DECEMBER 9, 2014
TIM HORTONS INC. (ELECTION MERGER) - ANTICIPATED ADJUSTMENT OPTION SYMBOLS: THI/1THI NEW SYMBOLS: QSR1/1QSR1 DATE: 12/15/14??? (ELECTION DEADLINE: 12/9/14) * * * UPDATE * * *
On December 9, 2014, Shareholders of Tim Hortons Inc. (THI) approved the proposed arrangement with Burger King Worldwide (BKW). If and when the arrangement is consummated, both THI and BKW will become indirect subsidiaries of a new holdings company, Restaurant Brands International Inc. (QSR) and its general partner, Restaurant Brands International Inc. Limited Partnership. Restaurant Brands International Inc. Shares are anticipated to be listed on the NYSE for when issued trading on December 10, 2014 under the trading symbol “QSR WI.” The Merger: Aggregate Terms The aggregate amount of cash paid and Holdings Shares issued to THI shareholders in the arrangement will equal, as nearly as practicable, the total amount of cash and number of shares that would have been paid and issued if all THI shareholders elected to receive CAD$65.50 plus 0.8025 (New) Restaurant Brands International Inc. (QSR) Common Shares per each existing THI share. The Merger: Individual Share Elections Within the terms of the Arrangement, individual THI shareholders may: -
Elect to receive a CAD$65.50 plus 0.8025 (New) Restaurant Brands International Inc. (QSR) Common Shares per each existing THI share (Mixed Consideration). OR, Elect to receive CAD$88.50 Cash (Cash Consideration). Cash Considerations are subject to proration. OR, Elect to receive 3.0879 (New) Restaurant Brands International Inc. (QSR) Common Shares (Stock Consideration). Stock Considerations are subject to proration. Register no preference by not making an election (Non-electing). Under the terms of the election, shares which are not subject to an effective election will be treated as non-electing shares and converted into the right to receive the Mixed Consideration.
Elections must be submitted to the exchange agent, Computershare Trust Company, N.A. The election deadline is 5:00 pm New York City Time, December 9, 2014, unless extended. THI Shareholders must observe all terms and conditions for the election as specified in the Proxy. It should be noted that THI Shares may NOT be delivered pursuant to an election under “Notices of Guaranteed Delivery.” In all cases, Call option holders exercising in order to obtain stock for an election must exercise in sufficient time to be able to make valid delivery pursuant to the election procedures.
The Merger Consideration: Prorations Both Stock and Cash Considerations will be subject to proration as described in the THI/BKW Joint Information Statement/Circular dated November 5, 2014.
CONTRACT ADJUSTMENT DATE:
Effective the opening of the business day after the merger is consummated. Contract adjustment is anticipated to occur on December 15, 2014.
THI changes to QSR1 1THI changes to 1QSR1
100 (e.g., for premium or strike price extensions, 1.00 equals $100)
NEW DELIVERABLE PER CONTRACT:
The deliverable for adjusted THI options will be BASED ON THE MERGER CONSIDERATION WHICH ACCRUES TO NON-ELECTING THI SHAREHOLDERS (stated in terms of a current 100-Share deliverable). 1) 80 (New) Restaurant Brands International Inc. (QSR) Common Shares 2) Cash in lieu of 0.25 fractional QSR shares 3) 100 x the USD cash equivalent of CAD$65.50.
DELAYED SETTLEMENT The QSR component of the QSR1/1QSR1 deliverables will settle through National Securities Clearing Corporation (NSCC). OCC will delay settlement of the cash portion of the QSR1/1QSR1 deliverables until the cash in lieu of fractional QSR shares and USD equivalent of the cash consideration amounts are determined. Upon determination of the cash in lieu and USD equivalent of the cash consideration amounts, OCC will require Put exercisers and Call assignees to deliver the appropriate cash amount. Important Exercise Considerations Holders of THI Call options who wish to make their own elections with respect to THI shares received through exercise (for example, to receive a consideration other than the Non-Electing consideration) bear sole responsibility in determining when to exercise their options to permit a valid election. After the merger is consummated and the contract adjustment described above is effected, THI options will no longer call for the delivery of THI shares upon exercise. Call option holders will receive upon exercise (and Put holders deliver upon exercise) the non-electing merger consideration (on a per contract basis). Delivery Settlement and Protect Provisions Option contracts which are exercised, and physically-settled security futures contracts which mature, will require the settlement of all component securities included in the contract deliverable at the time of the futures contract maturation or option contract exercise, including rights, warrants, or similar instruments. Additional THI entitlements (such as due bills, eligibility to participate in tender offers, elections, etc.) may also
automatically attach to securities deliverable upon physically-settled futures contract maturity or option exercise. Conversely, securities not included in the contract deliverable at the time of the option exercise or futures contract maturity, or other entitlements not associated with the underlying deliverable securities, may preclude holders of long futures contracts from realizing the benefit of such entitlements. For example, if a physically-settled security futures underlying security is the subject of a tender offer, exchange offer, or similar event which expires before the futures contract reaches its maturity, the securities due to long futures holders upon maturity will not be eligible for participation in the tender/exchange offer. Conversely, if such tender offer, exchange offer or similar event expires after the futures contract matures, securities deliverable to long futures holders will be eligible for participation in these events. Except in unusual cases, securities deliverable as a result of equity option exercise or the maturity of physically-settled security futures are settled through National Securities Clearing Corporation (NSCC). Rights and obligations of Members with respect to securities settling at NSCC as a result of an option exercise or assignment or a physically-settled security future delivery or receipt obligation are governed by the rules of NSCC. NSCC has its own rules which enable purchasers of securities to protect themselves for value which may be lost if timely delivery is not made to them of securities subject to specific deadlines, such as the expiration of a tender offer, rights subscription, election, or similar event. These rules are generally called protect or liability notice procedures, and are intended to protect purchasers by binding the delivering parties to liability if such value is lost because timely delivery is not effected. Purchasers of securities must observe the rules and procedures of NSCC to avail themselves of such "protect" provisions of NSCC. Questions regarding these provisions should be addressed to NSCC. Special Risks Writers of call options and holders of short positions in physically-settled security futures at maturity who are uncovered with respect to deliverable securities subject to deadlines or cut-off times (such as expirations of tender offers, rights subscriptions, elections, or similar events) should be aware of a risk associated with the timing of their possible assignments or physically-settled security futures delivery obligations: Equity option exercise settlement and settlement of physically-settled security futures delivery obligations normally occurs 3 business days after the option exercise date or the security-futures maturity date. An uncovered call writer or uncovered short futures holder who has an obligation to deliver, and who waits until after assignment or futures maturity to effect purchase of the underlying security, may not be able to effect timely delivery by a regular-way purchase (3 business-day settlement) or call option exercise (3 business-day settlement after exercise). Such uncovered writer or short futures holder may nevertheless be subject to liability under the protect provisions of NSCC (see above) with respect to his delivery obligation, because he cannot make timely delivery. Additionally, Cash Markets (same-day, or less-than-3-business-day settlement) may not be available, or may be expensive for buyers of the underlying security. DISCLAIMER This Information Memo provides an unofficial summary of the terms of corporate events affecting listed options or futures prepared for the convenience of market participants. OCC accepts no responsibility for the accuracy or completeness of the summary, particularly for information which may be relevant to investment decisions. Option or futures investors should independently ascertain and evaluate all information concerning this corporate event(s). The determination to adjust options and the nature of any adjustment is made by a panel of The OCC Securities Committee pursuant to OCC By-Laws, Article VI, Sections 11 and 11A. The adjustment panel is comprised of representatives from OCC and each exchange which trades the affected option. The determination to adjust futures and the nature of any adjustment is made by OCC pursuant to OCC ByLaws, Article XII, Sections 3, 4, or 4A, as applicable. For both options and futures, each adjustment decision is made on a case by case basis. Adjustment decisions are based on information available at the time and are subject to change as additional information becomes available or if there are material changes to the terms of the corporate event(s) occasioning the adjustment.
ALL CLEARING MEMBERS ARE REQUESTED TO IMMEDIATELY ADVISE ALL BRANCH OFFICES AND CORRESPONDENTS ON THE ABOVE. For questions regarding this memo, call Investor Services at 1-888-678-4667 or email [email protected]
Clearing Members may contact Member Services at 1-800-544-6091 or, within Canada, at 1-800-424-7320, or email [email protected]