- EdgePoint Investment Group agrees to subscribe for
US$55 million of the Secured
Debenture Offering and, together with Maple Rock Capital Partners,
for a total commitment of the US$90
million Offering
- Optiva announces that notice has been provided to fully
redeem all of its issued and outstanding Series A Preferred Shares
held indirectly by ESW Capital
TORONTO, June 26, 2020 /CNW/ - Optiva Inc. ("Optiva"
or the "Company") (TSX: OPT), a leader in providing communications
service providers ("CSPs") worldwide with cloud-native revenue
management software on the public cloud, announces today a series
of transactions that the Company expects to collectively refinance
its balance sheet, strengthen its corporate governance and position
it for future growth.
Summary of the Transaction
The Company has provided the required notice to ESW Capital, LLC
("ESW") to fully redeem the 800,000 Series A Preferred Shares of
the Company (the "Preferred Shares") beneficially owned or
controlled by ESW and its affiliates, including all accrued and
unpaid dividends thereon, in accordance with the terms of the
Preferred Shares, in consideration for the required redemption
payment of approximately US$91,378,719.
Concurrently, the Company announces that it has entered into
binding agreements for a US$90
million high yield offering (the "Offering") of 9.75%
secured PIK toggle debentures due 2025 (the "Debentures"). The
Debentures will be issued by the Company and guaranteed by certain
of the Company's subsidiaries (collectively, the "Guarantors"),
and will be senior secured obligations of the Company. The
Offering will consist of a non-brokered private placement and a
marketed brokered private placement led by CIBC Capital Markets
("CIBC") as agent for the Offering. CIBC has an agent's option to
increase the size of the Offering by up to 15.0%. If the entire
amount of the agent's option is exercised, the total size of the
Offering will be US$103.5 million
principal amount of Debentures.
Optiva intends to use the net proceeds from the Offering to
redeem the Preferred Shares and, if the agent's option is
exercised, for general working capital purposes.
As part of the Offering, funds managed by EdgePoint Investment
Group Inc. (collectively, "EdgePoint") and Maple Rock Capital
Partners ("Maple Rock"), two of the Company's largest shareholders,
have severally agreed to purchase their respective commitments up
to the US$90 million principal amount
of Debentures. EdgePoint and Maple
Rock are not receiving any standby or backstop fee in
connection with the Offering.
The Offering is expected to close, subject to customary closing
conditions, on or about July 20,
2020, being the first business day after the minimum 20-day
notice period for a redemption of Preferred Shares of the Company
set out in the terms of the Preferred Shares.
The Debentures are being conditionally offered for sale in each
of the provinces of Canada on a
private placement basis pursuant to certain prospectus exemptions.
The Debentures have not been and will not be registered under the
U.S. Securities Act of 1933, as amended (the "U.S. Securities
Act"), or any state securities laws, and are being offered and sold
in the United States only to
qualified institutional buyers in reliance on Rule 144A under the
U.S. Securities Act. The Debentures will be subject to a statutory
four month hold following the date of issuance period under
National Instrument 45-102 – Resale Restrictions.
Governance Matters
In May 2020, EdgePoint initially
raised a proposal with the Company for a financing transaction to
redeem the Preferred Shares. Under the articles of the Company, the
proposed refinancing transaction may only be considered by the
directors of the Company that were not nominated and elected by ESW
as holder of the Preferred Shares, namely Robert Stabile, Christy
Jones and Farhan Thawar (the "Independent Committee").
During the intervening period, the Independent Committee has met
regularly to conduct discussions with EdgePoint, Maple Rock, ESW and the Company. The Independent
Committee retained an independent financial advisor, INFOR
Financial Inc. ("INFOR Financial"), to provide a fairness opinion
to the Independent Committee in respect of the redemption of the
Preferred Shares and the Offering (the "Transactions"). INFOR
Financial has advised that, based upon and subject to the
assumptions, qualifications and limitations contained therein, it
is of the opinion that, as of the date hereof, the Transactions are
fair, from a financial point of view, to the shareholders of Optiva
other than EdgePoint, Maple Rock and
ESW. The Independent Committee has unanimously approved the
Transactions.
Pursuant to the terms of the agreements related to the
Transactions entered into among the Company, EdgePoint and
Maple Rock (the "Transaction
Agreements"), Farhan Thawar, Christy
Jones and Chris Helling will
resign from the Company's board of directors, and Andrew Day, Lee
Matheson and Paul Yancich
will be appointed as directors of the Company, concurrent with the
closing of the Offering.
EdgePoint and Maple Rock are
insiders of the Company, each of whom beneficially own or control
more than 10% of the Company's issued and outstanding subordinate
voting shares. The participation by each insider in the Offering is
considered to be a "related party transaction" for purposes of
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). The Company is
relying on the exemption from the formal valuation requirement in
section 5.4 of MI 61-101 in reliance on section 5.5(c) as neither
the Company nor the related parties have knowledge of any material
information concerning the Company or its securities that has not
been disclosed, and the Debentures are non-voting securities,
issued to each related party for cash consideration, that will not
affect the voting interest of the related parties. Additionally,
the Company is relying on the exemption from the minority
shareholder approval requirement in section 5.6 of MI 61-101 in
reliance on section 5.7(1)(f) as the Debentures constitute a loan
being provided on reasonable commercial terms that are not less
advantageous to the Company than would be obtained from a person
dealing at arm's length with the Company, and the Debentures are
neither convertible into equity or voting securities of the Company
nor repayable, directly or indirectly, in equity or voting
securities of the Company.
Annual Shareholder Meeting
Separately, the Company announces that its annual meeting of
shareholders (the "Meeting") will be held on August 18, 2020. Formal notice of the record date
and meeting date will be provided under applicable securities laws
in due course. A management information circular pertaining to the
matters to be acted upon at the Meeting will be provided to
shareholders of record prior to the Meeting. Pursuant to the
Transaction Agreements, the Company has agreed that eight nominees
will be proposed for election as directors at the Meeting, with two
of such director nominees being designated by EdgePoint, two being
designated by Maple Rock and the
remaining four having been mutually agreed among the Independent
Committee, EdgePoint and Maple Rock.
The nominees will be selected with a view to appropriate
diversity. EdgePoint and Maple Rock,
which currently beneficially own or exercise control and direction
over approximately 18.1% and 22.4%, respectively, of the Company's
issued and outstanding subordinate voting shares, have agreed to
vote all such shares at the Meeting in favour of the election of
the eight director candidates to be nominated by the Company for
election at the Meeting. Further details regarding these
director nominees will be set forth in the Company's management
information circular for the Meeting.
In connection with the Offering, Maple
Rock has agreed to withdraw the previously announced
requisition for a special meeting of holders of the Company's
subordinate voting shares.
Early Warning Requirements – EdgePoint
EdgePoint currently exercises control over 963,654 subordinate
voting shares of the Company, representing approximately 18.1% of
the Company's issued and outstanding subordinate voting shares. The
acquisition of the Debentures is being made in the ordinary course
of business and for investment purposes. EdgePoint may acquire or
dispose of additional securities of the Company or may enter into
derivative or other transactions with respect to such securities on
behalf of accounts it manages.
EdgePoint will prepare and file a report containing the
information required by Form 62-103F1 Required Disclosure under the
Early Warning Requirements in connection with the matters referred
to in this press release. Once filed, a copy of this report can be
obtained by contacting Sayuri
Childs, EdgePoint's Chief Compliance Officer, at (416)
963-9353. EdgePoint's head office is located at 150 Bloor
Street West, Suite 500, Toronto,
Ontario M5S 2X9.
Early Warning Requirements – Maple
Rock
Maple Rock currently exercises
control over 1,188,091 subordinate voting shares of the Company,
representing approximately 22.4% of the Company's issued and
outstanding subordinate voting shares. The acquisition of the
Debentures is being made in the ordinary course of business and for
investment purposes. Maple Rock may
acquire or dispose of additional securities of the Company or may
enter into derivative or other transactions with respect to such
securities on behalf of accounts it manages.
Maple Rock will prepare and file
a report containing the information required by Form 62-103F1
Required Disclosure under the Early Warning Requirements in
connection with the matters referred to in this press release. Once
filed, a copy of this report can be obtained by contacting
Stephen Lane, Maple Rock's Chief Financial Officer, at (416)
572-3899. Maple Rock's head office
is located at 21 St. Clair Ave. E, Suite 1100, Toronto, Ontario M4T 1L9.
About Optiva Inc.
Optiva Inc. is a global leader in
providing CSPs with cloud-native revenue management software on the
public cloud. CSP operators and mobile virtual network operators
can integrate our best-of-breed charging engine into a BSS stack or
deploy our fully managed, end-to-end, SaaS-based suite. Optiva
solutions offer unmatched speed, scale, security and savings. Our
market knowledge, analytical insights and unique Customer Success
Program ensure telecoms are equipped to achieve their strategic
business goals. Established in 1999, Optiva Inc. is on the Toronto
Stock Exchange (TSX: OPT). For more information,
visit www.optiva.com.
Caution Concerning Forward-Looking Statements
This
press release contains forward-looking statements and forward
looking information within the meaning of applicable securities
laws. Often, but not always, forward-looking statements can be
identified by the use of words such as "plans", "expects", or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or describes a "goal", or variation of such words and
phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
The forward looking statements in this press release include, but
are not limited to, statements regarding the anticipated redemption
of the Preferred Shares, the completion of the Offering, the
issuance of the Debentures, corporate governance changes, including
Board resignations and appointments, timing of the annual meeting
of shareholders, other governance matters, objectives, strategies,
financial conditions, results of operations and businesses of the
Company and the effect of the Offering on the credit profile of the
Company. These statements are forward-looking as they are based on
the Company's expectations, as at June 26,
2020, about the Company's business and the markets we
operate in, and on various estimates and assumptions. Our actual
results could materially differ from our expectations if known or
unknown risks affect our business, or if our estimates or
assumptions turn out to be inaccurate. As a result, there is no
assurance that any forward-looking statements will materialize.
Risks that could cause our results to differ materially from our
current expectations include failure to complete the Offering,
other known and unknown risks and such other risks as are discussed
in our annual information form dated March
9, 2020 and management's discussion and analysis in respect
of the three months ended March 31,
2020. In addition, the Offering is subject to general market
and other conditions and there are no assurances that the Offering
will be completed or that the terms of the Offering will not be
modified. We disclaim any intention or obligation to update any
forward-looking statements, except as required by law, even if new
information becomes available, as a result of future events or for
any other reason.
SOURCE Optiva