~TIMIA to acquire one of Canada's leading private providers of
residential mortgages focused on Ontario and British
Columbia; Combined company pro forma assets surpass $200
million~
VANCOUVER, BC, May 5, 2022
/CNW/ - TIMIA Capital Corporation ("TIMIA" or the "Company")
(TSXV: TCA) (OTCQB: TIMCF) a leading innovator in
specialty private credit, is pleased to announce that it
has entered into a non-binding letter of intent (the "LOI"),
dated April 29th, 2022 and
effective May 4th, 2022,
pursuant to which it has agreed to acquire Brightpath Capital
Corporation and Brightpath Residential Mortgage LP I
(collectively, "Brightpath"), one of Canada's leading private providers of
residential mortgages focused on Ontario and British
Columbia, for a purchase price of approximately $30.5 million comprised of a combination of
31,250,000 common shares ("Common Shares") with a deemed
value of $0.40 per share and
18,000,000 series A preferred shares ("Preferred Shares")
with a deemed value of $1.00 per
share (the "Transaction").
Brightpath is a leading private provider of residential
mortgages in Canada specializing
in arranging mortgages for those who are seeking alternatives to
traditional banking institutions. Over the past 10 years Brightpath
has grown significantly by offering private credit to individuals
who are self-employed, experiencing credit issues, or looking at
real estate renovation or development projects. Brightpath expects
to accelerate its growth through the combination with TIMIA.
The Brightpath management team will continue to operate the
mortgage lending company.
Highlights of the combined company and related financial metrics
include:
- The acquisition is expected to be immediately accretive for
TIMIA shareholders
- Combined insider ownership of approximately 54.5%
- Pro forma combined assets of approximately $210 million
- Key 2021 pro forma amounts for the combined entity:
-
- Revenue of approximately $24.0
million, an increase over TIMIA's consolidated revenue of
$9.7 million for Fiscal 2021
- Operating expenses of approximately $13.3 million, an increase over TIMIA's
consolidated operating expenses of $6.7
million for Fiscal 2021.
- Net income after taxes of $5.1
million, an increase over TIMIA's consolidated net income
$2.4 million.
- Brightpath generated $2.4 million
in normalized net income for fiscal 2021
"Brightpath Capital significantly increases our size and
profitability and opens our private credit business model to the
lucrative real-estate mortgage markets in Canada," said Mike
Walkinshaw, CEO of TIMIA. "TIMIA began as a specialist in
SaaS revenue based lending but has quickly grown to offering a
broad spectrum of specialized private credit opportunities to
Canadian investors. Our technology driven loan origination
and underwriting platform allows us to offer scalability and
transparency to other vertical segments of the private credit
industry, opening up a traditionally restricted asset class to a
broader range of investors. "
"TIMIA is a great fit for Brightpath as we prepare for our next
growth phase of successfully providing mortgages to those in need,"
said Blake Albright, President of
Brightpath Capital Corporation. "TIMIA's proven technology-based
loan origination and management platform and access to capital will
benefit both companies."
Details of the Transaction
Pursuant to the Transaction, TIMIA will directly or
indirectly:
- Acquire all of the outstanding common shares of Brightpath
Capital Corporation, and
- Acquire all of the outstanding limited partnership units of
Brightpath Residential Mortgage LP I.
Subject to adjustment, aggregate consideration payable by TIMIA
under the Transaction is comprised of:
- 31,250,000 Common Shares (at a deemed price of $0.40 per Common Share)
- 18,000,000 Series A Preferred Shares (at a deemed price of
$1.00 per Preferred Share).
Additional highlights of the combined company include:
- 90.85 million common shares total outstanding
post-transaction
- 28.5 million series A Preferred shares total outstanding
post-transaction
- 108.85 million common shares fully diluted post
transaction
- Continuity of management for Brightpath and the appointment of
Mr. Blake Albright as Chief Capital
Officer of TIMIA on closing.
Completion of the Transaction is subject to the following
conditions:
- Execution of definitive agreements for the Transaction
- Receipt of approval of the TSX Venture Exchange (the
"TSXV") for the Transaction
- Receipt of approval of the disinterested shareholders of TIMIA
Capital Corp. at its upcoming annual and special shareholders
meeting scheduled for June 7th, 2022
(the "Meeting")
- Receipt of all necessary third party consents, including the
consent of lenders to Brightpath
- Entry into voting agreements by certain of the vendors of
Brightpath
- Other customary closing conditions
- Expected closing in June
2022.
The vendors of Brightpath include Fiona
Elder and companies controlled by Blake Albright, Sabrina
Kyle and Ken Thomson. Mr.
Ken Thomson ("Thomson"), is a
director of the Company. The other vendors are at arm's length to
the Company. See "Related Party Transaction Details" below.
As part of its deliberations, the board of directors obtained a
fairness opinion from MNP LLP (the "Fairness Opinion"). The
Fairness Opinion provided that, as of May
2nd, 2022, based upon the and subject to the assumptions,
limitations and qualifications set forth therein, the Transaction
is fair, from a financial point of view, to the shareholders of the
Corporation. In addition, the directors formed a special committee
of independent directors to review and consider the potential
acquisition of Brightpath. A copy of the Fairness Opinion is
available for review upon request.
Thomson declared his interest in the Acquisition and abstained
from voting on approving the LOI and proceeding with the
Transaction. Thomson also was absent from discussions and
deliberations amongst the special committee, the remaining
directors and management. The board unanimously approved a
recommendation of the special committee and management to proceed
with the Transaction. Further information regarding the board
review process will be available for review in the circular for the
Meeting.
Related Party Transaction Details
Thomson indirectly owns or controls approximately 33% of
Brightpath Capital and a material limited partnership interest
in Brightpath Mortgage LP (together the "Brightpath
Securities") and he will receive 12,500,000 Common Shares and
4,000,000 Preferred Shares in exchange for his Brightpath
Securities on closing of the Transaction, subject to adjustment.
Accordingly, the Transaction will be considered a "related party
transaction" under MI 61-101 (as defined below) and will require
Majority of Minority Shareholder Approval (as defined below) prior
to closing. If Majority of Minority Shareholder Approval (as
defined below) for the Transaction is obtained at the Meeting and
the other closing conditions for the Transaction are met, the
Company proposes to close the Transaction in June 2022
Multilateral Instrument 61-101 - Protection of Minority
Holders in Special Transactions ("MI 61-101") was
adopted by the Ontario Securities Commission, the Alberta
Securities Commission and certain other securities regulatory
authorities in Canada to govern
transactions that raise the potential for conflicts of interest and
that may affect the interests of minority securityholders. In
addition, the TSXV has adopted the provisions of MI 61-101 in its
Policy 5.9 - Protection of Minority Holders in Special
Transactions ("Policy 5.9"). MI 61-101 and
Policy 5.9 are intended to regulate insider bids, issuer bids,
business combinations and related party transactions to ensure
equality of treatment among securityholders, generally by requiring
enhanced disclosure, minority securityholder approval, and, in
certain instances, independent valuations, as well as approval and
oversight of certain transactions by a special committee of
independent directors.
Under MI 61-101, a "related party" of an entity includes, among
others, a control person of the entity, directors and senior
officers of an entity, as well as shareholders holding over 10% of
the voting rights attached to the voting securities of the Company
(a "Related Party"). Thomson is a director and beneficial
shareholder of both the Company and Brightpath. Accordingly, Mr.
Thomson is a "related party" pursuant to MI 61-101.
A "related party transaction" under MI 61-101 includes, among
others, transactions where an issuer: (i) purchases or acquires an
asset from a Related Party for valuable consideration; or (ii)
issues a security to a Related Party. Pursuant to the Transaction,
the Company will acquire the Brightpath Securities in consideration
for the issuance of Common Shares and Preferred Shares, thereby
making the Transaction a "related party transaction" under MI
61-101.
MI 61-101 permits issuers to complete related party transactions
provided that certain disclosure is made regarding the Transaction
and the Related Party, including disclosure included in this news
release and the circular for the Meeting. In addition, unless an
exemption is available, issuers contemplating a related party
transaction must obtain (1) a formal valuation with respect to the
transaction, and (2) minority shareholder approval for the
transaction ("Majority of Minority Shareholder Approval").
With respect to the Transaction, the Company need not obtain a
formal valuation because it is an issuer listed on the TSX Venture
Exchange and may rely on the exemption available to it pursuant to
section 5.5(b) of MI 61-101 Issuer Not Listed on Specified
Markets. There is no exemption available to the Company with
respect to the Majority of Minority Shareholder Approval
requirement under MI 61-101 and as such, the Corporation must
obtain minority shareholder approval.
In relation to the approval of the Transaction, "minority
approval" requires the approval of a simple majority (50% +1) of
the holders of each of the Common Shares and Preferred Shares,
excluding those Common Shares and Preferred Shares beneficially
owned, or over which control or direction is exercised by: (a) the
issuer; (b) an interested party; (c) a "related party" to such
interested party within the meaning of 61-101 (subject to certain
exceptions); and (d) any person that is a joint actor with any
party referred to in (b) or (c) (collectively, the "Excluded
Shareholders"). In connection with the Transaction, there is
one Excluded Shareholder, Thomson. Thomson directly and
indirectly owns and controls 5,000,000 Common Shares, representing
8.4% of the outstanding Common Shares of the Corporation and
3,500,000 Preferred Shares, representing 33.4% of the outstanding
Preferred Shares of the Corporation.
Further information regarding the Majority of Minority
Shareholder Approval requirements for the Transaction will be set
forth in the circular for the Meeting.
About the Meeting:
The Company confirms its Annual General and Special Meeting will
be held on June 7, 2022, at
10:00am, at Room C300, UBC
Robson Square 800 Robson Street, Vancouver, British Columbia. The record date
for the shareholders entitled to vote at the Meeting has been set
as shareholders of record as at the close of business on
May 2, 2022. Business at the Meeting
includes setting the number of and electing directors of the
Company, appointing auditors for the ensuing year, approving an
equity incentive plan and approving the Transaction. A copy of the
notice of meeting, proxy and management information circular for
the Meeting will be available on the Company's SEDAR profile
at www.sedar.com.
About Brightpath Capital
Brightpath specializes in arranging mortgages for people who are
self-employed, new to the country, experiencing credit issues, or
looking at renovation/flip projects. Our knowledge and experience,
efficient service, and common sense approach to lending are just a
few of the reasons to select Brightpath Capital for financing
needs. We also offer bridge financing for residential properties
with flexible terms. Private mortgages at very competitive terms.
Interest only payments. Fully open terms. For more
information please visit: www.brightpath.ca
About TIMIA Capital Corporation
The Company democratizes private credit for investors by
offering a broad range of speciality private credit opportunities
with transparency and efficiency, facilitated by the Company's
proprietary technology platform. These high-yield loan
opportunities are delivered through two operating divisions: TIMIA
Capital which offers revenue-based investment to fast growing,
business-to-business Software-as-a-Service (or SaaS) businesses in
North America, and Pivot Financial
which specializes in asset-based private credit targeting
mid-market borrowers in Canada.
The Corporation deploys funds on behalf of limited partnerships,
institutions, retail investors, high net worth individuals, its
management team and shareholders. For more information about TIMIA
and SaaS lending, please visit www.timiacapital.com. For more
information about specialized private credit and Pivot please
visit: www.pivotfinancial.com
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Forward-Looking Information
Certain information and statements in this news release contain
and constitute forward-looking information or forward-looking
statements as defined under applicable securities laws
(collectively, "forward-looking statements"). Forward-looking
statements normally contain words like 'believe', 'expect',
'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may',
'will', 'should', 'ongoing' and similar expressions, and within
this news release include any statements (express or implied)
respecting the completion of the Transaction, the future
performance of the combined companies, the execution of definitive
transaction documentation, the conditions of closing the
transaction, including the approval of the TSXV and approval of the
shareholders of the Company, future value creation for
shareholders, the creation of value for shareholders following
completion of the Transaction, growth of the company's investment
portfolio and expectations regarding making further investments in
the coming months, the execution of voting agreements by certain
vendors of Brightpath and the appointment of additional officers of
the Company. Forward-looking statements are not guarantees of
future performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances, including, without limitation, the following
assumptions: that the conditions to the completion of the
Transaction and Investment Transaction will be satisfied, that the
Company and its investee companies are able to meet their
respective future objectives and priorities, assumptions concerning
general economic growth and the absence of unforeseen changes in
the legislative and regulatory framework for the Company.
Although management believes that the forward-looking statements
are reasonable, actual results could be substantially different due
to the risks and uncertainties associated with and inherent to
Timia's business. Material risks and uncertainties applicable to
the forward-looking statements set out herein include, but are not
limited to, the conditions of the Transaction and Investment
Transaction not being satisfied, the Company having insufficient
financial resources to achieve its objectives; availability of
further investments that are appropriate for the Company on terms
that it finds acceptable or at all; successful completion of exits
from investments on terms that constitute a gain when no such exits
are currently anticipated; intense competition in all aspects of
business; reliance on limited management resources; general
economic risks; new laws and regulations and risk of litigation.
Although Timia has attempted to identify factors that may cause
actual actions, events or results to differ materially from those
disclosed in the forward-looking statements, there may be other
factors that cause actions, events or results not to be as
anticipated, predicted, estimated or intended. Also, many of the
factors are beyond the control of Timia. Accordingly, readers
should not place undue reliance on forward-looking statements.
Timia undertakes no obligation to reissue or update any
forward-looking statements as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements contained in this news release are
qualified by this cautionary statement.
SOURCE TIMIA Capital Corp.
