Catalyst Capital seeks to block rival bid for HBC

An investment firm and Canada's oldest retailer will face off at a hearing at the Ontario Securities Commission as the battle to take Hudson's Bay Co. private heats up.

Catalyst Capital Group Inc. said late Monday it filed a notice of application for a hearing with the OSC to block a privatization bid led by HBC executive chairman Richard Baker.

A group of shareholders, including Baker, is offering a buyout priced at $10.30 per share. HBC's board approved the deal after the group bumped their price by 85 cents from $9.45 per share.

"As as substantial minority shareholder, Catalyst requires the OSC's assistance seeking redress for inadequate and inaccurate disclosure, and coercive and unfair practices leading up to and following HBC board approval of the transaction," the investment firm said in a statement. It did not immediately respond to a request for comment.

The OSC has received Catalyst's application and will issue a notice when it has been scheduled, wrote spokeswoman Kate Ballotta in an email.

She declined to answer questions about the hearing process.

The OSC can initiate proceedings against companies that are suspected of violating securities law or acting contrary to the public interest, according to its website. Hearings occur before an administrative tribunal of the commission, and the commission can impose sanctions, including financial penalties and bans on trading.

Neither HBC nor the Baker-led group immediately responded to a request for comment.

Claims management misrepresented Catalyst offer to shareholders

If Catalyst cannot have the deal blocked, it wants HBC to amend and resend to shareholders its management information circular to address what it says are numerous omissions and misrepresentations. Additionally, HBC should postpone its special meeting of shareholders to vote on the privatization bid, the firm said.

The meeting is scheduled for Dec. 17. The Baker-led deal requires approval by a 75 per cent majority, as well as a majority of the minority shareholders, which excludes those behind the bid and their affiliates.

The escalation to the OSC by the investment firm came after a special committee of HBC's board, formed to review the Baker-led bid, announced that Catalyst's unsolicited competing proposal "is not reasonably capable of being consummated."

Catalyst has offered $11 per share in cash for HBC, but HBC's special committee said the Baker-led group, which calls itself the continuing shareholders, confirmed to it that they "are not interested in any transaction that would result in a sale of their interests" in the company. They collectively own about 57 per cent of HBC's common shares on an as-converted basis.

Catalyst, which controls about 17.49 per cent of HBC's common shares, has indicated it has enough support from other minority shareholders to vote down the Baker-led bid.

The investment firm and other shareholders that together control a 28.24 per cent stake of the company's common shares plan to vote no, Catalyst said in late October. That represents "a majority of minority shareholders," it said at the time.