Canada: A Closer Look At Orange Capital's Unconventional Tender Offer For Units Of Partners REIT

On May 28, Orange Capital announced that it was launching a tender offer at a premium to market to purchase up to 10% of the outstanding units of Partners REIT. While it did not constitute a takeover bid, the tender offer was structured similar to a takeover bid, asking for willing shareholders to tender their securities to be potentially purchased by Orange Capital in accordance with the terms of the offer. Notably, the tender offer required that depositing unitholders be holders of record as of the record date in respect of the 2014 annual general meeting and appoint Orange Capital as their nominee and proxy for all deposited units in respect of the AGM.

In the event that more than the maximum number of units were delivered in accordance with the tender, the units purchased from each depositing unitholder were to be determined on a pro rata basis according to the number of units delivered by each unitholder. Orange Capital pledged to vote all proxies solicited in favour of a new slate of independent trustees to be nominated by Orange at the AGM.

Lead up to Tender Offer

On May 1, Orange Capital issued a press release identifying a number of concerns in regards to recent transactions and announcements by Partners. Specifically, Orange Capital stated that Partners' purchase of retail centres from Holyrood Holdings, first announced in December 2013, was a related party transaction that prejudiced the interests of minority unitholders. Orange Capital also made a financing proposal whereby it offered to purchase $15 million of convertible securities, subject to the appointment of three new trustees, including one Orange Capital nominee.

Pursuant to an investigation of Orange Capital's concerns, Partners' board announced on May 4 that it had received material new information suggesting that the REIT's CEO and the owner of Holyrood should be considered as acting together, and that it had thus asked Holyrood to unwind the transaction. Partners' CEO also resigned, and the REIT ultimately announced the rescission of the transaction on June 6.

Meanwhile, on May 6, Partners announced that it had initiated a strategic review process to consider strategic alternatives to maximize value for unitholders.

The Tender Offer

Orange Capital's tender offer was made to purchase up to 10% of the outstanding units of Partners (prior to the closing of the purchase of Holyrood deal), represented a 7.1% premium to the closing price of the units on the previous trading day and a 15% premium over the volume-weighted average trading price over the previous 30 trading days. As stated above, in order for units to be eligible for take up and payment, depositing unitholders were required to be holders of record as of the record date and appoint Orange Capital as nominee and proxy for Partners' upcoming AGM.

Notably, pursuant to the offer, a tendering unitholder would be required to appoint Orange Capital as the unitholder's nominee and proxy for all deposited units, regardless of the number of deposited units actually taken up and paid for under the tender. According to Orange Capital, all proxies would be voted in favour of a new slate of independent trustees to be nominated by Orange at the upcoming AGM. Orange Capital cited issues with Partners' performance and governance, notably in respect of the Holyrood transaction, as reasons for initiating the tender offer.

The Fallout

On June 6, Partners announced that it had filed a complaint with the Ontario Securities Commission regarding Orange Capital's "highly coercive offer". In outlining its complaint to the OSC, Partners emphasized a number of concerns, stating that, among other things:

  1. Orange Capital did not make "any real offer", as the offer could be withdrawn, varied or extended by Orange Capital for any reason at any time. Partners thus characterized the offer as a "free option" for Orange Capital to acquire the units that were deposited;
  2. the tender offer would transfer control of the REIT to Orange Capital (characterized as a small minority unitholder) for no compensation, as the offer allowed Orange Capital to acquire all of the voting rights of unitholders who tendered under the offer, even if it only purchased 10% (or less) of Partners' units. The REIT characterized Orange Capital's ability to secure proxy control without taking up or paying for all of the units tendered as a "bait and switch" tactic;
  3. even if Orange Capital elected to purchase units, unitholders would likely face "massive pro-ration", as unitholders would only be able to sell 10% of their tendered units, but Orange Capital would be able to vote 100% of the tendered units; and
  4. Orange Capital was not filing a proxy circular and had not provided information regarding a proposed slate of nominees.

Pursuant to the REIT's complaint to the OSC, Orange Capital and the regulator engaged in discussions that ultimately led to a further explanatory release being issued by Orange Capital. Among other things, Orange Capital clarified that:

  1. in the event that greater than 10% of the number of outstanding units of Partners were tendered and the conditions of the offer were otherwise met, Orange Capital would not be able to take up less than the full 10% of the units;
  2. if the tender offer was withdrawn by Orange Capital, all units would be immediately returned to unitholders and all associated proxies would be deemed to be revoked;
  3. deposited units could be withdrawn by unitholders from the tender offer at any time prior to take-up by Orange Capital. In such a case, all associated proxies would be deemed to be revoked; and
  4. any proxies solicited by Orange Capital, other than those in respect of units taken up and paid for, could be revoked at any time by unitholders.

Orange Capital also extended its offer to ensure that its proxy circular would be disseminated and received by unitholders in advance of the expiry of its offer and further released a list of board nominees in advance of the unitholder meeting scheduled for July 15.

As we will discuss in our second post on the subject, Partners REIT subsequently applied to the Ontario Superior Court of Justice for a declaration that Orange Capital had breached the REIT's advance notice policy. While Orange Capital was successful in court, it later withdrew its nominees from consideration for election to the board, while leaving the tender offer open.

At the expiry of Orange Capital's tender offer, however, the 10% minimum tender condition had not been satisfied. As such, Orange Capital announced that it would not be taking up any of the REIT's units and that all tendered units would be returned to tendering unitholders.


Orange Capital employed a relatively unorthodox means of attempting to acquire control of a company, and it is unclear whether others will follow in attempting to gain control of an issuer by offering a premium for shares or units rather than simply soliciting proxies. Prior to its offer, Orange Capital held only a nominal number of Partners' units and, thus, had no preexisting economic interest in the REIT.

Regardless of whether Orange Capital would have succeeded in this case, acceptance by the OSC of its methods pursuant to the above mentioned clarifications demonstrates the importance of full disclosure.

This article is the first of a two part series on the recent Orange Capital Tender offer for Partners REIT units.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.