~TIMIA to acquire Canadian-based private
lender to small and medium businesses; Combined company pro forma
assets surpass $100 million~
VANCOUVER, BC, Sept. 10, 2021 /CNW/ - TIMIA Capital
Corporation ("TIMIA" or the "Company") (TSXV:TCA) (OTCQB:
TIMCF) is pleased to announce that it has entered into a series of
agreements to acquire the business of Pivot Financial
("Pivot"), a Canadian-based private lender focused on
creative financing solutions for the small and medium business
market, for a purchase price of approximately $6.0 million plus working capital comprised
of a combination of common shares ("Common Shares") with a
deemed value of $0.30 per share,
series A preferred shares ("Preferred Shares") with a deemed
value of $1.00 per share and cash
(the "Transaction").
Pivot Financial has successfully grown to profitability over the
past 6 years and is now looking to accelerate its growth via this
combination with TIMIA. The Pivot management team is excited
to continue growing Pivot and the TIMIA team is excited to welcome
them into the broader group. Ken
Thomson, CEO of Pivot, will take on a senior leadership role
with TIMIA Capital as Chief Strategy Officer as well as
joining the Board of Directors of TIMIA, while Dan Flaro, President of Pivot, will continue in
his role with respect to the Pivot business.
"TIMIA's fintech-based loan origination and underwriting
platform is complementary to the lending profile of Pivot
Financial," said Mike Walkinshaw,
CEO of TIMIA. "TIMIA and Pivot service two distinct markets
seeking growth capital with little or no overlap. As a result, this
combination provides synergies from which we can each continue to
build our portfolios while mutually leveraging our technology
platform to drive efficiency and profit."
"Over the past 6 years, we have been successful at building our
business by focusing on the borrowing needs of small to mid sized
Canadian enterprises with up to 100 employees and $50 million in revenue," said Ken Thomson, CEO of Pivot. "Joining TIMIA
Capital provides access to a more diverse capital pool, a combined
larger portfolio of assets under management, and a proven
technology-based loan origination and management platform. Moving
forward we will leverage the strengths of each company with a goal
of becoming a leading specialty lending company in North America."
Details of the Transaction
Pursuant to the Transaction, TIMIA will:
- Acquire the loan book and other assets, and assume specific
related debt of Pivot Financial Inc. ("PFI")
- Acquire all of the outstanding common shares of Pivot Financial
Services Inc. ("PFSI")
- Establish a new wholly-owned limited partnership to manage the
loan book, other assets, and specific related debt of PFI
Aggregate consideration payable by TIMIA under the Transaction
is comprised of:
- 5,000,000 Common Shares (at a deemed price of $0.30 per Common Share), 2,000,000 Preferred
Shares (at a deemed price of $1.00
per Preferred Share) and the payment of $1.0
million in cash (subject to post-closing working
capital adjustments) to Ken
Thomson ("Thomson"), the sole shareholder of
PFSI
- 1,500,000 Preferred Shares (at a deemed price of $1.00 per Preferred Share) issuable to PFI
Highlights of the combined company and key financial
metrics1 include:
- 52.5 million common shares total outstanding post
transaction
- 68.2 million common shares fully diluted post transaction
- 10.5 million Preferred A Shares total outstanding post
transaction
- Insider ownership of approximately 37%.
- Pro forma combined assets would have been approximately
$100 million with a further
$42 million of assets under
administration had the acquisition been completed by August 31, 2021.
- Pro Forma revenue for the combined entity for the first half of
Fiscal 2021 would have been $4.3
million, assuming the transaction closed on August 31, 2021. This pro forma revenue for the
combined entity is an increase of 39% over TIMIA's consolidated
revenue for the first half of Fiscal 2021.
- Pivot generated $431,000 in
normalized net income for the first half of fiscal 2021.
________________
|
1
Note Pivot's past financial results have
not been subject to an external financial audit.
|
Additionally, the Company wishes to announce that, concurrent
with closing of the Transaction, it proposes to complete a private
placement of 1,666,667 Common Shares at a price of $0.30 per Common Share and 500,000 Preferred
Shares at a price of $1.00 per
Preferred Share with Dan Flaro
("Flaro"), a key employee of PFSI, for gross proceeds of
$1,000,000 (the "Investment
Transaction"). The Company anticipates using proceeds of the
Investment Transaction for general corporate purposes.
On closing of the Transaction expected to be on or about
September 21, 2021, the Company will
enter into voting agreements with Thomson, PFI and Flaro, whereby,
among other things, these parties will agree to vote Common Shares
held by them in favour of matters proposed by management of the
Company for a period of 24 months, subject to certain standard
exceptions (the "Voting Agreements").
On closing of the Transaction, the Company will appoint Thomson
as a member of the board of directors of TIMIA and will grant
Thomson 100,000 stock options exercisable at a price of
$0.30 per share for a period of 5
years. Flaro will receive 150,000 stock options exercisable at a
price of $0.30 per share for a period
of 5 years. Thomson and Flaro will each enter into employment
agreements with the Company.
Completion of the Transaction is subject to the following
conditions:
- Receipt of approval of the TSX Venture Exchange (the
"TSXV") for the Transaction and the Investment
Transaction
- Receipt of all necessary third party consents, including the
consent of lenders to Pivot.
- Completion of the Investment Transaction
- Entry into the Voting Agreements
- Other customary closing conditions
Following completion of the Transaction and the Investment
Transaction, Thomson (including shares issuable to PFI) will hold
an aggregate of 5,000,000 Common Shares (representing 9.52% of the
outstanding Common Shares on an undiluted basis) and 3,500,000
Preferred Shares. On a partially diluted basis (assuming conversion
of stock options and Preferred Shares controlled by him), Thomson
will hold an aggregate of 8,500,000 Common Shares (representing
15.32% of the outstanding Common Shares on a partially diluted
basis).
The Company is at arm's length with PFI, PFSI, Thomson and
Flaro. No finder's fee will be payable in connection with the
Transaction and the Investment Transaction.
Ken Thomson, CEO and founder of
Pivot Financial, will serve as CEO of the wholly-owned subsidiary,
Pivot Financial Services Inc and will serve as Chief Strategy
Officer and Board Member of TIMIA. Mr. Thomson has over 20
years of experience in the investment industry and in managing and
growing businesses. He serves on the board of several private
companies including two other private lenders, Chairs the board of
a North American manufacturing business, and was a member of the
Board of Directors, Audit Committee and Independent Review
Committee of a family of TSX-listed investment funds. Mr. Thomson
is a member of the Independent Review Committees of Hazelview
Securities Inc., Algonquin Capital and Goodwood Inc. and is Chair
of the Independent Review Committee of Educators Financial Group.
He holds an Honours Business Administration degree from the Richard
Ivey School of Business and has completed the Partners', Directors'
and Officers' Course offered by the Investment Funds Institute of
Canada.
In other matters, the Company wishes to confirm that it
previously closed the second tranche of its private placement of
its over-subscribed private placement as announced in April, 2021.
The second tranche consisted of an additional 500,000 series A
preferred shares, for a total of $1,250,000 in aggregate proceeds.
About Pivot Financial
Pivot is an asset manager that
deploys funds on behalf of institutions, retail investors, high net
worth individuals, its management team and shareholders. We seek
out favourable risk return lending opportunities through prudent
credit assessment and diversification targeting lower mid market
borrowers in Canada. We manage all
aspects of borrower relationships including origination,
underwriting and ongoing portfolio management. For more information
please visit: www.pivotfinancial.com
About TIMIA Capital Corporation
TIMIA Capital
Corporation has developed a proprietary loan origination platform
that services private market, high-yield loan opportunities,
thereby earning recurring fees and a share of the profit.
While focusing on the fast growing, global, business-to-business
Software-as-a-Service (or SaaS) segment, TIMIA's automated loan
origination system is applicable to multiple technology sectors, it
creates scalable and profitable growth for TIMIA's stakeholders.
For more information about TIMIA Capital Corporation, please visit
www.timiacapital.com
Neither the 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 news release.
Forward-Looking Information
Certain information and statements in this news release contain
and constitute forward-looking information or forward-looking
statements as defined under applicable securities laws
(collectively, "forward-looking statements"). Forward-looking
statements normally contain words like 'believe', 'expect',
'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may',
'will', 'should', 'ongoing' and similar expressions, and within
this news release include any statements (express or implied)
respecting the completion of the Transaction and Investment
Transaction, the future performance of the combined companies, the
conditions of closing the transaction, including the approval of
the TSXV, making further disbursements upon the completion of
certain milestones, future value creation for shareholders, the
growth of the company's investment portfolio and expectations
regarding making further investments in the coming months.
Forward-looking statements are not guarantees of future
performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances, including, without limitation, the following
assumptions: that the conditions to the completion of the
Transaction and Investment Transaction will be satisfied, that the
Company and its investee companies are able to meet their
respective future objectives and priorities, assumptions concerning
general economic growth and the absence of unforeseen changes in
the legislative and regulatory framework for the Company. Although
management believes that the forward-looking statements are
reasonable, actual results could be substantially different due to
the risks and uncertainties associated with and inherent to Timia's
business. Material risks and uncertainties applicable to the
forward-looking statements set out herein include, but are not
limited to, the conditions of the Transaction and Investment
Transaction not being satisfied, the Company having insufficient
financial resources to achieve its objectives; availability of
further investments that are appropriate for the Company on terms
that it finds acceptable or at all; successful completion of exits
from investments on terms that constitute a gain when no such exits
are currently anticipated; intense competition in all aspects of
business; reliance on limited management resources; general
economic risks; new laws and regulations and risk of litigation.
Although Timia has attempted to identify factors that may cause
actual actions, events or results to differ materially from those
disclosed in the forward-looking statements, there may be other
factors that cause actions, events or results not to be as
anticipated, predicted, estimated or intended. Also, many of the
factors are beyond the control of Timia. Accordingly, readers
should not place undue reliance on forward-looking statements.
Timia undertakes no obligation to reissue or update any
forward-looking statements as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements contained in this news release are
qualified by this cautionary statement.
SOURCE TIMIA Capital Corp.