
and Class B shares of ShawCor by a newly formed Canadian corporation.
The new corporation would purchase all of the Class A shares of ShawCor
in exchange for new common shares on a 1:1 basis. The new corporation
would also acquire all of the Class B shares of ShawCor in exchange for
a mix of new common shares and cash. The consideration paid for the
Class B shares of ShawCor will be $43.43 in cash or 1.1 new common
shares per Class B share, such that 90% of the total consideration will
be paid in cash and 10% of the total consideration will be paid in new
common shares. At closing, a special dividend of $1.00 per share would
be paid on all remaining shares (the record and payment dates for such
dividend remain to be determined) and the new corporation and ShawCor
would amalgamate, under the name ShawCor Ltd. All issued and
outstanding shares would as a result be the same class of common

The closing conditions of the reorganization proposal include, among
others, receipt of required ShawCor shareholder approvals, receipt of
Toronto Stock Exchange approval, receipt of court approvals, there
being no material adverse change in the affairs of ShawCor or
applicable laws, and sufficient financing being available to complete
the transactions contemplated in the reorganization. ShawCor’s board
would also retain a “fiduciary out” ability to change its
recommendation to shareholders.

Recommendation of the Board and the Special Committee

In approving the definitive agreement and making its recommendation that
shareholders (other than the Controlling Shareholder) vote in favour of
the reorganization proposal, the Board of Directors and the Special
Committee considered the fairness opinion prepared by TD Securities and
a number of other factors relating to the fairness of the
reorganization proposal.

The factors relating to fairness considered by the Board and the Special
Committee included, among others, the following:

        --  The reorganization transaction is expected to be accretive to
            ShawCor from an earnings per share perspective.
        --  The premium to the current trading price and resulting dilution
            to Class A shareholders is within the range of precedents
            generally for similar types of transactions.
        --  The Special Committee has received a fairness opinion from TD
            Securities that the consideration to be paid to the Class B
            shareholders pursuant to the Arrangement is fair, from a
            financial point of view, to the Class A and Class B
            shareholders, other than the Controlling Shareholder.
        --  The elimination of the Class B shares may facilitate future
            change of control transactions following the completion of the
            transaction. It will also result in a widely held single class
            structure, and is expected to diversify ShawCor's shareholder
            base, as many investment mandates exclude investment in
            companies with dual class structures, and to increase liquidity
            and provide for enhancing financing flexibility going forward.
        --  The transaction is subject to shareholder and court approval,
            and shareholders will be provided with dissent rights.
        --  After completion of the transaction, all remaining shareholders
            will receive a $1.00 per share special dividend.

Notice to Investors

This news release is for informational purposes only and is not an offer
to buy or the solicitation of an offer to sell any securities.

Forward Looking Information

This document includes certain statements that reflect the Board’s and
the Special Committee’s expectations and objectives for the Company’s
future performance, opportunities and growth, which statements
constitute forward-looking information under applicable securities
laws. Such statements, other than statements of historical fact, are
predictive in nature or depend on future events or conditions. Forward
looking information involves estimates, assumptions, judgments and
uncertainties. These statements may be identified by the use of
forward-looking terminology such as may , will , should ,
anticipate , expect , believe , predict , estimate , continue ,
intend , plan , possibility and unlikely , and variations of
these words or other similar expressions.

Forward looking information involves known and unknown risks and
uncertainties that could cause actual results to differ materially from
those predicted by the forward looking information. We caution readers
not to place undue reliance on forward looking information, as a number
of factors could cause actual events, results and prospects to differ
materially from those expressed in or implied by the forward looking
information. Significant risks facing the Company include, but are not
limited to: changes in global or regional economic activity and changes
in energy supply and demand, which impact on the level of drilling
activity and pipeline construction; exposure to product and other
liability claims; shortages of or significant increases in the prices
of raw materials used by the Company; compliance with environmental,
trade and other laws; political, economic and other risks arising from
the Company’s international operations; fluctuations in foreign
exchange rates, as well as other risks and uncertainties, as more fully
described under the heading “Risks and Uncertainties” in the Company’s
annual MD&A; as well as the possible effects of a change of control or
other significant transaction.

When considering the forward looking information in making decisions
with respect to the Company, readers should carefully consider the
foregoing factors and other uncertainties and potential events. The
Company does not assume the obligation to revise or update forward
looking information after the date of this document or to revise it to
reflect the occurrence of future unanticipated events, except as may be
required under applicable securities laws.

Additional Information

The foregoing description of the proposed transaction does not purport
to be complete and is qualified in its entirety by reference to the
copy of the definitive agreement entered into by ShawCor in respect of
the reorganization proposal, which will be available at www.sedar.com. ShawCor cautions shareholders and others considering trading in
securities of ShawCor that the reorganization proposal is subject to
certain material conditions, some of which are beyond ShawCor’s
control, including shareholder and court approval, and there can be no
assurance that the transaction contemplated by the reorganization
proposal, or any other transaction, will be completed.

ShawCor Ltd. is an energy services company specializing in products and
services for the pipeline and pipe services and the petrochemical and
industrial segments of the oil and gas industry. The Company operates
through eight divisions with over seventy manufacturing and service
facilities located around the world.

SOURCE ShawCor Ltd.

Source: PR Newswire