DATA Communications Management Corp. Completes Rights Offering for $4.6 million and Announces Private Placement of up to $3.9 million for Gross Proceeds of up to $8.5 million
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
BRAMPTON, ON, June 23, 2017 /CNW/ - DATA Communications Management Corp. (TSX: DCM) ("DATA" or the "Company") is pleased to announce that it has completed its previously announced rights offering (the "Rights Offering"), raising gross proceeds of $4.6 million. The Company also announced that it intends to complete a non-brokered equity private placement (the "Private Placement") to raise up to $3.9 million. Collectively, the gross proceeds from the Rights Offering and the Private Placement will be up to $8.5 million.
Rights Offering
Under the terms of the Rights Offering, each eligible securityholder was entitled to subscribe for one common share of the Company ("Common Share") for every two rights held upon payment of the subscription price of $1.40 per Common Share. The Company will issue 3,312,368 Common Shares or approximately 50% of the Common Shares available under the Rights Offering for gross proceeds of approximately $4.6 million.
To the knowledge of the Company, after reasonable inquiry, directors, officers, employees and other insiders of the Company exercised subscription privileges, including subscription privileges associated with additional rights acquired in the market, to acquire 1,219,179 Common Shares under the Rights Offering representing total subscription proceeds of approximately $1.7 million. To the knowledge of the Company, after reasonable inquiry, no person that was not an insider became an insider of the Company as a result of the Rights Offering.
Upon closing the Rights Offering the Company has 16,572,631 Common Shares outstanding.
DATA retained Kingsdale Advisors as the information agent in connection with the Rights Offering.
Private Placement
The Company also announced that it intends to complete the Private Placement of up to 2,762,104 units ("Units"), with each Unit consisting of one 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 up to $3.9 million. 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, Gregory J. Cochrane, DATA's President, and a group of third party investors have agreed to subscribe for a total of approximately $3.5 million (2,521,465 Units) pursuant to the Private Placement. DATA expects to close the Private Placement on or about June 28, 2017. Completion of the Private Placement is subject to receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange.
If the Private Placement is fully completed, the Company will issue a total of 2,762,104 additional Common Shares pursuant to the Private Placement and a total of 19,334,735 Common Shares will be outstanding (before giving effect to the exercise of any Warrants or 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 the Private Placement closes.
The Company determined it was prudent to take advantage of expressions of interest received from certain investors to raise additional equity capital through the Private Placement, in order to provide additional financial flexibility to assist with the Company's current and projected capital requirements, including payment of principal and accrued and unpaid interest on the Company's outstanding 6.00% convertible unsecured subordinated debentures (the "Debentures") which mature on June 30, 2017.
Use of Proceeds
The Company intends to use the net proceeds from the Rights Offering and the Private Placement, together with borrowings under credit facilities established by the Company, to repay the Debentures at maturity and for general corporate purposes.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities of the Company in the United States. The securities described in this news release have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from registration is available.
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 Rights Offering, Mr. Sifton, a family member and a family holding corporation acquired beneficial ownership of, or control over, a total of 500,907 Common Shares (the "Acquired Shares") at a price of $1.40 per share and an aggregate purchase price of $701,269.80. The Acquired Shares represent approximately 3.0% of the issued and outstanding Common Shares (after giving effect to the completion of the Rights Offering). Prior to the completion of the Rights Offering, Mr. Sifton and his joint actors described above had beneficial ownership of, or control over, 1,043,447 Common Shares, 499,377 stock options to acquire Common Shares and $62,000 aggregate principal amount of Debentures, representing 11.21% of the outstanding Common Shares. After giving effect to the acquisition of the Acquired Shares and the completion of the Rights Offering and assuming the exercise in whole of such options and the conversion in whole of such Debentures, Mr. Sifton and his joint actors described above have beneficial ownership of, or control over, 2,043,783 Common Shares, representing 12.0% of the issued and outstanding Common Shares.
The Acquired Shares were acquired pursuant to the Rights Offering and will be held (together with the other securities of the Company beneficially owned, or over which Mr. Sifton and his joint actors have control) for investment purposes. Other than the possible exercise of stock options granted to Mr. Sifton pursuant to the Company's long-term incentive plan, and the acquisition of Units pursuant to the proposed Private Placement, 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.
The foregoing Early Warning Reporting Information does not give effect to the proposed Private Placement, pending the closing of that transaction.
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.
Forward-Looking Statements
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 ability to obtain Toronto Stock Exchange and other regulatory approval and the Company's ability to close the proposed Private Placement. Additional factors are discussed under the headings "Risk Factors" 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.
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]
Share this article