Trez Capital Senior Mortgage Investment Corporation Provides Update on its Proposed Transition to Public Company Regulatory Regime

Toronto Stock Exchange: TZS

VANCOUVER, Oct. 30, 2013 /CNW/ - Trez Capital Fund Management Limited Partnership (the "Manager"), the manager of Trez Capital Senior Mortgage Investment Corporation (the "Corporation"), today provided an update on the proposed change of the Corporation's status (the "Proposed Transition") for purposes of Canadian securities regulations from that of an investment fund to that of a public company (i.e. a reporting issuer that is a not an investment fund).  The Proposed Transition was first announced on October 15, 2013.

The board of directors of the Corporation (the "Board") has approved the materials that will be sent to shareholders in connection with the special meeting (the "Meeting") to be held on November 29, 2013.  The management information circular forming part of those materials was prepared based on the disclosure requirements for public companies. Since its inception, the Corporation has consistently generated stable, monthly distributions as well as maintained a stable net asset value for its investors by investing in a diversified portfolio of shorter term first mortgage loans to qualified real estate investors and developers. In that context, the Board believes that it is in the best interest of the Corporation and its shareholders to continue the Corporation's current investment objectives and strategy under the public company regime, to avoid the potential restrictions to the business of the Corporation that could result if the regulatory changes to investment funds proposed by the Canadian securities administrators on March 27, 2013 are implemented.  Following the Proposed Transition, the Corporation would continue to qualify as a mortgage investment corporation under the Income Tax Act (Canada) and would maintain the same investment objectives and strategies.

The Board is of the view that the Proposed Transition will provide shareholders a number of benefits, including:

  • continuing the Corporation's ability to operate in accordance with its existing investment objectives and strategies;
  • eliminating the trailer fee paid on Class A Shares which will likely result in more income generated by the Corporation being available for distribution to investors;
  • Class A shares become voting;
  • increased frequency of financial reporting;
  • the potential for research analyst coverage; and
  • Increased stability of capital resulting from the elimination of the redemption feature.

Key changes to the Corporation that will be included in the Proposed Transition and are described in greater detail in the meeting materials are the following:

  • As part of the transition to a public company regime, the concept of investment restrictions will cease to exist. As such, the Corporation's investment restrictions will become investment guidelines which may be amended from time to time by the Board in the future.  Certain investment guidelines will be modified to prevent them from impeding the ability of the Corporation to remain fully invested in a prudent manner.  Further, the limit on borrowing by the Corporation will be removed as is the norm in the public company regime.

  • The Corporation will be authorized to issue a new class of shares, in series, with the Board having the authority to determine the attributes of each such series (including for voting, dividends and redemption rights, and any conversion or exchange rights into Class A shares).

  • The management agreement between the Corporation and the Manager will be amended to change the basis on which the management fee is calculated from 1.0% of the Corporation's net asset value to 0.85% of its gross assets.

  • The management agreement also will be amended to incorporate termination provisions and other terms that are comparable to the management agreements in place with other mortgage investment corporations that are public companies.

The Corporation has retained RBC Capital Markets to act as a soliciting dealer and financial advisor to the Corporation in connection with the Proposed Transition.  Provided the Proposed Transition is approved and implemented, and subject to certain limits, the Corporation will pay to brokers a solicitation fee equal to $0.05 for each Class A share that is voted in favour of the Proposed Transition and not submitted for redemption on December 31, 2013.

The materials for the meeting will be filed on SEDAR and available on the Manager's website at www.trezcapital.com by November 6, 2013.

The Corporation will host a conference call for shareholders to discuss the Proposed Transition on Wednesday, November 13, 2013 at 11:00 a.m. EST. The details for this call are as follows:

North America Toll-Free: 1-866- 364- 0217

Following the call, a replay will be accessible until Friday November 29th, 2013 using the following dial-in information:

North America Toll-Free: 1-800-558-5253

Conference Code: 21683620#

SOURCE: Trez Capital Senior Mortgage Investment Corporation

For further information:

Michael J.R. Nisker
President & Chief Executive Officer
Trez Capital Mortgage Investment Corporation
416-350-1299
MichaelN@trezcapital.com

Karyn Phuong
Vice-President, Investor Relations
Trez Capital Corporation
647-788-1788
KarynP@trezcapital.com


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