Exclusive: Tim Hortons investor agitates for buybacks, new strategy

Canadian coffee-and-donut chain Tim Hortons Inc is under pressure from one of its top investors to buy back a large chunk of its shares, pare back in the United States and get more money out of its real estate assets, according to documents seen by Reuters and two sources familiar with the matter on Tuesday.

Hedge fund Highfields Capital, which owns about 1.5 percent of the company, wants Tim Hortons to borrow $3.4 billion to buy back more than one-third of its outstanding shares at $59 apiece, the documents show.

The investor also wants Tim Hortons to spin off or sell its distribution business and create a real estate investment trust to house its real estate assets, according to the documents.

The documents include correspondence between Tim Hortons and Highfields executives since March and a Highfields presentation to the restaurant chain.

Tim Hortons had a market value of $8.3 billion. It is working with Citigroup Inc and RBC Capital Markets as strategic advisers, the documents show.

A spokeswoman for Highfields declined to comment on the matter, except to note that the firm did not provide a copy of the documents to Reuters. Tim Hortons did not immediately respond to requests for comment. RBC and Citigroup declined to comment.

(Reporting By Lauren Tara LaCapra, Jessica Toonkel and Olivia Oran; Editing by Soyoung Kim and Paritosh Bansal, Gary Hill)