Colliers International Group Inc. agreed to settle its long-term incentive arrangement with Chairman, CEO and largest voting shareholder Jay Hennick and to initiate an orderly elimination of the company's dual-class voting structure by Sept. 1, 2028.
The global real estate service provider and investment management company will provide disinterested holders of its subordinate voting shares with a chance to approve a transaction to settle the management services agreement, including the long-term incentive arrangement, between Colliers, Hennick and Hennick-controlled Jayset Management CIG Inc.
As part of the deal, Colliers will, among other things, fully acquire Jayset shares, the recipient of all fees and other entitlements under the management services agreement, and thereafter terminate the existing agreement.
The parties will enter into a new five-year management services agreement, with mutual one-year renewal options thereafter under which Hennick will continue to offer services to the company as the CEO and/or executive chairman. The agreement will be substantially similar to the current one, except that there will be no entitlement to a long-term incentive arrangement, stock options or other equity-linked compensation.
Hennick and his controlled Henset Capital Inc. will enter into a new trust agreement pertaining to their controlled multiple voting shares, providing that such shares will convert into subordinate voting shares on a one-for-one basis and for no additional consideration or premium upon certain conditions.
Colliers agreed to pay US$95.0 million in cash in satisfaction of 20% of the purchase price and to issue 3,572,858 subordinate voting shares in satisfaction of 80% of the purchase price. The company expects to make the cash payment under the transaction from cash on hand and its revolving credit facility.
Immediately following the transaction close, Hennick is expected to have control and direction over 5,005,369 subordinate voting shares, representing 11.8% of the then expected outstanding such shares, and 1,325,694 multiple voting shares.
The transaction is subject to approval by a majority of the disinterested holders of subordinate voting shares, among other conditions.
Colliers' board recommended that shareholders vote in favor of the transaction at the company's annual and special shareholder meeting scheduled for April 14.
Benjamin Stein, a Colliers director and a member of the special committee of its board, plans to vote to approve the transaction. Stein is co-founder of Spruce House Investment Management LLC, Colliers' largest holder of subordinate voting shares, owning or controlling about 14.7% of such outstanding shares.
Hugessen Consulting is independent compensation consultant to the special committee, while Miller Thomson LLP was its independent legal adviser.
