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BRAMPTON, ON, June 28, 2017 /CNW/ - DATA Communications Management Corp. (TSX: DCM) ("DATA" or the "Company") is pleased to announce that it has completed its previously announced private placement (the "Private Placement") of units ("Units"), raising gross proceeds of $3.8 million. The Company also announced that it has established a $3.5 million non-revolving credit facility (the "Bridging Credit Facility") with Bridging Finance Inc., as agent for and on behalf of certain funds sub-advised or managed by it ("Bridging"). The net proceeds of these financings will be used, together with the net proceeds from the Company's recently completed rights offering, to repay the Company's 6.00% convertible unsecured subordinated debentures (the "Debentures") at maturity on June 30, 2017 and for general corporate purposes.
Pursuant to the Private Placement, the Company issued 2,690,604 units ("Units"), with each Unit consisting of one common share of the Company (a "Common Share") and one-half of a Common Share purchase warrant (each whole Common Share purchase warrant, a "Warrant") at a price per Unit of $1.40 for gross proceeds to the Company of $3.8 million. The Company will complete a second closing within the next five business days for an additional 71,500 Units for additional gross proceeds of $100,100. Each full Warrant will entitle the holder to acquire one Common Share (a "Warrant Share") at a price of $1.75 for a period of two years from the closing of the Private Placement. If the volume weighted average price of the Common Shares on the Toronto Stock Exchange equals or exceeds $2.75 for 20 consecutive trading days, the Company will have the right (the "Acceleration Right") to accelerate the expiry date of the Warrants to a date that is 30 days from the date on which the Company notifies the Warrant holders of its intent to exercise the Acceleration Right.
Michael G. Sifton, DATA's Chief Executive Officer, and Gregory J. Cochrane, DATA's President, acquired 357,150 Units and 179,000 Units, respectively, and certain other senior executives of the Company acquired a total of 29,000 Units under the Private Placement. The balance of the Units were acquired by a group of third party investors.
The Company issued a total of 2,690,604 additional Common Shares pursuant to the Private Placement and a total of 19,263,235 Common Shares are currently outstanding (before giving effect to the exercise of any Warrants, the second closing of Units and the exercise of existing anti-dilution rights held by an existing shareholder of the Company). The Common Shares, Warrants and Warrant Shares will be subject to a statutory hold period expiring four months and one day after closing.
Bridging Credit Facility
The Company has established the Bridging Credit Facility with Bridging in the amount of $3.5 million pursuant to a credit agreement dated as of June 28, 2017 between the Company and Bridging. Advances under the Bridging Credit Facility are repayable on demand and bear interest at a rate equal to the prime rate of interest charged by the Company's bank lender from time to time plus 10.3% per annum, calculated and payable monthly. The Bridging Credit Facility has a term of one year and can be repaid in full or partially at any time without any fee upon sixty days prior written notice to the Lender, subject to the prior written consent of the Company's other senior lenders.
The Bridging Credit Facility is secured by certain specified equipment together with certain other conventional security.
In connection with the Bridging Credit Facility, the Company made certain amendments to its existing senior credit facility (the "Bank Credit Facility") maintained with a Canadian chartered bank. Under the terms of those amendments, the term portion (the "Bank Term Facility") of the Bank Credit Facility will amortize in equal monthly instalments over the twelve months ending June 2018 and advances under the Bank Term Facility will bear interest at the rate of the Canadian prime rate plus 2.25% per annum. In addition, the Company repaid $2 million of the borrowings outstanding under the Bank Term Facility. Principal repayments made on the Bank Term Facility will not reduce the total available principal amount under the Bank Credit Facility.
Use of Proceeds
The Company intends to use the net proceeds from the Private Placement, the Company's recently completed rights offering and the Bridging Credit Facility to repay DATA's principal and interest obligations under the Debentures at maturity, which total approximately $11.5 million, and for general corporate purposes.
Early Warning Reporting Information
The following information is being provided in respect of Michael G. Sifton in accordance with National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.
Pursuant to the Private Placement, Mr. Sifton acquired beneficial ownership of, or control over, a total of 357,150 Units (the "Acquired Units") at a price of $1.40 per Unit and an aggregate purchase price of $500,010. Prior to the acquisition of the Acquired Units, Mr. Sifton and his joint actors had beneficial ownership of, or control over, 1,544,354 Common Shares, 499,377 stock options (the "Options") to acquire Common Shares at a price of $1.50 per share and $62,000 aggregate principal amount of Debentures, representing 12.0% of the outstanding Common Shares. The principal amount of the Debentures is convertible, at the option of the holder, into Common Shares at a price of $1,189.41 per share (or 0.84075 Common Shares for each $1,000 principal amount of the Debentures). After giving effect to the acquisition of the Acquired Units and the completion of the Private Placement and assuming the exercise in whole of the Options and the Warrants comprising the Acquired Units and the conversion in whole of such Debentures, Mr. Sifton and his joint actors have beneficial ownership of, or control over, 2,579,508 Common Shares, representing 12.9% of the issued and outstanding Common Shares.
Mr. Sifton acquired the Acquired Units for investment purposes. Other than the possible exercise of the Options and, or, the Warrants, Mr. Sifton and his joint actors do not have any present plans or intentions to acquire or dispose of Common Shares. Depending upon the circumstances, including but not limited to the Company's business and prospects, market and general economic conditions and other available investment opportunities, however, Mr. Sifton and his joint actors may, in the future, acquire additional securities or related financial instruments of the Company or dispose of all or a portion of the securities or related financial instruments of the Company previously acquired.
About DATA Communications Management Corp.
DATA is a leading provider of business communication solutions, bringing value and collaboration to marketing and operation teams across North America. We help marketers and agencies unify and execute communications campaigns across multiple channels, and we help operations teams streamline and automate document and communications management processes. Our core capabilities include direct marketing, print services, labels and asset tracking, event tickets and gift cards, logistics and fulfilment, content and workflow management, data management and analytics, and regulatory communications. We serve clients in key vertical markets such as financial services, retail, healthcare, lottery and gaming, not‐for‐profit, and energy. We are strategically located across Canada to support clients on a national basis, and serve the U.S. market through our facilities in Chicago, Illinois.
Additional information relating to DATA Communications Management Corp. is available on www.datacm.com, and in the disclosure documents filed by DATA Communications Management Corp. on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.
Certain statements in this press release constitute "forward‐looking" statements that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, objectives or achievements of DATA, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward‐looking statements. When used in this press release, words such as "may", "would", "could", "will", "expect", "anticipate", "estimate", "believe", "intend", "plan", and other similar expressions are intended to identify forward‐looking statements. These statements reflect DATA's current views regarding future events and operating performance, are based on information currently available to DATA, and speak only as of the date of this press release. These forward‐looking statements involve a number of risks, uncertainties and assumptions and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such performance or results will be achieved. Many factors could cause the actual results, performance, objectives or achievements of DATA to be materially different from any future results, performance, objectives or achievements that may be expressed or implied by such forward‐looking statements. The principal factors, assumptions and risks that DATA made or took into account in the preparation of these forward-looking statements include the Company's debt service obligations under its outstanding credit facilities and other indebtedness; the availability of capital to refinance those debt obligations; and the fact that the Company's respective obligations under the Bank Credit Facility and the Bridging Credit Facility are subject to floating interest rates and therefore are subject to fluctuations in interest rates. Additional factors are discussed under the headings "Risk Factors" in DATA's annual information form and "Risks and Uncertainties" in DATA's management 's discussions and analysis and in DATA's other publicly available disclosure documents, as filed by DATA on SEDAR (www.sedar.com). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward‐looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Unless required by applicable securities law, DATA does not intend and does not assume any obligation to update these forward‐looking statements.
SOURCE DATA Communications Management Corp.
For further information: Mr. Michael G. Sifton, Chief Executive Officer, DATA Communications Management Corp., Tel: (905) 791-3151; Mr. James E. Lorimer, Chief Financial Officer, DATA Communications Management Corp., Tel: (905) 791-3151, [email protected]