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Celestica to Sell Toronto Real Estate
July 24, 2015 | Celestica Inc.Estimated reading time: 2 minutes
Celestica Inc., a global leader in the delivery of end-to-end product lifecycle solutions, has entered into an agreement for the sale of its property located in Toronto, Ontario, which includes the site of Celestica's corporate headquarters and its Toronto manufacturing operations.
The site is being sold to a special purpose entity to be formed by a consortium of three real estate developers, namely Diamond Corp., Lifetime Developments and Context Development Inc. The consortium intends to work with the City of Toronto to develop a mixed-use community including office, retail and residential uses. If the transaction is completed, the purchase price will be approximately CDN$137 million, exclusive of applicable taxes and subject to adjustment in accordance with the terms of the agreement of purchase and sale, including for certain density bonuses and other adjustments in accordance with usual commercial practice.
Pursuant to the terms of the Property Sale Agreement, the Property Purchaser will pay Celestica a cash deposit of CDN$15 million, which is non-refundable except in limited circumstances. Upon closing, which is subject to various conditions including municipal approvals and is anticipated to occur within approximately two years, the Property Purchaser will pay Celestica an additional CDN$53.5 million in cash. The balance of the purchase price is to be satisfied on closing by an interest-free, first-ranking mortgage in the amount of CDN$68.5 million to be registered on title to the property and having a term of two years from the closing date.
As part of the Property Sale Agreement, Celestica will enter into an interim lease for its existing head office and manufacturing premises on a portion of the real estate for an initial two-year term on a rent-free basis (subject to certain payments including taxes and utilities), which will be followed by a longer-term lease for the new home of Celestica’s corporate headquarters on terms it would settle with the Property Purchaser. There can be no assurance that this transaction will be completed within two years or at all.
Approximately 30% of the interests in the Property Purchaser will be held by Context, a privately-held company in which Gerald Schwartz, a controlling shareholder and director of Celestica, has a material interest. Schwartz also has a non-voting interest in Diamond Corp.'s Whitecastle New Urban Fund 3, which will have an approximate 25% interest in the Property Purchaser.
Given the interest in the transaction by a related party, Celestica's board of directors formed a Special Committee, consisting solely of independent directors, which retained its own independent legal counsel, to review and supervise a competitive bidding process. The Special Committee, after considering, among other factors, that the purchase price for the property exceeded the valuation provided by an independent appraiser, determined that the Property Purchaser’s transaction terms are in the best interests of Celestica. The Board, at a meeting where Schwartz was not present, approved the transaction based on the unanimous recommendation of the Special Committee.
About Celestica
Celestica is dedicated to delivering end-to-end product lifecycle solutions to drive our customers’ success. Through our simplified global operations network and information technology platform, we are solid partners who deliver informed, flexible solutions that enable our customers to succeed in the markets they serve. Committed to providing a truly differentiated customer experience, our agile and adaptive employees share a proud history of demonstrated expertise and creativity that provides our customers with the ability to overcome complex challenges.
For further information on Celestica, visit its website.
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