Pivot Technology Proposes Exchange Offer to Holders of Series A Preferred Shares

CARLSBAD, CA, Nov. 21, 2013 /CNW/ - Pivot Technology Solutions, Inc. ("Pivot" or the "Company") (TSX-V: PTG) today announced it has received Board approval to move forward with a formal exchange offer to holders of its Series A preferred shares.

Under the terms of the offer, the Company proposes to allow holders of Series A preferred shares to tender to the Company all of their Series A preferred shares for exchange for subordinated redeemable notes that can, in part, be exchanged into common shares of the Company (based on an exchange price of Cdn$0.40 per share).  The notes are to be issued by Pivot's wholly owned subsidiary ACS Acquisition Holdings, Inc., and will be guaranteed by Pivot Technology Solutions, Inc.  The notes will have a four year term and bear interest at an annual interest rate of 8%, payable quarterly on the last day of each calendar quarter.  The notes will be mandatorily redeemable at quarterly intervals over a four year period.  In addition, the notes may be redeemed at the option of the Company after the second anniversary at a price equal to 110% of the principal amount and after the third anniversary at a price equal to 105% of the principal amount (in each case, together with accrued but unpaid interest).

Once completed, the exchange offer will result in the following changes to the Company's capitalization:

  • If all Series A preferred shares, outstanding as of the date of the release, are tendered for exchange, $35.5 million principal amount of notes will be issued.
  • Up to a maximum of one third of the outstanding notes can be exchanged into common shares on the basis of Cdn$0.40 per share, limiting the maximum number of common shares that can be issued under the conversion to 29,560,667, subject to the right of holders to exchange up to all outstanding note principal and unpaid interest into common shares at Cdn$0.40 in the event of a default by the Company in its obligations under the notes.
  • Upon issuance of the notes, the stated amount of the preferred shares will be largely reclassified from shareholders' equity on the Company's balance sheet, at a value to be determined in accordance with IFRS accounting standards.
  • Preferred shares not tendered for exchange will be converted into common shares on a one for one basis.

In the event of a default at maturity (as defined in the indenture relating to the notes), noteholders will have the right to seek the repayment of up to 20.5% of the original issue amount of the notes with the balance (or, at the option of each noteholder, 100% of their then outstanding unpaid notes) to be satisfied by exchanging unpaid notes for common shares.

Warren Barnes, CEO of Pivot, stated, "We believe the offer represents a balanced solution to satisfy all stakeholder needs.  Firstly, it will create more visibility on our capital structure and, depending on the level of participation, could reduce potential dilution by as much as two thirds.  Secondly, it provides holders of the preferred shares, who have been strong supporters of the Company throughout its formative years, with an instrument that allows them to participate as shareholders in the future of the Company, while at the same time providing a definitive path to liquidity."

The terms and conditions of the notes and of the exchange offer will be described in a circular to be mailed to holders of Series A preferred shares and which will be made available on www.sedar.com.

The exchange offer will be made by way of formal bid in accordance with applicable securities laws.  The bid circular is expected to be mailed to all holders of Series A preferred shares by December 20, 2013 and will remain open for 35 days.  The exchange offer will be subject to customary conditions, including approval of the TSX Venture Exchange (the "TSXV"). Management anticipates completion by January 31, 2014.

About Pivot Technology Solutions, Inc.
Together with its portfolio companies and partners, Pivot delivers solutions that enable organizations to design, build, implement and maintain computing and communication infrastructure that addresses their unique business needs. Pivot's approach supports improvement of business performance, helps organizations reduce capital and operating expenses, and accelerates the delivery of new products and services to end-customers. With over 2,000 clients, many of whom are Fortune 1000 companies, Pivot extends its value added solutions to help organizations of all sizes improve operating efficiency, reduce complexity and enhance service delivery through virtualization and cloud computing. Pivot enables businesses to extend their enterprise through mobility solutions to better connect business partners and customers. Pivot has offices throughout North America and can be found online at www.pivotts.com.

Forward Looking Statement
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements in this news release include statements regarding the exchange offer and its impact on Pivot's future capitalization or the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could", "will", "likely", "expect", "believe", "intend" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by Pivot in light of its experience and its perception of historical trends, current conditions and expected future developments, including the assumption that TSXV approval will be obtained, that the circular relating to the exchange offer will be mailed by December 20, 2013, as well as other factors Pivot believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause Pivot's actual results, to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: the risk that TSXV approval may not be obtained within the timeframe expected or that the number of Series A preferred shares not tendered to the exchange offer will exceed the number anticipated, resulting in the issuance of a greater number of common shares on conversion of Series A preferred shares than expected.  The "forward-looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


SOURCE: Pivot Technology Solutions, Inc.

For further information:

Warren Barnes
CEO, Pivot Technology Solutions, Inc.
warren.barnes@pivotts.com

Marc Lakmaaker
TMX Equicom
investors@pivotts.com
Tel: 416 815 0700

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Pivot Technology Solutions, Inc.

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