Trez Capital Mortgage Investment Corporation Announces Substantial Issuer Bid and Provides Update Regarding Orderly Wind-Up Plan
Jul 21, 2016, 17:00 ET
TORONTO, July 21, 2016 /CNW/ - Trez Capital Mortgage Investment Corporation (TZZ: TSX) (the "Company") announced today that its Board of Directors has authorized a substantial issuer bid to purchase for cancellation up to 2,325,581 Class A shares ("Shares") for an aggregate purchase price not to exceed $20 million (the "Offer"), as described below. The Offer represents approximately 12.3% of the Company's 18,885,806 Class A shares outstanding. A complete description of the terms and conditions of the offer will be contained in the offer to purchase and issuer bid circular, and related documents that will be filed with the applicable securities regulatory authorities in Canada and mailed to shareholders shortly.
The Company also provides the following update with respect to the progress of the Company's orderly-wind-up plan (the "Orderly Wind-Up Plan"). The Orderly Wind-Up Plan was approved by a special resolution of shareholders at the Company's annual and special meeting of shareholders held on June 16, 2016.
Since the shareholders approved the Orderly Wind-Up Plan on June 16, 2016, the Company has undertaken the following activities:
- received repayment of approximately $2.6 million principal amount of mortgages;
- sold approximately $13.3 million principal amount of mortgages at par prior to their scheduled maturity; and
- purchased for cancellation 335,944 Shares of the Company under its normal course issuer bid.
The Company's sale of approximately $13.3 million principal amount of mortgages in the Company's portfolio at par prior to their scheduled maturities to private funds managed by the Manager was approved by the independent directors of the Board on July 14, 2016.
Over the next 90 days the Company expects to receive $6.3 million in refinancing of existing mortgages by other private funds managed by the Manager. In addition, over the next 90 days, the Company also expects to receive repayment of up to $3.3 million principal amount of mortgages. However, there can be no assurance that any of such repayments will occur.
Under the Orderly Wind-Up Plan, the Company may pursue, where appropriate, opportunities to accelerate the monetization of the Corporation's loan portfolio through the sale of loans to third parties. In this regard, the Company has engaged Morrison Park Advisors Inc. ("MPA") to assist the Company in sourcing potential buyers for some or all of the Company's mortgages. The Board is of the view that a combination of strategic sales and repayments on existing maturities will yield the best results for shareholders in the wind-up process.
As of July 18, 2016, the expected weighted average term to maturity of the loan portfolio is 19 months and approximately $48.5 million in mortgages (representing approximately 31.6% of the total portfolio and including loans currently past due) are scheduled to mature on or before July 18, 2017. The final contractual loan maturity in the Corporation's portfolio is currently September 2, 2019.
Substantial Issuer Bid
The Offer will be made by way of a "modified Dutch auction" pursuant to which shareholders may tender all or a portion of their Shares (i) at a price not more than $9.00 and not less than $8.60 per Share, in increments of $0.05 per Share, or (ii) without specifying a purchase price, in which case their Shares will be purchased at the purchase price determined in accordance with the Offer.
The purchase price paid for each Share properly tendered and not withdrawn will be based on the number of Shares tendered and the prices specified by shareholders making such tenders, and will be the lowest price that will allow the Company to purchase up to an aggregate of $20 million of Shares at a price within the range specified above. Shareholders will receive the purchase price in cash for Shares tendered at prices equal to or lower than the purchase price. All Shares tendered at prices higher than the purchase price will be returned to shareholders. All Shares purchased by the Company will be purchased at the same price, even if shareholders have selected a lower price. If the number of Shares tendered at or below the purchase price would result in an aggregate purchase price in excess of $20 million, those Shares will be purchased on a pro rata basis. None of the Company or its Board of Directors makes any recommendation to shareholders as to whether to tender or refrain from tendering any or all of their Shares to the Offer or as to the purchase price or prices at which shareholders may choose to tender Shares
The Offer will not be conditional upon any minimum number of Shares being tendered, but will be subject to certain other conditions. A complete description of the terms and conditions of the Offer will be contained in the Offer to Purchase and Issuer Bid Circular and related documents that will be filed with the applicable securities regulatory authorities in Canada and mailed to shareholders shortly.
The Company will temporarily suspend its current normal course issuer bid that expires on May 18, 2017, and no subsequent purchases will be completed under such normal course issuer bid until after the expiration or termination of the Offer.
This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell the Company's Shares. The solicitation and the offer to buy the Company's Shares will be made only pursuant to the Offer to Purchase and Issuer Bid Circular and related documents. At the time the Offer is commenced, the Issuer will file the Offer to Purchase and Issuer Bid Circular and related documents with the Canadian securities regulatory authorities. Shareholders should carefully read the Offer to Purchase and Issuer Bid Circular, the related letter of transmittal and other related documents when they are available because they will contain important information, including the various terms and conditions of the Offer. The Offer to Purchase and Issuer Bid Circular, the related letter of transmittal and certain other documents will be delivered without charge to all Company shareholders. Offer documents required to be filed in Canada will be available without charge at www.sedar.com. Shareholders are urged to read these materials carefully prior to making any decision with respect to the Offer.
This press release may contain forward-looking statements with respect to the Company, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of the Company discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the substantial issuer bid and the Orderly Wind-Up Plan contemplated herein will be completed as contemplated. Important factors that could cause actual results to differ materially from expectations include, among other things, the availability of opportunities to accelerate the monetization of the Company's loan portfolio and the factors described under "Risk Factors" in the Company's Annual Information Form, which is available at www.sedar.com. These cautionary statements qualify all forward-looking statements attributable to the Company and persons acting on the Company's behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and the Company has no obligation to update such statements.
About the Company
The Company holds a diversified portfolio of mortgages in Canada. Trez Capital Fund Management Limited Partnership is the manager of and portfolio advisor to the Company.
SOURCE Trez Capital Junior Mortgage Investment Corporation
For further information: Karyn Phuong, Vice President, Investor Relations, Trez Capital, Tel: 647-788-1788, Email: [email protected]
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