TORONTO, April 3, 2017 /CNW/ - The Westaim
Corporation ("Westaim" or the "Company") (TSXV: WED) today
announced that it has entered into a letter agreement pursuant to
which Fairfax Financial Holdings Limited, through certain of its
subsidiaries (collectively, "Fairfax"), will make an investment of
up to C$100 million in Westaim in
exchange for the issuance by Westaim of 5% interest bearing notes
(the "Preferred Securities") and common share purchase warrants
("Warrants").
Fairfax has agreed to subscribe, on a private placement basis
and subject to certain conditions, for Preferred Securities in an
aggregate amount of up to C$100
million. Westaim intends to close an initial subscription of
C$50 million, and has discretion with
respect to additional subscriptions by Fairfax for the remaining
C$50 million in minimum tranche sizes
of C$25 million by no later than
December 31, 2017. The Preferred
Securities will be subordinate and secured, and may be redeemed by
Westaim at any time after 5 years from closing, or after 3 years if
its common shares are trading at a price of at least C$5.60 per share.
Westaim has also agreed to issue 28,571,430 Warrants,
exercisable at C$3.50 per share. The
Warrants will vest proportionately based on the aggregate amount of
Preferred Securities drawn by Westaim under the private placement.
Each vested Warrant will be exercisable within 5 years, but may be
extended to 7 years if the closing price of the Westaim common
shares is less than C$5.60 on the
fifth anniversary of the initial closing. Westaim can also elect to
require early exercise of the Warrants if the closing price of its
common shares reaches C$5.60 at any
time after the third anniversary of the initial closing.
Fairfax has also agreed to invest up to US$500 million in investments sourced by
Westaim's affiliate, Arena Investors, LP ("Arena Investors").
Fairfax's commitment to invest an initial US$125 million with Arena Investors will be
triggered by the drawdown by Westaim of the first tranche of
C$50 million of Preferred Securities.
Subject to the satisfaction of certain conditions (including
Westaim's compliance with the indenture governing the Preferred
Securities), Fairfax may invest an additional US$125 million with Arena Investors upon the next
C$25 million drawdown of Preferred
Securities by Westaim, and an additional US$250 million upon the final C$25 million drawdown of Preferred Securities by
Westaim.
The proceeds raised from the Fairfax financing will be used by
Westaim for potential acquisitions and for general corporate
purposes.
Fairfax will have the right to nominate one director to the
board of directors of Westaim.
J. Cameron MacDonald, Westaim's
President and Chief Executive Officer commented, "Fairfax, with
their exceptional track record in both the investment and insurance
industries, make them an ideal partner for Westaim as we look to
grow HIIG and Arena, and pursue our long-term goals. We are
very excited about this new relationship for Westaim, and look
forward to exploring additional investment opportunities with
Fairfax as part of this partnership."
"We are very pleased to invest in Westaim and to partner with
Cam, Rob Kittel, Stephen Way, Dan
Zwirn and their respective teams, each of whom has a track
record of success" added Paul
Rivett, President of Fairfax. "We expect that our Westaim
investment, together with the capital allocation strategies we will
deploy in cooperation with Dan and his team at Arena, will create a
mutually beneficial opportunity for both of our organizations."
Closing of the transaction is subject to the settlement of
mutually agreeable definitive documentation, and other customary
closing conditions, including the approval of the TSXV and receipt
of all other requisite third party approvals and is expected to
occur in the second quarter of 2017.
About Westaim
Westaim is a Canadian investment company specializing in
providing long-term capital to businesses operating primarily
within the global financial services industry. The Company
invests, directly and indirectly, through acquisitions, joint
ventures and other arrangements, with the objective of providing
its shareholders with capital appreciation and real wealth
preservation. Westaim's strategy is to pursue investment
opportunities with a focus towards the financial services industry
and grow shareholder value over the long term. Westaim's
investments include significant interests in HIIG and the Arena
Group. HIIG, the HIIG Partnership, Arena, the Arena Group,
Arena Finance, Arena Origination and Arena Investors are defined in
the notes to Westaim's audited consolidated financial statements
for the years ended December 31, 2016
and 2015 and the MD&A. Westaim's common shares are listed
on the TSX Venture Exchange under the trading symbol WED.
Except for statements of historical fact contained herein,
information in this press release may constitute "forward-looking
information" within the meaning of Canadian securities laws. Other
than statements of historical fact, all statements that involve
various known and unknown risks, uncertainties and other factors
are "forward-looking statements". There can be no assurance that
such statements will prove accurate. Results and future
events could differ materially from those anticipated in such
statements. These forward-looking statements are based on current
expectations that are subject to risks, uncertainties and
assumptions and Westaim can give no assurance that these
expectations are correct. Westaim's actual results could differ
materially from those anticipated by forward-looking statements for
various reasons generally beyond our control, including but not
limited to: (i) our ability to obtain all requisite approvals,
including TSXV approval, as applicable, for the private placement;
(ii) our ability to complete the private placement on the terms
described herein or at all; (iii) changes in market conditions or
deterioration in underlying investments; (iv) general economic,
market, financing, regulatory and industry developments and
conditions; and (v) other risk factors set forth in Westaim's
annual information form for its fiscal year ended December 31, 2016. Readers of this press release
are cautioned not to place undue reliance on these "forward-looking
statements". Except as otherwise required by applicable law,
Westaim expressly disclaims any intention or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or otherwise.
Neither 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 Westaim Corporation