OREANDA-NEWS. On August 28, 2007 Joint Stock Company Open Investments (“OPIN”), a real estate development, management and investment company based in Moscow, Russia, announced that it intends to make a proposal to the Board of Directors of Viceroy Homes Limited (“Viceroy”), an Ontario corporation, to pursue a transaction pursuant to which Viceroy Homes would be taken private.  The transaction is expected to be implemented by way of a court-approved plan of arrangement under Ontario law, reported the press-centre of Open Investments.

OPIN further announced that it has entered into an agreement with Viceroy Construction (1984) Limited, Gaylord G. Lindal, Christopher H. Lindal and Fred Haas (collectively, the “MVS Shareholders”), the holders of all the outstanding Class B Multiple Voting Shares of Viceroy, whereby the MVS Shareholders would continue as shareholders of Viceroy after the going private transaction is completed.  Among other things, the agreement provides that, subject to certain conditions including the execution of a shareholders' agreement after the approval of the plan of arrangement, they will vote their Class B Multiple Voting Shares in favour of the transaction. 

As part of the proposed transaction, OPIN (through an affiliated entity) would acquire the outstanding Class A Subordinate Voting Shares of Viceroy for C$4.25 cash per share, which represents an approximately 37% premium over the C$3.10 closing price of the Class A Subordinate Voting Shares on the Toronto Stock Exchange on August 27, 2007, and an approximately 37% premium over the volume weighted average trading price over the past three months.

The transaction is subject to applicable securities and corporate laws, including the Ontario rules that specifically govern going private transactions of this nature.  In addition to court approval, the transaction would require the approval of shareholders at a special meeting called to consider the plan of arrangement, including approval by 66 2/3 % of the votes cast by holders of Class A Subordinate Voting Shares and by a majority of the votes cast by holders of Class A Subordinate Voting Shares other than the MVS Shareholders.

The Board of Directors of Viceroy has not yet responded to the proposal, however, it is anticipated that the Board of Directors would form an independent committee to consider the proposal.  The independent committee would retain legal and financial advisors to assist it and in particular would engage and supervise a financial advisor to prepare a formal valuation of its Class A Subordinate Voting Shares.  Proxy solicitation materials would be prepared by Viceroy in respect of the special meeting of shareholders to be called to consider the plan of arrangement.  The proxy materials for each meeting would disclose the formal valuation and would also contain whatever recommendation the independent members of the Board of Directors of Viceroy deem appropriate following the conclusion of their deliberations and taking into account the advice received from their legal and financial advisors.  There can be no assurance that the Board of Directors of Viceroy will approve the proposed transaction in the form in which it has been put forward. 

The MVS Shareholders currently own 100% of the Class B Multiple Voting Shares and 1% of the Class A Subordinate Voting Shares, representing an approximate 39% equity interest in Viceroy and the right to cast approximately 86% of the votes attached to Viceroy's outstanding shares.

Sergey Bachin, General Director of JSC “OPIN”, commented:

 “We are considering ways of expanding into middle class segment of the out-of-town property market.  Within this market there is a chronic shortage of, and growing demand for, high quality, deluxe, residential housing.  The growing potential within this segment can be attributed to rising levels of personal wealth as well as the development of mortgage lending in Russia.

Joining Viceroy, a world-wide recognised leader among the developers of modular construction systems, will give us access to highly efficient “fast” wood-frame technologies for residential construction, which can be used for the development of a significant proportion of our land bank.

The strength of our relationship and the trust that has been built between OPIN and Viceroy over the last year, makes it possible for both companies to look forward to a mutually beneficial partnership.”

Gaylord Lindal, founder and Chairman of the Board of Viceroy, commented:

"This proposed transaction gives the shareholders of Viceroy an opportunity to realize on their investment at a significant premium to market.  The format of this transaction allows us to proceed with OPIN to take Viceroy private, if the independent members of our board of directors and our shareholders consider it appropriate.  We consider this to be a unique opportunity."