Clarke to acquire Ravelin Properties

Executive Summary

• Clarke Inc. has entered into an arrangement agreement to acquire all outstanding units and convertible debentures of Ravelin Properties REIT via a court-approved plan of arrangement.
• The transaction values Ravelin at $1.1 billion (including assumed debt), creating a pro forma entity valued at $1.7 billion, with REIT securityholders receiving Clarke common shares in exchange for their holdings.
• The deal is expected to close in Q2 2026, subject to customary regulatory, court, and securityholder approvals, and will significantly reduce the REIT's leverage while expanding Clarke's geographic footprint and asset base.

Key Details

• Transaction Structure: Court-approved statutory plan of arrangement under the Canada Business Corporations Act.
• Valuation: Ravelin valued at $1.1 billion (including debt assumption); pro forma entity valued at $1.7 billion.
• Consideration for Unitholders: ~0.582 common shares of Clarke for each 1,000 REIT units held.
• Consideration for Debentureholders: ~14.562 Clarke shares for each $1,000 principal amount of REIT debentures held.
• Early Consent Bonus: Early consenting debentureholders receive a pro rata allocation of an aggregate 150,000 Clarke shares.
• Premiums: Consideration represents a 93% premium to the 20-day VWAP of REIT debentures and a 171% premium to the closing price on March 26, 2026.
• Share Issuance: Clarke expects to issue 2.5 million new common shares, representing ~19.3% of outstanding Clarke shares.
• Post-Closing Ownership: Existing Clarke shareholders ~83.8%; REIT securityholders ~16.2%.
• Closing Timeline: Expected Q2 2026, subject to customary conditions (court approval, TSX approval, REIT unitholder/debentureholder approvals).
• REIT Financial Context: Addresses continuing financial difficulties, defaults on existing indebtedness, and capital requirements.
• Forbearance Extension: G2S2 Capital Inc. extended forbearance on certain REIT loans to June 1, 2026.
• CCAA Contingency: If 50%+ debentureholders don't consent by the early deadline or requisite approvals fail, the REIT may commence CCAA proceedings where G2S2/affiliate may credit bid. REIT unitholders/debentureholders would receive no consideration in CCAA.
• Secured Debt: Unaffected by transaction, paid in ordinary course.
• Debt Reduction: $157.95 million principal amount of REIT debentures + accrued interest exchanged for Clarke shares.
• LTV Ratio: Pro forma LTV ~68.5%, down from REIT's Dec 31, 2025 LTV of 94.2%.
• Geographic Expansion: Pro forma entity will operate in 11 of Canada's 13 provinces/territories, plus Chicago and Ireland.
• Approvals Required: 2/3 vote of REIT unitholders and 2/3 of aggregate principal amount of REIT debentures.
• Termination Fee: $1 million payable by REIT to Clarke if it accepts a superior proposal.
• Fairness Opinion: KSV Soriano Inc. opined that unitholder consideration is fair and debentureholders would be in a better financial position than in liquidation.
• Advisers: Bennett Jones LLP (Clarke); Voorheis & Co. LLP and Thornton Grout Finnigan LLP (REIT special committee/board); KSV Advisory Inc. (REIT financial adviser).

Notable Quotes

• Calvin Younger, Chair of the Board of Trustees of the REIT: "After considering with our external financial and legal advisers, the strategic and viable financial alternatives available to Ravelin, the board determined that this transaction is in the best interests of Ravelin and its stakeholders given the current and go-forward solvency and leverage challenges facing the REIT."
• Tom Casey, CFO of Clarke: "The transaction will be a great outcome for both companies. It gives Ravelin securityholders the benefit of Clarke's strong, well-capitalized platform and provides an immediate solution for the capital and liquidity pressures facing the REIT. It will allow Ravelin's management team to focus on what matters most -- improving the portfolio's performance, attracting new tenants and restoring occupancy -- rather than being distracted by liquidity and lender defaults."