Rhône Capital L.L.C. and its affiliates (“Rhône”) and affiliates of WeWork Property Advisors LLC, a joint venture between Rhône and WeWork Companies Inc. (“WPA”), announced today that on July 13, 2018 WPA indirectly acquired approximately 50% of the equity interests in Fabric-Charles Holdings LP from Fabric Holdings LP, an affiliate of investment funds managed by Rhône (the “WPA Transfer”). Fabric-Charles Holdings LP is the sole shareholder of Fabric Luxembourg Holdings S.àr.l. (“Fabric Luxembourg”), which is the registered holder of 50,919,608 preferred shares (“Preferred Shares”) of Hudson’s Bay Company (“HBC”). As previously disclosed, the WPA Transfer was contemplated at the time of Rhône’s initial equity investment in HBC.
There has been no change in the holdings of Preferred Shares by Fabric Luxembourg as a result of the WPA Transfer. Fabric Luxembourg holds 50,919,608 Preferred Shares, representing 100% of the issued and outstanding Preferred Shares.
As of the date of this press release, Fabric Luxembourg’s Preferred Shares are convertible into 52,670,020.4125 common shares of HBC (“Common Shares”), representing approximately 22.3% of the issued and outstanding Common Shares, on an as-converted and partially diluted basis.
The calculation of the foregoing percentage is based on 183,073,362 Common Shares outstanding as of May 5, 2018. Through its equity interests in Fabric-Charles Holdings LP, Rhône has an interest in approximately 50% of the Preferred Shares held by Fabric Luxembourg or 25,734,769.88 Preferred Shares (such Preferred Shares being convertible, as of the date hereof, into 26,619,428.3165 Common Shares, representing approximately 12.7% of the outstanding Common Shares on an as-converted and partially-diluted basis (assuming no conversion of the Preferred Shares in which WPA has an interest)) and WPA has an interest in approximately 50% of the Preferred Shares held by Fabric Luxembourg or 25,184,838.12 Preferred Shares (such Preferred Shares being convertible, as of the date hereof, into 26,050,592.0960 Common Shares, representing approximately 12.5% of the outstanding Common Shares on an as-converted and partially-diluted basis (assuming no conversion of the Preferred Shares in which Rhône has an indirect interest)).
WPA paid approximately U.S.$248 million (C$326 million) for its equity interest in Fabric-Charles Holdings LP, including interest payable, representing approximately U.S.$9.83 (C$12.93) per Preferred Share.
Fabric Luxembourg and its joint actors have acquired the Preferred Shares for investment purposes, subject to the following:
Fabric Luxembourg intends to review on a continuing basis its investment in HBC. Subject to the restrictions imposed on Fabric Luxembourg pursuant to an investor rights agreement between Fabric Luxembourg and HBC dated October 24, 2017 or the arrangements agreed to between WPA and Rhône, Fabric Luxembourg may seek to sell or otherwise dispose of some or all of HBC’s securities (which may include, but is not limited to, transferring some or all of such securities to its affiliates or to joint ventures which its affiliates have established) from time to time, and/or may seek to acquire additional securities of HBC (which may include rights or securities exercisable or convertible into securities of HBC) from time to time, in each case, in open market or private transactions, block sales or acquisitions or otherwise. Any transaction that Fabric Luxembourg may pursue may be made at any time and from time to time without prior notice and will depend on a variety of factors, including, without limitation, the price and availability of HBC’s securities, subsequent developments affecting HBC, HBC’s business and HBC’s prospects, other investment and business opportunities available to Fabric Luxembourg, general industry and economic conditions, the securities markets in general, tax considerations, applicable law and other factors deemed relevant by the Investor.