How many toll roads are going to be given back to the public? How many toll roads are near end of life? Do you know which tolls we are concentrated in? Do you know anything about your investment?
Risks Relating to the Business
A prospective purchaser of Debentures should carefully consider the risk factors described under the heading “Risk Factors” in the AIF. These risks include but are not limited to: (a) COVID-19, (b) risks affecting the Company and its business and corporate strategy generally, (c) risks affecting the Company’s operating subsidiaries more specifically, including those affecting ETC, IRD and WiLAN, (d) risks generally affecting the jurisdictions in which we and our operating subsidiaries conduct our businesses and (e) risks more specifically affecting our Common Shares and our status as a public company.
In addition to the risk factors described under the heading “Risk Factors” in the AIF, upon and following the Company’s acquisition of ETC, the Company may be subject to the following additional risks more specifically relating to ETC’s business (in addition to other ETC-related risks that are similar to those facing IRD and its business as described in the AIF):
(a) ETC’s business is currently concentrated with a relatively small number of customers and related agreements, the loss of certain of which customers without replacement could adversely affect its operating results and cash flows;
(b) ETC’s customers often rely on the issuance of bonds to construct their projects and if any issuance of such bonds by any such customer does not permit the construction of such a project, then any such customer may delay or terminate its agreement(s) with ETC, which could adversely affect its operating results and cash flows;
(c) from time to time, ETC is required by certain of its customers to obtain performance, litigation, payment, operation and/or maintenance bonds for specific projects; if ETC is unable to obtain any such required bonds or is unable to obtain any such bonds on a favourable basis, it may not be able to win and/or perform related agreements for such customers, which could adversely affect its operating results and cash flows; and
(d) from time to time, ETC is required by certain of its customers to agree to rigorous key performance indicators and related liquidated damages for the failure to meet such indicators; such liquidated damages can be substantial and, if ETC were required to pay any such liquidated damages, this could materially adversely affect its operating results and cash flows.
In addition, on September 1, 2021, the Company’s wholly-owned subsidiary Quarterhill ITS (as borrower) entered into the ITS Credit Agreement (as amended on September 16, 2021). The ITS Credit Facilities were used to pay a portion of the purchase price for ETC and for other general corporate purposes. The total commitments of the ITS Lenders under the ITS Credit Facilities is US$60 million (which includes a US$5 million revolving facility). The commitments of the ITS Lenders under the ITS Credit Facilities may be increased by US$25 million by way of an accordion feature, subject to satisfaction of certain conditions set forth in the ITS Credit Agreement. The ITS Credit Facilities are secured by a general security agreement over all of Quarterhill ITS’s assets and guaranteed by each of IRD and ETC as secured by general security agreements over all of each of their respective assets. As at each of September 1, 2021 and October 21, 2021, US$60 million was outstanding under the ITS Credit Facilities. As at the date of this Prospectus Supplement, Quarterhill ITS is in compliance with the terms of the ITS Credit Facilities and no breach of the ITS Credit Facilities has been waived by the ITS Lenders. If Quarterhill ITS were to default under the ITS Credit Facilities, including a failure to comply with any financial or other restrictive covenants, it could have a materially adverse effect on Quarterhill's business and prospects.
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