Cara plan could be derailed

Jarislowsky Fraser said it will vote against the deal because Cara was offering only $7.50 a share. "Millions of shares traded above $7.50 in the past," said Len Racioppo, Toronto partner at Jarislowsky Fraser…"It is painfully obvious that $7.50 is not enough," Racioppo said in an interview. "We are not tendering at $7.50, and we don't think it is an adequate offer."

The Toronto Star
October 24, 2003

Cara plan could be derailed
Key investor seeks higher bid to take company private. ‘There are hurdles in this thing going through,’ chief says.
Patrick White

MONTREAL—Cara Operations Ltd. says its plan to go private could be derailed if the majority owner of the company's minority shares rejects the proposal during a key shareholder vote. And a partner with that investor says the company will not support the plan at the price currently offered for shares.

In August, Cara Holdings Ltd., the parent company, said it planned a $324 million stock buyback that would take Cara private. Cara runs Canadian fast-food chains Harvey's and Swiss Chalet and supplies food to airlines. The company also runs the Second Cup coffee-shop chain.

The Toronto-based group said yesterday it feared investment firm Jarislowsky Fraser could block the proposal at the vote in December.

"If Jarislowsky votes no, the deal is off," Gabe Tsampalieros, Cara's president and chief executive, said during a conference call with analysts. "They own 80 per cent of the (minority) voting shares … . There are hurdles in this thing going through."

On Wednesday, Cara said its management was preparing an information and proxy circular, which is expected to be mailed to shareholders in early November to allow a meeting in early December for stakeholders to vote on the proposed transaction.

Jarislowsky Fraser said it will vote against the deal because Cara was offering only $7.50 a share.

"Millions of shares traded above $7.50 in the past," said Len Racioppo, Toronto partner at Jarislowsky Fraser.

Cara's common shares gained 2 cents on the Toronto Stock Exchange yesterday to close at $7.77, while the class A shares rose 6 cents to $7.81.

"It is painfully obvious that $7.50 is not enough," Racioppo said in an interview. "We are not tendering at $7.50, and we don't think it is an adequate offer."

He said his firm was not negotiating with anyone and was waiting for the circular.

Jarislowsky Fraser owns 7 million of the minority voting shares, which gives the company a leading portion in this share class.

"Each class is voting separately. Cara has to have a majority (vote) of the minority shareholders to have a majority" of people approving the deal, Racioppo said.

The company has been hit this year by the financial troubles of insolvent Air Canada, one of Cara's main food-catering clients. Air Canada has been under bankruptcy protection since April. Cara was also hurt earlier this year by the outbreak of severe acute respiratory syndrome in Toronto.


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