- Loan Purchase Agreement of up to
US$150 million per year withNeuberger Berman fund enables IOU to capitalize on the economic recovery Neuberger Berman managed fund will also lead non-brokered private placement of up to$2.1 million Neil Wolfson to joinIOU Financial Inc.'s Board of Directors
Further to the Loan Purchase Agreement, IOU also announces that it intends to complete a non-brokered private placement of 18,009,806 common shares of the Company at a price of
"This investment by a
The Purchase Price represents a 37.5% premium to the 5-trading-day volume-weighted average price (the "VWAP") of the common shares on the TSX-V, as of the close of trading on
IOU's strategy has consistently been to maintain diversified sources of capital to fund both its loan portfolio and servicing portfolio (loans being serviced on behalf of third parties). Although the Company has previously guided to growing its loan portfolio, the COVID-19 pandemic and its impact on IOU's financial position has dictated an adjustment to the Company's funding strategy to reduce the loan portfolio in favour of the servicing portfolio.
Return to profitability
In 2019, IOU reported adjusted net earnings of approximately
Appointment of new director
IOU is pleased to announce that it intends to appoint
In addition to his corporate governance experience,
Other material items
As part of the Offering, an insider of IOU,
The issuance of securities to FinTech may be considered a related party transaction within the meaning of Regulation 61-101 – Protection of Minority Security Holders in Special Transactions. However, the Offering is exempt from the valuation and minority approval requirements provided under such regulation since the fair market value of the Insider Subscription is less than 25 per cent of the market capitalization of IOU. The Company's board of directors has approved the Offering.
In total, the Company will issue 18,009,806 common shares to the Fund and FinTech, for total gross proceeds of
This news release shall not constitute an offer to sell nor the solicitation of an offer to buy nor shall there be any securities of IOU offered in any jurisdiction in which such offer, solicitation or sale would be unlawful. The common shares will be offered on a private placement basis in
THE SECURITIES BEING OFFERED HAVE NOT BEEN, NOR WILL THEY BE REGISTERED UNDER THE
About
Forward Looking Statements
Certain information set forth in this news release may contain forward-looking statements. Forward looking statements are statements, other than statements of historical fact, that address or discuss activities, events or developments that IOU expects or anticipates may occur in the future. These forward looking statements can be identified by the use of words and phrases such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", "intends", "seeks", "allows", "creates a path for", "puts in a position to" or the negative thereof or other variations thereon. In particular, this news release contains forward-looking statements including, without limitation, with respect to the closing of the Offering and the Company's future profitability. These forward-looking statements are subject to and involve substantial known and unknown risks and uncertainties, certain of which are beyond the control of IOU, including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the obtaining of the regulatory approval relating to the Offering, the uncertainty of obtaining additional financing, risks related to the Company's incapacity to execute on its business plan, dependence on third-party service providers, competition, dependence on key personnel, security and confidentiality risk, technological development risk, IT disruptions, maintenance of client relationships, and litigation risk. No assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU will derive from them. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. IOU does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise. Additional information concerning these and other factors can be found beginning on page 21 under the heading "Risks and Uncertainties" in IOU's management's discussion and analysis dated
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