TORONTO, March 26, 2013 /CNW/ - Xceed Mortgage Corporation. (TSX: XMC)
("Xceed") today announced that it has entered into an arrangement
agreement (the "Agreement") with MCAN Mortgage Corporation ("MCAN",
TSX:MKP) pursuant to which MCAN will acquire, by way of a plan of
arrangement ("Plan of Arrangement") under the Business Corporations Act (Ontario), 100% of the issued and outstanding shares of Xceed for $1.75
per Xceed share on a fully diluted basis (the "Transaction"). The
Transaction is expected to close within 90 days.
In March 2012, Xceed announced that the board of directors (the "Board")
had created a special committee consisting of its independent board
members (the "Special Committee"), to undertake a strategic review and
consider future opportunities for Xceed, including recommencing its
application to become a bank, seeking out a sale, merger or other
transaction involving Xceed and returning capital to shareholders in a
tax effective manner, including by way of a wind-up of Xceed. Following
the Special Committee's strategic review of these and other options,
the Board has unanimously determined, upon the recommendation of the
Special Committee and after consideration of the advice of legal and
financial advisors to Special Committee and Xceed, that the Plan of
Arrangement is in the best interests of Xceed. Canaccord Genuity Corp.,
Xceed's financial advisor, has provided the Special Committee and the
Board with an opinion that, as of the date hereof, the consideration
payable in connection with the Plan of Arrangement is fair, from a
financial point of view, to Xceed's shareholders.
Under the Plan of Arrangement, Xceed shareholders will, for each share
held, receive at their election, subject to adjustment: (i) 0.118 MCAN
common shares or (ii) $1.75 in cash, or a combination thereof, subject
to a maximum of $30 million in aggregate cash being paid. The
implementation of the Plan of Arrangement will be subject to approval
of 66⅔% of shareholders of Xceed present at a meeting to be held in May 2013.
Certain shareholders, including Akemis Holding SARL, Windsor Private
Capital LP, Chiefswood Holdings Limited and each director and officer
of Xceed who is a shareholder have agreed to vote in favour of the Plan
of Arrangement. Collectively, this group of shareholders beneficially
owns approximately 13,248,000 shares of Xceed representing
approximately 48.54% of the total shares outstanding.
The Transaction is subject to a number of closing conditions, including
court approval, the approval of not less than 66⅔% of the votes cast by Xceed shareholders and regulatory approvals.
The Agreement provides for, among other things, a non-solicitation
covenant on the part of Xceed, subject to customary "fiduciary out"
provisions and a right in favour of MCAN to match any superior
proposal. The Agreement also provides for a termination fee of $2
million payable by the parties in certain specified circumstances and
reciprocal expense reimbursement payments of $750,000 in certain
specified circumstances.
Mr. Jim Taylor, Chairman of the Special Committee of the Board, said, "
We are pleased to announce this transaction with MCAN. We believe this
transaction represents the best outcome resulting from the strategic
review process that the Special Committee undertook to enhance
shareholder value."
Mr. Ivan Wahl, Chairman of the Board, said, "This Transaction provides
Xceed shareholders with an opportunity for liquidity and to acquire
shares of a strong performer in the mortgage industry and capital
markets."
A material change report, which provides more details on the Transaction
and the Agreement will be filed with the Canadian securities regulators
and will be available at www.sedar.com and at Xceed's website at www.xceedmortgage.com.
Shareholders should consult their own investment dealer, stockbroker,
bank manager, accountant, lawyer or other professional advisor with
respect to the Transaction.
About Xceed Mortgage
Xceed Mortgage Corporation, based in Toronto, is a Canadian provider of
residential mortgages that it originates in Canada. The Company has
approximately $0.8 billion of mortgages under administration. The
Company's shares are traded on the Toronto Stock Exchange ("TSX") under
the symbol XMC. To find out more about Xceed Mortgage Corporation,
visit our website at www.xceedmortgage.com.
Forward-Looking Statements
Forward-looking statements in this document are based on current
expectations that are subject to significant risks and uncertainties.
Actual results might differ materially due to various factors such as
the competitive nature of the mortgage industry, the ability of the
Company to continue to execute its growth and development strategy, and
the reliance of the Company on key personnel. The Company and the
Company's management assume no obligation to update these
forward-looking statements, or to update the reasons why actual results
could differ from those reflected in these. Additional information
identifying risks and uncertainties is contained in the company's
regulatory filings available on its website and at www.sedar.com.
About MCAN Mortgage Corporation
MCAN is a public company listed on the TSX under the symbol MKP and is a
reporting issuer in all provinces and territories in Canada. MCAN also
qualifies as a mortgage investment corporation ("MIC") under the Income
Tax Act (Canada) (the "Tax Act"). The Company's primary objective is to
generate a reliable stream of income by investing its corporate funds
in a portfolio of mortgages (including single family residential,
residential construction, non-residential construction and commercial
loans), as well as other types of financial investments, loans and real
estate investments. MCAN employs leverage by issuing term deposits
eligible for Canada Deposit Insurance Corporation ("CDIC") deposit
insurance up to a maximum of five times capital (on a non-consolidated
tax basis) as permitted by the Tax Act. The term deposits are sourced
through a network of independent financial agents. As a MIC, MCAN is
entitled to deduct from income for tax purposes 100% of dividends,
except for capital gains dividends, which are deducted at 50%. Such
dividends are received by the shareholders as interest income and
capital gains dividends, respectively. MCAN also participates in the
Canada Mortgage Bonds program, and other securitizations of insured
mortgages.
SOURCE: Xceed Mortgage Corporation
Michael Jones, President and Chief Executive Officer, and Jeff Bouganim, Chief Financial Officer will be available to respond to investor inquiries regarding this Arrangement.