MCAN Mortgage Corporation Announces Successful Closing of $15 Million Rights Offering
13 Jul, 2015, 18:29 ET
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TORONTO, July 13, 2015 /CNW/ - MCAN Mortgage Corporation ("MCAN", the "Company" or "we") today announced the successful closing of the previously announced rights offering (the "Offering"), which expired at 4:00 pm on July 10, 2015. The Offering raised gross proceeds of $15.3 million with 1,406,084 new Common Shares issued. Of the new Common Shares issued, 1.2 million were subscribed for under the initial subscription privilege and 0.2 million (out of total additional subscription requests of 1.46 million) were subscribed for under the additional subscription privilege. The Offering was therefore oversubscribed by 1.9 times.
As detailed in the Rights Offering Circular dated June 3, 2015, the exercise price for each new Common Share was $10.90. The net proceeds of the Offering (after payment of the estimated expenses of $125,000) will be used to fund further growth of the Company's mortgage origination opportunities, primarily in its single family residential product lines.
"We are pleased with the response from shareholders on the Offering," commented William Jandrisits, MCAN's President and Chief Executive Officer. "The majority of shareholders not only exercised their rights but also elected under the additional subscription privilege to apply for additional shares. We were considerably oversubscribed - a great vote of confidence from our investors as to the value of the Company's Common Shares and the potential for its performance in the future."
"The additional capital is important for the growth we need to attain our business objectives," Mr. Jandrisits added, "as it qualifies as both regulatory and income tax capital. Consistently, our core business activities of raising term deposits and originating and investing in mortgages must be done with prudent leverage and capital requirements in mind. The successful closing of the Offering provides MCAN with the capital support required to continue its in-house origination growth in single family insured and uninsured mortgages and avail itself to other investment opportunities that fit MCAN's risk appetite and net spread requirements."
The Company would like to thank all shareholders who participated in the Offering, which, as anticipated, included a high level of participation from MCAN directors, officers and staff.
Further Information: The Rights Circular dated June 3, 2015 was filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and is also available on the Company's website at www.mcanmortgage.com.
MCAN is a public company listed on the Toronto Stock Exchange ("TSX") under the symbol MKP and is a reporting issuer in all provinces and territories in Canada. MCAN also qualifies as a mortgage investment corporation ("MIC") under the Income Tax Act (Canada) (the "Tax Act").
MCAN's primary objective is to generate a reliable stream of income by investing its corporate funds in a portfolio of mortgages (including single family residential, residential construction, non-residential construction and commercial loans), as well as other types of financial investments, loans and real estate investments. MCAN employs leverage by issuing term deposits eligible for Canada Deposit Insurance Corporation ("CDIC") deposit insurance up to a maximum of five times capital (on a non-consolidated tax basis in the MIC entity) as permitted by the Tax Act. The term deposits are sourced through a network of independent financial agents. As a MIC, MCAN is entitled to deduct from income for tax purposes 100% of dividends, except for capital gains dividends, which are deducted at 50%. Such dividends are received by the shareholders as interest income and capital gains dividends, respectively.
MCAN's wholly-owned subsidiary, Xceed, focuses on the origination and sale to third party mortgage aggregators of residential first-charge mortgage products across Canada. As such, Xceed operates primarily in one industry segment through its sales team and mortgage brokers.
MCAN also participates in the NHA MBS program.
A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release contains "forward-looking statements" within the meaning of applicable Canadian securities laws. The words "may," "believe," "will," "anticipate," "expect," "planned," "estimate," "project," "future," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Such statements reflect management's current beliefs and are based on information currently available to management. The forward-looking statements in this press release include, among others, statements and assumptions with respect to:
- the current business environment and outlook;
- possible or assumed future results;
- ability to create shareholder value;
- business goals and strategy;
- the stability of home prices;
- effect of challenging conditions on us;
- factors affecting our competitive position within the housing markets;
- sufficiency of our access to capital resources; and
- the timing of the effect of interest rate changes on our cash flows.
The material factors or assumptions that were identified and applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking statements include, but are not limited to:
- the Company's ability to successfully implement and realize on its business goals and strategy;
- factors and assumptions regarding interest rates;
- housing sales and residential mortgage borrowing activities;
- the effect of competition;
- government regulation of the Company's business;
- computer failure or security breaches;
- future capital and funding requirements;
- the value of mortgage originations;
- the expected margin between interest earned on mortgage portfolios and interest paid on deposits;
- the relative continued health of real estate markets;
- acceptance of the Company's products in the marketplace;
- availability of key personnel;
- the Company's operating cost structure; and
- the current tax regime.
Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to:
- global market activity;
- worldwide demand for and related impact on commodity prices;
- changes in government and economic policy;
- changes in general economic, real estate and other conditions;
- changes in interest rates;
- changes in MBS spreads and swap rates;
- MBS and mortgage prepayment rates;
- mortgage rate and availability changes;
- adverse legislation or regulation;
- availability of MBS issuer allocation;
- technology changes;
- confidence levels of consumers;
- ability to raise capital and term deposits on favourable terms;
- our debt and leverage;
- competitive conditions in the homebuilding industry, including product and pricing pressures;
- ability to retain our executive officers and other employees;
- litigation risk;
- relationships with our mortgage originators;
- ability to realize anticipated benefits from the acquisition of Xceed; and
- additional risks and uncertainties, many of which are beyond our control, referred to in this press release and our other public filings with the applicable Canadian regulatory authorities.
Subject to applicable securities law requirements, we undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports should be consulted.
SOURCE MCAN Mortgage Corporation
For further information: MCAN Mortgage Corporation, Website: www.mcanmortgage.com, e-mail: [email protected]; William Jandrisits, President and Chief Executive Officer, (416) 591-2726; Jeffrey Bouganim, Vice President and Chief Financial Officer, (416) 203-5935
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