News

16.10.2006

Atlas Cold Storage and Avion Group Reach Agreement on Revised Offer at CDN$7.50

Atlas Cold Storage Income Trust (TSX: FZR.UN) (“Atlas”) and Avion Group hf (ICEX: AVION) (“Avion”) have reached an agreement on a friendly transaction under which Avion will increase its offer to acquire all of the outstanding trust units (the “Units”) of Atlas. Atlas and Eimskip Atlas Canada, Inc., an indirect subsidiary of Avion, have entered into a definitive support agreement pursuant to which the offer will be increased to CDN$7.50 in cash per Unit and will be extended to the 10th day after the date that a notice of variation and extension outlining the increased offer is delivered to registered holders of trust units, unless extended. The revised offer values the transaction at approximately CDN$583 million on a fully-diluted basis.

Following an extensive review of strategic alternatives, the Board of Trustees of Atlas determined that the revised Avion offer is fair to unitholders (other than Avion and parties acting jointly or in concert with Avion) and unanimously recommends that its unitholders accept the offer. Atlas’ financial advisors, BMO Capital Markets and Brascan Financial Real Estate Group, have also each provided opinions to the Atlas Board of Trustees that, as of October 15, 2006 and subject to the assumptions and limitations on which the opinions are based, the consideration to be received under the revised Avion offer is fair, from a financial point of view, to unitholders (other than Avion and parties acting jointly or in concert with Avion).

With the negotiated price of CDN$7.50 per unit, Atlas unitholders will not be receiving any further monthly distributions.

In support of the Avion offer, Atlas unitholders holding approximately 20.6% of the outstanding units (on a fully-diluted basis) have agreed to support the bid from Avion and have signed irrevocable lock-up agreements for such purpose. The units subject to the lock-up, combined with the 13.8% of units owned by Avion and KingStreet Capital Partners (“KingStreet”) represent 34.4% of the total units outstanding (on a fully-diluted basis).

David Williamson, President and Chief Executive Officer of Atlas said: “The revised Avion offer is the result of an extensive review of strategic alternatives by Atlas’ Trustees and management, including contacting 57 potential bidders and entering into confidentiality agreements and providing data room access to 22 parties. The revised Avion offer is the most attractive third party alternative that Atlas considered or received throughout this process and, accordingly, the Trustees have unanimously recommended acceptance of this offer. Atlas’ Board of Trustees has been advised that Trustees and members of Atlas’ leadership board will tender their Units to the bid.”

Magnus Thorsteinsson, Executive Chairman of Avion Group said: “We are pleased to have secured the unanimous support of the Atlas Board of Trustees and lock-up agreements with the two largest unitholders of the Trust. The strategic rationale for the acquisition of Atlas is compelling and we expect it will provide significant benefits to both Atlas’ and Avion’s customers, employees and suppliers. Most importantly, this transaction supports our growth strategy and through our enhanced North American footprint we will continue to expand our business.”

“We look forward to working with the Atlas team to ensure a seamless and efficient integration that provides benefits to all stakeholders,” added Mr. Thorsteinsson. “With the addition of Atlas, Eimskip, our temperature-controlled transportation and logistics subsidiary, will control a network of more than 90 temperature-controlled facilities around the world. This transaction will provide broader customer reach for both companies and create a significant competitive product offering.”

Avion worked in partnership with Toronto-based KingStreet Capital Partners to structure and finance the acquisition. KingStreet through KingStreet Real Estate Growth LP No 2 is providing structured real estate secured financing to the transaction.

The mailing to Atlas unitholders of a notice of variation and extension amending the offer together with an amended Atlas Trustees’ Circular is expected to occur on or before October 18, 2006 for completion on or about October 30, 2006. The notice of variation and extension from Avion will set out the details as to how to tender to the revised Avion offer. Completion of the offer will be subject to certain conditions, including a sufficient number of Units being tendered to the offer such that Avion would own at least 66 2/3% of Atlas Units on a fully-diluted basis, the absence of a material adverse change with respect to Atlas and certain other conditions.

The support agreement provides for the payment of a termination fee to Avion by Atlas of CDN$15 million under certain circumstances.

Atlas retained BMO Capital Markets and Brascan Financial Real Estate Group to act as financial advisors and McCarthy Tetrault LLP to act as legal advisors to Atlas. Atlas retained Osler, Hoskin & Harcourt LLP to act as legal advisors to the Board of Trustees of Atlas and the Board of Directors of Atlas Cold Storage Holdings Inc.

Avion Group retained CIBC World Markets Inc. and RBC Capital Markets to act as financial advisors and dealer managers and Bennett Jones LLP and Goodmans LLP to act as legal advisors.