CARLSBAD, CA, Nov. 21, 2013 /CNW/ - Pivot Technology Solutions, Inc.
("Pivot" or the "Company") (TSX-V: PTG) today announced it has received
Board approval to move forward with a formal exchange offer to holders
of its Series A preferred shares.
Under the terms of the offer, the Company proposes to allow holders of
Series A preferred shares to tender to the Company all of their Series
A preferred shares for exchange for subordinated redeemable notes that
can, in part, be exchanged into common shares of the Company (based on
an exchange price of Cdn$0.40 per share). The notes are to be issued
by Pivot's wholly owned subsidiary ACS Acquisition Holdings, Inc., and
will be guaranteed by Pivot Technology Solutions, Inc. The notes will
have a four year term and bear interest at an annual interest rate of
8%, payable quarterly on the last day of each calendar quarter. The
notes will be mandatorily redeemable at quarterly intervals over a four
year period. In addition, the notes may be redeemed at the option of
the Company after the second anniversary at a price equal to 110% of
the principal amount and after the third anniversary at a price equal
to 105% of the principal amount (in each case, together with accrued
but unpaid interest).
Once completed, the exchange offer will result in the following changes
to the Company's capitalization:
-
If all Series A preferred shares, outstanding as of the date of the
release, are tendered for exchange, $35.5 million principal amount of
notes will be issued.
-
Up to a maximum of one third of the outstanding notes can be exchanged
into common shares on the basis of Cdn$0.40 per share, limiting the
maximum number of common shares that can be issued under the conversion
to 29,560,667, subject to the right of holders to exchange up to all
outstanding note principal and unpaid interest into common shares at
Cdn$0.40 in the event of a default by the Company in its obligations
under the notes.
-
Upon issuance of the notes, the stated amount of the preferred shares
will be largely reclassified from shareholders' equity on the Company's
balance sheet, at a value to be determined in accordance with IFRS
accounting standards.
-
Preferred shares not tendered for exchange will be converted into common
shares on a one for one basis.
In the event of a default at maturity (as defined in the indenture
relating to the notes), noteholders will have the right to seek the
repayment of up to 20.5% of the original issue amount of the notes with
the balance (or, at the option of each noteholder, 100% of their then
outstanding unpaid notes) to be satisfied by exchanging unpaid notes
for common shares.
Warren Barnes, CEO of Pivot, stated, "We believe the offer represents a
balanced solution to satisfy all stakeholder needs. Firstly, it will
create more visibility on our capital structure and, depending on the
level of participation, could reduce potential dilution by as much as
two thirds. Secondly, it provides holders of the preferred shares, who
have been strong supporters of the Company throughout its formative
years, with an instrument that allows them to participate as
shareholders in the future of the Company, while at the same time
providing a definitive path to liquidity."
The terms and conditions of the notes and of the exchange offer will be
described in a circular to be mailed to holders of Series A preferred
shares and which will be made available on www.sedar.com.
The exchange offer will be made by way of formal bid in accordance with
applicable securities laws. The bid circular is expected to be mailed
to all holders of Series A preferred shares by December 20, 2013 and
will remain open for 35 days. The exchange offer will be subject to
customary conditions, including approval of the TSX Venture Exchange
(the "TSXV"). Management anticipates completion by January 31, 2014.
About Pivot Technology Solutions, Inc.
Together with its portfolio companies and partners, Pivot delivers
solutions that enable organizations to design, build, implement and
maintain computing and communication infrastructure that addresses
their unique business needs. Pivot's approach supports improvement of
business performance, helps organizations reduce capital and operating
expenses, and accelerates the delivery of new products and services to
end-customers. With over 2,000 clients, many of whom are Fortune 1000
companies, Pivot extends its value added solutions to help
organizations of all sizes improve operating efficiency, reduce
complexity and enhance service delivery through virtualization and
cloud computing. Pivot enables businesses to extend their enterprise
through mobility solutions to better connect business partners and
customers. Pivot has offices throughout North America and can be found
online at www.pivotts.com.
Forward Looking Statement
This news release contains statements that, to the extent they are not
recitations of historical fact, may constitute "forward-looking
statements" within the meaning of applicable Canadian securities laws.
Forward-looking statements in this news release include statements
regarding the exchange offer and its impact on Pivot's future
capitalization or the assumptions underlying any of the foregoing.
Pivot uses words such as "may", "would", "could", "will", "likely",
"expect", "believe", "intend" and similar expressions to identify
forward-looking statements. Any such forward-looking statements are
based on assumptions and analyses made by Pivot in light of its
experience and its perception of historical trends, current conditions
and expected future developments, including the assumption that TSXV
approval will be obtained, that the circular relating to the exchange
offer will be mailed by December 20, 2013, as well as other factors
Pivot believes are appropriate under the relevant circumstances.
However, whether actual results and developments will conform to
Pivot's expectations and predictions is subject to any number of risks,
assumptions and uncertainties. Many factors could cause Pivot's actual
results, to differ materially from those expressed or implied by the
forward-looking statements contained in this news release. These
factors include, without limitation: the risk that TSXV approval may
not be obtained within the timeframe expected or that the number of
Series A preferred shares not tendered to the exchange offer will
exceed the number anticipated, resulting in the issuance of a greater
number of common shares on conversion of Series A preferred shares than
expected. The "forward-looking statements" contained herein speak only
as of the date of this press release and, unless required by applicable
law, the Company undertakes no obligation to publicly update or revise
such information, whether as a result of new information, future events
or otherwise.
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 release.
SOURCE Pivot Technology Solutions, Inc.
