VANCOUVER, May 7, 2020 /PRNewswire/ - Mogo Inc. (TSX:MOGO)
(NASDAQ:MOGO) ("Mogo" or the "Company"), one of Canada's leading financial technology
companies, announced today that it has provided enhanced terms to
the amendments to its 10.0% convertible senior secured debentures
due May 31, 2020 (TSX: MOGO.DB)
(the "Convertible Debentures") to be considered at the meeting
of holders of the Convertible Debentures ("Convertible
Debentureholders") to be held on May 22,
2020 (the "Meeting").
Based on feedback from Convertible Debentureholders, the Company
has announced revised terms to the originally proposed amendments.
Mogo now proposes the following enhanced amendments (together with
the originally proposed amendments, the "Amendments") for
Convertible Debentureholders to consider at the Meeting:
- Reduce the conversion price of the principal by 45% from
$5.00 to $2.75 per common share. Previously, the Company
had proposed reducing the conversion price from $5.00 to $3.50 per
common share;
- Removal of the proposed amendment to establish a minimum price
at which common shares may be issued to repay the principal amount
of the Convertible Debentures at maturity; and
- In addition to the previously proposed early consent fee of 1%
for those Convertible Debentureholders who consent to the
Amendments before 5pm (Vancouver time) on May
15, 2020 (the "Early Consent Deadline") by validly
submitting their proxy or voting information form, the Company is
announcing it will also pay a solicitation fee of 1% of the
principal amount of Convertible Debentures that are voted in favor
of the Amendments prior to the Early Consent Deadline to the
soliciting dealer who solicits such proxy or voting instruction
voted in favor of the Amendments.
"Based on discussions with Convertible Debentureholders, we're
enhancing the previously proposed amendments to the Convertible
Debentures and have received strong support to move forward on
these revised terms," said Greg
Feller, President and CFO.
In summary, the Company is now proposing the following
Amendments to the Convertible Debentures, including the originally
proposed amendments and revised terms as above:
- Extend the maturity date of the Convertible Debentures from
May 31, 2020 to May 31, 2022;
- Reduce the conversion price of the principal by 45% from
$5.00 to $2.75 per common share;
- Increase the frequency of interest payments from semi-annually
to quarterly;
- Increase the early conversion trigger from 115% to 125% (such
price equaling $3.4375 per common
share based on the proposed amended conversion price) to allow
investors greater opportunity to take advantage of a rising share
price and thus an extended period to benefit from the coupon
payment;
- Amend the provisions relating to payment of interest upon early
conversion so as to ensure that payment of interest through the
issuance of common shares is permitted by and complies with
applicable securities regulations and stock exchange policies;
and
- Amend the definition of change of control provision to provide
the Company with greater flexibility to pursue or enter into a
strategic transaction.
Details regarding the Amendments and the Meeting can be found in
the Company's management information circular (the "Circular")
which has been filed under the Company's profile on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. For the Amendments
to be approved, provided quorum has been met, holders of at least
66 ⅔% of the outstanding principal amount of the Convertible
Debentures represented at the Meeting must vote FOR the
extraordinary resolution approving the Amendments (the
"Extraordinary Resolution").
As a result of the enhanced terms to the Amendments, the Company
is mailing new BLUE forms of proxies and voting information forms
("VIFs") to all Convertible Debentureholders, and any votes
submitted on the yellow form of proxies and VIFs by Convertible
Debentureholders will be discarded. ACCORDINGLY, IN ORDER FOR THEIR
VOTE TO BE TABULATED, CONVERTIBLE DEBENTUREHOLDERS MUST SUBMIT
THEIR VOTE USING THE NEW BLUE FORM, EVEN IF THEY HAVE PREVIOUSLY
VOTED USING THE YELLOW FORM.
If the Amendments are approved by the Convertible
Debentureholders, they will be effective on the date that the
Company enters into the second supplemental trust indenture
providing for such amendments, which is anticipated to be on or
about May 26, 2020. The Amendments
are also subject to the approval of the Toronto Stock Exchange.
If the Amendments are not approved by the Convertible
Debentureholders at the Meeting, the Company intends to repay the
principal amount and all accrued interest owing under all of the
Convertible Debentures through the issuance of common shares on
May 31, 2020, as permitted by the
governing indenture.
Certain of the Company's directors and executive officers who
own in the aggregate 1.7% of the outstanding Convertible Debentures
are considered "related parties" to the Company for the purposes of
Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions ("MI 61-101"),
and accordingly, the Amendments are considered "related party
transactions" within the meaning of MI 61-101. The Company is
relying on exemptions from the formal valuation and minority
shareholder approval requirements in Sections 5.5(a) and 5.7(1)(a)
of MI 61-101 in respect of the Amendments as neither the fair
market value of the Convertible Debentureholders held by interested
parties (as such term is defined in MI 61-101) nor any
consideration for the transaction insofar as it involves interested
parties exceeds 25% of the market capitalization of the
Company.
Early Consent & Solicitation Fees
Those Convertible Debentureholders that consent to the
Extraordinary Resolution by validly submitting their proxy or
voting information form on or before 5:00
p.m. (Vancouver time) on
May 15, 2020 will earn an increase to
their return on investment by receiving cash consideration
equivalent to 1% of the principal amount of Convertible
Debentures held by such Convertible Debentureholders as at the
Record Date, subject to the Extraordinary Resolution being approved
at the Meeting.
In addition, the Company has engaged Raymond James and Eight Capital as co-financial
advisors in connection with the Amendments and to form and manage
the group of soliciting dealers to solicit proxies or voting
instructions in favour of the Amendments. The Company will pay a
solicitation fee of 1% of the principal amount of Convertible
Debentures that are voted in favour of the Amendments prior to the
Early Consent Deadline, payable to the soliciting dealer who
solicits such proxy or voting instruction form voted in favour of
the Amendments. No solicitation fees will be paid to the soliciting
dealers if the Amendments are not approved by the Convertible
Debentureholders at the Meeting or if the vote is received after
the Early Consent Deadline.
If you have any questions about the amendments or how to vote,
contact Raymond James at
ecmsyndication@raymondjames.ca or (416) 777-4939 or Eight Capital
at ecm@viiicapital.com or (416) 350-3476.
Board of Directors Recommends a Vote In Favour
The Company's board of directors has concluded that the
Amendments are in the best interests of the Company
and UNANIMOUSLY RECOMMENDS that Convertible
Debentureholders vote FOR the Amendments.
Forward-Looking Statements
This news release may contain "forward-looking statements"
within the meaning of applicable securities legislation, including
statements regarding the timing for implementing the proposed
Amendments. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable by management at the time of preparation, are inherently
subject to significant business, economic and competitive
uncertainties and contingencies, and may prove to be incorrect.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual financial
results, performance or achievements to be materially different
from the estimated future results, performance or achievements
expressed or implied by those forward-looking statements and the
forward-looking statements are not guarantees of future
performance. Mogo's growth, its ability to expand into new products
and markets and its expectations for its financial performance for
2020 are subject to a number of conditions, many of which are
outside of Mogo's control. For a description of the risks
associated with Mogo's business please refer to the "Risk Factors"
section of Mogo's current annual information form, which is
available at www.sedar.com and
www.sec.gov. Except as required by law, Mogo disclaims
any obligation to update or revise any forward-looking statements,
whether as a result of new information, events or otherwise
About Mogo
Mogo — a financial technology company — offers a finance app
that empowers consumers with simple solutions to help them get in
control of their financial wellness. Financial wellness continues
to be the #1 source of stress across all demographics and highest
among millennials. At Mogo, users can sign up for a free account in
only three minutes and begin to learn the 4 habits of financial
health and get convenient access to products that can help them
achieve their financial goals. The Mogo platform has been
purpose-built to deliver a best-in-class digital experience, with
best-in-class products all through one account. With more than one
million members and a marketing partnership with Canada's largest news media company, Mogo
continues to execute on its vision of becoming the go-to financial
app for the next generation of Canadians. To learn more, please
visit mogo.ca or download the mobile app (iOS or Android).
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SOURCE Mogo Inc.