Trez Capital Senior Mortgage Investment Corporation Announce Proposed Transition to Public Company Regulatory Regime

Toronto Stock Exchange: TZS

VANCOUVER, Oct. 15, 2013 /CNW/ - Trez Capital Fund Management Limited Partnership (the "Manager"), the manager of Trez Capital Senior Mortgage Investment Corporation (the "Corporation"), announced today that it will seek approval from the shareholders of the Corporation to implement changes in connection with changing the status of the Corporation for purposes of Canadian securities regulations from that of an investment fund to that of reporting issuer that is a public corporation (the "Proposed Transition").  To that end, the Board of Directors of the Corporation has authorized the calling of a special meeting (the "Special Meeting") of its shareholders to be held on November 29, 2013. The record date for determining shareholders entitled to receive notice of the Special Meeting will be October 29, 2013, at a location to be determined.

This decision is a pro-active response by the Manager to the proposed regulatory changes (the "Proposed Regulatory Changes") announced by the Canadian Securities Administrators' ("CSA") earlier this year which, if and when implemented, would (among other matters) prohibit the Corporation from continuing to invest in non-government guaranteed mortgages.

Since its inception in 2012, the Corporation has consistently paid out monthly distributions at its targeted levels and net asset value has been relatively stable since its initial public offering. Accordingly, the Manager believes that it is in the best interest of the shareholders of the Corporation that it continues to have the ability to pursue its current objectives and mandate by transitioning to the public company regime.  Such a transition was expressly contemplated by the CSA in the Proposed Regulatory Changes.

Following the Proposed Transition, the Corporation will continue to qualify as a mortgage investment corporation under the Income Tax Act (Canada) and will continue to pursue its current investment objectives and strategies. Some key changes to the Corporation will occur as part of the Proposed Transition, including the following:

	Current	After Proposed Transition
Continuous Disclosure by Trez Senior MIC	Semi-annual financial statements for investment funds, accompanied by management reports of fund performance Publication of net asset value on a weekly basis Quarterly portfolio disclosure	Quarterly financial statements or public companies, accompanied by management discussion and analysis Book value disclosed in quarterly financial statements
Basis of Accounting	Canadian GAAP (Part V)	International Financial Reporting Standards (IFRS)
Class Structure	One class of publicly traded shares	One class of publicly traded shares, with the ability to issue other classes of shares
Shareholder Voting	Class A Shares are non-voting	Class A Shares are fully voting
Liquidity	Redeemable annually at net asset value per share, subject to a 15% cap	Redemption feature will cease to exist
Governance	Class A Shareholder approval only required on special resolutions as per CBCA or the Articles (no annual shareholder meetings) Audit Committee and Independent Review Committee	Class A Shareholders approve all matters as per CBCA and articles (annual meetings of Class A Shareholders commence in 2014) Audit and Nomination Committees
Annual Trailer Fees	Annual Trailer Fee of 0.40%	No trailer fees paid

The Manager is of the view that the Proposed Transition will provide shareholders of the Corporation with a number of benefits, including:

• the ability to continue pursuing its current mandate in accordance with its current investment objectives and strategies;
  
  
• the ability to raise additional capital, as needed;
  
  
• the elimination of the trailer fees paid on Class A Shares will leave more of the income generated by the Corporation available for distribution to its shareholders;
  
  
• the grant of full voting rights to Class A Shareholders;
  
  
• increased frequency of financial reporting;
  
  
• the potential for research analyst coverage which does not cover investment funds; and
  
  
• increased stability of capital resulting from the elimination of the redemption feature.

If the Proposed Transition is approved, shareholders of the Corporation will have a one-time opportunity to request that their Class A Shares be redeemed at their net asset value on December 31, 2013. The number of Class A Shares of the Corporation which can be redeemed on December 31, 2013 will be limited to 15% of its currently outstanding number of shares.

Shareholders will be asked at the Special Meeting to consider and, if thought fit, approve the Proposed Transition and certain related changes including the following:

• Class A Shares will become fully voting and all redemption rights will be removed from the Class A Shares.
  
  
• The Corporation will be permitted to issue additional classes of shares in the future.
  
  
• Matters requiring shareholder approval will be removed from the Corporation's articles.
  
  
• The Management Agreement for the Corporation will be amended to provide for a termination fee payable to the Manager in the event of termination of the Management Agreement other than for cause.

A notice of meeting and management information circular of the Corporation containing additional information regarding the Proposed Transition is currently expected to be mailed to all shareholders by November 6, 2013.

For information, please visit www.trezcapital.com.

 

SOURCE: Trez Capital Senior Mortgage Investment Corporation

Michael Nisker 
President & Chief Executive Officer  
Trez Capital Senior Mortgage Investment Corporation 
416-350-1299 
[email protected]

Karyn Phuong 
Vice President, Investor Relations
Trez Capital
647-788-1788
[email protected]