Mr. Cameron MacDonald reports
WESTAIM COMPLETES PRIVATE PLACEMENT OF SUBSCRIPTION RECEIPTS AND ENTERS INTO SUBSCRIPTION AGREEMENT FOR COMMON SHARES FOR AGGREGATE GROSS PROCEEDS OF APPROXIMATELY $150 MILLION
The Westaim Corp. has completed the sale of an aggregate of
50,995,385 subscription receipts at a purchase price of $2.65 per subscription receipt for aggregate
gross proceeds of $135,137,770. An aggregate of 47,180,380 subscription receipts ($125,028,007)
were sold pursuant to an underwriting agreement between the company,
Westaim HIIG LP (the partnership), GMP Securities LP and TD Securities Inc. (together, the joint bookrunners), and Cormark Securities Inc. (collectively with the joint bookrunners,
the underwriters). The subscription receipts sold pursuant to the underwriting
agreement include the exercise in full of the underwriters' option. An
additional 3,815,005 subscription receipts ($10,109,763) were sold
pursuant to a concurrent non-brokered private placement of subscription
receipts. The concurrent private placement included subscriptions by members
of the company's board of directors and management team for an aggregate of 3.4 million subscription receipts. The net
proceeds of the offering and the concurrent private placement will be
held in escrow pending satisfaction of the escrow release conditions as
described below.
The subscription receipts were issued under a subscription receipt
indenture among Westaim, the joint bookrunners and Equity Financial Trust
Company. Each subscription receipt entitles the holder thereof to receive, without further consideration or action, one common share of the company upon the satisfaction of the escrow release conditions, provided that
such conditions have been satisfied at or prior to the earlier of: (i)
4:30 p.m. (Toronto time) on Sept. 12, 2014, and (ii) the
termination of the stock purchase agreement in respect of the
acquisition (as defined below) in accordance with its terms; or if the escrow release conditions are not satisfied at or prior to
the termination time, holders of the subscription receipts will be
entitled to receive an amount equal to the full purchase price of a
subscription receipt plus the holder's pro rata entitlement to the
interest earned or income generated, if any, on such amount.
The escrow release conditions include, without limitation, the
following:
-
The TSX Venture Exchange having approved the listing of the common shares underlying the
subscription receipts on the TSX-V;
-
Receipt, as applicable, of certain regulatory approvals;
-
The acquisition agreement in respect of the acquisition shall not have
been withdrawn, terminated or cancelled, and the company, the
partnership and/or the vendors shall not have indicated that they
otherwise are not prepared to proceed with the acquisition;
-
All conditions required to complete the acquisition, other than payment
of the purchase price therefor and such other procedural conditions
that are customarily fulfilled immediately prior to the closing of a
transaction in the nature of the acquisition, shall have been satisfied
and fulfilled in all material respects, and a certificate of a senior
officer of the company and the general partner of the partnership
confirming the same shall have been delivered to the underwriters.
Pursuant to Westaim's press release of March 12, 2014, relating to the acquisition by the partnership, an Ontario limited
partnership established by Westaim, of a significant interest in Houston International Insurance
Group Ltd. (HIIG),
the company will use a portion of the proceeds from the offering to
purchase Class A limited partnership units in the partnership to enable
the partnership (together with funds committed by other investors in
the partnership) to satisfy the cash consideration payable by the
partnership in connection with the initial acquisition and the second
acquisition, as such terms are defined in the initial press release. Both the initial acquisition and the second acquisition are
expected to close concurrently in the second quarter of 2014.
Concurrent with closing of the offering and the concurrent private
placement, Westaim also entered into subscription agreements with
certain funds and co-investors managed by Trilantic Capital Partners, pursuant to which the Trilantic
funds have agreed to irrevocably subscribe for approximately 5,523,430 common shares at a price per share of $2.65 for aggregate gross proceeds
of approximately $14,637,090. The Trilantic funds currently own approximately 13.2 per cent of the
outstanding shares of common stock of Houston International Insurance
Group, which shares will be acquired by the company pursuant to the
acquisition in consideration of approximately $13,306,450 (U.S.). On
closing of the acquisition, Trilantic will use the proceeds from the
acquisition to finance the Trilantic subscription. The conditions to the
closing of the Trilantic subscription are the same as the escrow
release conditions. The precise number of common shares to be
purchased by the Trilantic funds will be determined prior to closing
the Trilantic subscription based on the actual proceeds to be received
by the Trilantic funds in respect of the acquisition, and the U.S.-dollar-to-Canadian-dollar noon exchange rate on the second
business day immediately preceding the closing date of the acquisition.
The aggregate gross proceeds of the offering, the concurrent private
placement and the Trilantic subscription are expected to be
approximately $150-million.
The net proceeds of the offering, the concurrent private placement and
the Trilantic subscription remaining after completion of the
acquisition will be used by the company for general corporate purposes, and to consider and possibly finance potential future acquisitions
(including possible additional equity investments in the partnership).
The TSX-V has conditionally approved the listing of the common shares
issuable upon the conversion of the subscription receipts. Listing is
subject to the satisfaction of certain conditions by the company on or
before June 2, 2014. The subscription receipts and common shares
issuable thereunder will be subject to a hold period under applicable
Canadian securities laws expiring on Aug. 24, 2014. The common
shares issuable pursuant to the Trilantic subscription will be subject
to a hold period under applicable Canadian securities laws expiring
four months and a day after the closing of the acquisition.
Further details regarding the terms of the subscription receipts are
contained in the indenture which will be available on SEDAR.
Multilateral Instrument 61-101 disclosure
The purchase of subscription receipts by the insiders constitutes a
related party transaction for the purposes of Multilateral Instrument
61-101 -- Protection of Minority Security Holders in Special Transactions. The company has relied on the exemption from the formal valuation
and minority shareholder approval requirements of MI 61-101 contained
in Section 5.5(a) and Section 5.7(1)(a) of MI 61-101 in respect of the
related party transactions based on the fact that the fair market value
of the related party participation in the offering does not exceed 25 per cent
of the company's market capitalization prior to the closing of the
offering. The purchase of subscription receipts by the insiders was
approved by the board of directors of the company, with the applicable
insiders declaring their interest and abstaining from voting.
We seek Safe Harbor.
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