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TSX-V Trading Symbol: FSN
CALGARY, July 8, 2013 /CNW/ - FRANCHISE SERVICES OF NORTH AMERICA INC. ("FSNA" or the "Company") (FSN.V) today announced that it intends to
conduct a non-brokered private placement (the "Private Placement") of
up to 500,000 shares of series B preferred stock in the capital of the
Company ("Series B Preferred Shares") at a subscription price of U.S.
$13.00 per share, which is equal to CDN $13.74 based on the closing
rate of exchange on July 5, 2013 of U.S. $1 = CDN $1.0567 as provided
by the Bank of Canada, for gross proceeds of up to U.S. $6.5 million.
Each Series B Preferred Share will be convertible, in whole or in part,
into 39.25 shares of common stock in the capital of the Company
("Common Shares") at a conversion price per Common Share of U.S. $0.33,
which is equal to CDN $.35 based on the closing rate of exchange on
July 5, 2013. Holders of Series B Preferred Shares will be entitled to
convert their Series B Preferred Shares into Common Shares following
the earlier of: (i) November 3, 2014 or (ii) the date of a change of
control of the Company. The Company may additionally compel conversion
of the Series B Preferred Shares: (i) in connection with a change of
control of the Company or (ii) five years less a day from the closing
date of the Private Placement. The right to convert the Series B
Preferred Shares will expire five years from the closing date of the
Private Placement. The Series B Preferred Shares will be non-voting
prior to their conversion.
Net proceeds of the Private Placement will be used for general working
capital purposes. The Private Placement is expected to close on or
about July 12, 2013.
In accordance with the Rules of the TSX Venture Exchange, FSNA announces
that insiders of the Company will be subscribing for greater than 25%
of the Private Placement. Thomas P. McDonnell, III, Chairman and Chief
Executive Officer of the Company, intends to subscribe for up to 76,923
Series B Preferred Shares. Mr. McDonnell presently owns or controls
22,535,635 Common Shares, representing 35.87% of the issued and
outstanding Common Shares. Boketo LLC intends to subscribe for up to
423,077 Series B Preferred Shares. Boketo LLC presently owns or
controls 62,212,200 shares of series A preferred stock of the Company,
representing all of the issued and outstanding series A preferred stock
of the Company, and no Common Shares.
The Private Placement will not result in the creation of any new
insiders or control persons. No commission or finder's fee is payable
in connection with the Private Placement.
As Mr. McDonnell and Boketo LLC are each considered to be "related
parties" of FSNA under Part 1.1 of Multilateral Instrument 61-101 ("MI 61-101"), their participation in the Private Placement constitutes a "related
party transaction" within the meaning of MI 61-101. The board of
directors of FSNA has determined that the Private Placement is exempt
from the formal valuation and minority shareholder approval
requirements of MI 61-101 as neither the fair market value of the
subject matter of, nor the fair market value of the consideration for,
the transaction, insofar as it involves related parties, exceeds 25% of
FSNA's market capitalization calculated on the basis of its issued and
outstanding Common Shares.
A material change report in respect of the transaction was not filed 21
days in advance of the expected closing of the Private Placement. The
shorter period was necessary in order to permit FSNA to close the
Private Placement in a timeframe consistent with usual market practice
for transactions of this nature.
The Series B Peferred Shares and Common Shares issuable on conversion
thereof will be subject to a hold period and restricted period from the
date of issuance in accordance with the policies of the TSX Venture
Exchange and applicable securities legislation. The securities offered
will not be registered under the United States Securities Act of 1933
(the "Act") and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the Act.
The Private Placement remains subject to standard filing requirements
and the receipt of approval from the TSX Venture Exchange.
FSNA is a publicly traded company listed on the TSX Venture Exchange.
The Company and its subsidiaries own the following brands: Advantage
Rent A Car ("Advantage"), U-Save Car & Truck Rental®, U-Save Car Sales, Rent-A-Wreck of
Canada, PractiCar, Auto Rental Resource Center ("ARRC"), Xpress Rent A Car and Peakstone Financial Services.
Advantage is currently positioned as a brand, and targets consumers in
the value-oriented segment of the U.S. rental car market. As of July
2013, Advantage is expected to operate from approximately 75 locations
servicing airports and five additional satellite locations in hotels in
Hawaii and Las Vegas and has a fleet of approximately 24,000 cars,
ranging from economy cars to SUVs. Advantage primarily services the
leisure segment of the rental car market and predominantly operates in
key domestic leisure destinations, including California, Florida,
Texas, Colorado, Hawaii and Arizona.
U-Save, together with its subsidiary ARRC, has over 1,100 locations
throughout the United States and is one of North America's largest
franchise car rental companies. Having primarily serviced the local
market for the past 30 years, the Company is expanding into the airport
market with plans for the opening of airport locations in the top 30
markets in the United States and the major airports in Canada. U-Save
currently services 28 airport markets in 11 different states and 7
countries. U-Save Car Sales is an expansion of the U-Save brand into
the car sales market, and provides goods and services to car sales
operators looking to affiliate with a national brand.
Practicar Systems Inc. (a wholly owned subsidiary of FSNA) owns the
rights to the Rent-AWreck® and the PractiCar® trademarks for all of
Canada. The Rent-A-Wreck® system operates a network of 69 franchise
locations from coast-to-coast in Canada, providing a range of vehicle
rental, leasing and sales options to its customers. The Rent-A-Wreck®
system has been in continuous operation in Canada since 1976.
Forward Looking Information
Certain statements made in this news release are forward-looking in
nature, including statements concerning the completion and timing of
the Private Placement, the anticipated use of the net proceeds of the
Private Placement and statements made with respect to Advantage's
operations, including expectations as to the number of locations and
size of fleet. The closing of the Private Placement could be delayed if
FSNA is not able to obtain the necessary regulatory and stock exchange
approvals on the timelines it has planned. The Private Placement will
not be completed at all if these approvals are not obtained or if some
other condition to the closing is not satisfied. Accordingly, there is
a risk that the Private Placement will not be completed within the
anticipated time or at all. The words "may", "could", "should",
"would", "expect", "intend", "estimate", "anticipate", "believe", or
"outlook" and similar expressions often identify forward-looking
information. By their nature, forward-looking statements require FSNA
to make assumptions and are subject to inherent risks and
uncertainties. The forward-looking statements contained in this news
release are based on certain key expectations and assumptions made by
FSNA. Although FSNA believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable, undue
reliance should not be placed on the forward-looking statements because
FSNA can give no assurance that they will prove to be correct. FSNA's
forward-looking statements are qualified in their entirety by these
cautionary statements. In addition, the forward-looking statements are
made only as of the date of this news release, and except as required
by applicable securities law, FSNA undertakes no obligation to publicly
update these forward-looking statements to reflect new information,
subsequent events or otherwise.
Neither 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: Franchise Services of North America Inc.
For further information:
For further information on FSNA or any of its operating subsidiaries please contact:
Thomas P. McDonnell, III
Franchise Services of North America Inc.