|
Printer friendly version |
  
|
Font Sizes |
Couche-Tard selected Davies to represent and advise it in the bidding process for Circle K. We were a natural choice, having represented Couche-Tard in many of its strategically important transactions, beginning with its 1986 IPO. In 1997, we acted for the firm in its acquisition of 245 Provi-Soir stores in Quebec, which consolidated its operations in the province. In 1999, we represented it in its $220 million, 980-store acquisition of Silcorp Ltd., which extended Couche-Tard’s portfolio outside of Quebec and made it the largest national convenience store retailer in Canada. We also represented the firm in 2001 when it first entered the US market, acquiring Johnson Oil’s 225-store BigFoot portfolio. Logistically, we were a fit for the Circle K acquisition because we have offices in Montreal, New York and Toronto, the markets where the acquisition would be negotiated and financing arranged. Strategically, we were a fit because as a leading M&A law firm with cross-border experience and practice areas in Securities, Environmental, Tax, Real Estate, Competition and Banking and Project Finance, we could negotiate and execute an integrated and seamless acquisition.
During the initial bidding process, Davies provided guidance to Couche-Tard on bidding strategies and bid terms and conditions. Couche-Tard was the successful bidder and agreed to acquire Circle K for US$804 million. We represented Couche-Tard in the negotiations process, conducted the due diligence and drew up the terms of the agreements for the acquisition. In conjunction with these activities, we closed a CDN$224 million private placement with existing Couche-Tard institutional investors. Davies’ Securities team prepared the agreements and ensured that all conditions for a prospectus exemption were met. To raise the additional capital required for the transaction, Davies also worked with Couche-Tard and its financial advisors to arrange a senior secured credit facility in Canada and the United States and a high-yield debt offering in the United States.
The senior secured credit facility raised $824 million and was backed by certain Couche-Tard and Circle K stores, some of which included gas stations. Our Tax and Banking groups structured the facility, while our Environmental group negotiated the environmental issues inherent to the transaction. The inclusion of gas stations as part of the Circle K portfolio meant that our Environmental practice had been involved in the acquisition from the outset. They conducted the due diligence for the acquisition and negotiated an Environmental Liability Agreement apportioning the environmental liability between Couche-Tard and ConocoPhillips.
A second portion of the financing was raised through a US$350 million high-yield debt offering in the US. Initially, the offering was privately placed and it will be converted subsequently to publicly tradable paper in the New Year. Davies’ Securities practice structured and negotiated this financing but was faced with a significant challenge - Couche-Tard was not a publicly listed firm in the US and did not meet disclosure requirements for issuing publicly tradable securities in the US. As a result, Davies was required to conduct extensive due diligence on both Couche-Tard and ConocoPhillips and to coordinate the preparation of combined financial information with Couche-Tard and ConocoPhillips' accountants, so that an offering memorandum meeting US requirements could be prepared by the firm. A further challenge was the aggressive timeline set by the investment banks for Davies and Couche-Tard to close the financing transactions.
Couche-Tard entered 2003 with the ambition to grow its assets wisely. Davies’ commercial, corporate finance, tax and environmental work on Couche-Tard’s acquisition of Circle K illustrates our ability to help clients such as Couche-Tard achieve their corporate objectives. We acted as a trusted corporate advisor to Couche-Tard through the bidding and acquisition process and helped them coordinate complex financing arrangements, all in a cross-border setting. Our ability to execute complex transactions through the integrated efforts of our lawyers from multiple disciplines and geographic jurisdictions enabled us to provide a seamless acquisition and financing structure for Couche-Tard, allowing them to achieve their strategic growth objectives in the US.
