TORONTO, Dec. 7, 2022 /CNW/ - Standard Mercantile Acquisition Corp. (TSX: SMA) (the "Company") today announces that the Company has negotiated a favorable renewal of a mortgage (the "Alberta Mortgage") with a principal amount of approximately $16.9 million (of which the Company's portion is approximately $8.4 million), which is approximately 77.5% of the Company's mortgage portfolio consisting of two remaining mortgages in its portfolio and the renewal relates to a residential property located in the Province of Alberta, for a period of one year expiring on December 1, 2023. (the "Mortgage Renewal"). The Mortgage Renewal was negotiated by the Company in collaboration with the mortgage administrator responsible for the administration of the Alberta Mortgage, Trez Capital Limited Partnership.
Under the terms of the Mortgage Renewal, the borrower agreed to pay the Company approximately $2.8 million on December 1, 2022, which payment has been received by the Company as of the date of this press release, with two additional $2.8 million payments payable to the Company on or before June 1, 2023 and on or before December 1, 2023. The Company is also entitled to a 1% extension fee on its portion of the outstanding principal amount of the Alberta Mortgage. Interest will is now to be paid monthly on the Company's portion of the Alberta Mortgage until it is fully paid. The Alberta Mortgage was previously renewed in November 2020.
Special Distribution
The Company also announces that its board of directors has declared a special distribution of $0.45 per Class A share of the Company (the "Special Distribution"). The Special Distribution, which constitutes a return of capital pursuant to the winding-up of the Company's business as approved by shareholders of the Company on June 16, 2016, as amended on May 6, 2021 (the "Orderly Wind-Up"), will be paid on December 29, 2022 to holders of Class A shares of record at the close of business on December 16, 2022. As of December 7, 2022, there were 7,318,067 Class A shares outstanding.
The Special Distribution payment is not subject to any condition, will be made in cash and will be subject to the "Due Bill" trading requirements mandated by the Toronto Stock Exchange (the "TSX"). Because the amount of the Special Distribution represents a distribution of greater than 25% of the market value of the Class A shares on the declaration date, the TSX has required that the Class A shares trade on a "Due Bill" basis during the period (the "Due Bill Period") from and including December 15, 2022 until the close of trading on December 29, 2022 (the "Payment Date"). This means that buyers of Class A shares through the facility of the TSX during the Due Bill Period will receive the Special Distribution payment, provided they continue to be holders of the applicable Class A shares on the Payment Date.
The Class A shares will commence trading on an ex-distribution basis (i.e., without an attached "Due Bill" entitlement to the Special Distribution) commencing the opening of trading on December 30, 2022 (i.e., the next trading day after the Payment Date). The Due Bill redemption date will be January 3, 2023. As a result of the Class A shares trading on a Due Bill basis during the Due Bill Period, those entitled to be paid the Special Distribution owing on the Due Bills should expect to receive that payment by the Due Bill redemption date of January 3, 2023.
About the Company
The Company holds a portfolio of mortgages in Canada. At the Company's 2021 annual and special meeting of shareholders, the Company sought and received shareholder approval to change its name to "Standard Mercantile Acquisition Corp." and broaden the parameters of the Orderly Wind-Up. The Company remains focused on monetizing its remaining mortgage assets pursuant to the Orderly Wind-Up through potential future distributions of cash as and when available, and as determined to be in the best interests of the Company and shareholders, or otherwise and is considering options to enable its shareholders to participate in the potential future value of the Company through transactions that could capitalize on the Company's public listing. The Board has experience in sourcing, evaluating and executing transactions of this nature. There can be no assurances as to the timing or quantum of any future cash distributions or other monetization transactions.
Forward Looking Statements
Statements in this press release contain forward-looking information. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". The forward-looking statements are founded on the basis of expectations and assumptions made by the Company. Details of the risk factors relating to the Company and its business are discussed under the heading "Business Risks and Uncertainties" in the Company's annual Management's Discussion & Analysis for the year ended December 31, 2021 and under the heading "Risk Factors" in the Company's Annual Information Form dated March 30, 2022, copies of which are available on the Company's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. These statements speak only as of the date of this press release. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
SOURCE Standard Mercantile Acquisition Corp.
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