Dealnet Capital Corp. Completes $30 Million Private Placement
– Momentum Public Relations – Feb. 05, 2016
Dealnet Capital Corp. (“Dealnet” or the “Company“) (TSX VENTURE:DLS) is pleased to announce that it has closed its previously announced private placement financing of subscription receipts (“Subscription Receipts”).
Dealnet issued, on a private placement bought deal basis, 54,545,700 Subscription Receipts at a price of $0.55 per Subscription Receipt (the “Offering Price”) for gross proceeds of $30 million (the “Offering”). The Offering was led by GMP Securities L.P. (“GMP”), Paradigm Capital Inc., Cormark Securities Inc. and INFOR Financial Inc. (collectively, the “Underwriters”).
Michael Hilmer, Dealnet’s Chief Executive Officer, commented: “We are very pleased with the support the market has shown in Dealnet and our strategic plan through this Offering. We remain on track to complete our purchase of EcoHome and significantly increase our loan book and organic origination volumes. The combination of EcoHome and One Dealer Financial Services, our current funding brand, is a powerful growth engine for Dealnet.”
Each Subscription Receipt entitles the holder to receive upon exchange thereof for no additional consideration, one common share of Dealnet in exchange for each Subscription Receipt upon satisfaction of certain escrow release conditions, including the satisfaction or waiver of all conditions precedent (but for the payment of the purchase price) to the closing by the Company of the acquisition of EcoHome Financial Inc. (the “Acquisition”), provided that the conditions have been satisfied by March 31, 2016. Please refer to Dealnet’s press release issued on January 21, 2016 for additional details about the Acquisition.
The Subscription Receipts were issued pursuant to a subscription receipt agreement (the “Subscription Receipt Agreement”) among the Company, GMP and Computershare Trust Company of Canada, as subscription receipt agent. Pursuant to the Subscription Receipt Agreement, the proceeds of the Offering, net of Offering expenses and 50% of the Underwriters’ commission, have been placed in escrow pending delivery of the escrow release notice by the Company.
If the escrow release conditions are satisfied by 5:00 p.m. (Toronto time) on March 31, 2016, the escrowed funds (less the balance of the Underwriters’ commission) will be released to the Company. The Company will use such funds towards the cash portion of the purchase price of the Acquisition, and, any remaining proceeds, for Dealnet’s future growth as well as for general corporate purposes. In the alternative, if: (i) the Acquisition closing does not occur prior to 5:00 p.m. (Toronto time) on March 31, 2016; (ii) the share purchase agreement for the Acquisition is terminated at an earlier date; or (iii) Dealnet announces that it does not intend to proceed with the Acquisition, the subscription receipt agent and Dealnet will return to holders of Subscription Receipts an amount per Subscription Receipt equal to the Offering Price plus a pro rata share of the interest earned on the escrowed funds, if any, net of any applicable withholding taxes.
Certain directors, officers and employees of Dealnet participated in the Offering and purchased Subscription Receipts for gross proceeds of approximately $1.4 million.
In connection with the Offering, the Underwriters are entitled to a cash commission of $0.033 per Subscription Receipt (except with respect to sales to certain specified purchasers agreed upon by the Company and GMP to a maximum of $1,000,000 (the “President’s List”) in respect of which the Underwriters are entitled to a cash commission of $0.0165 per Subscription Receipt) and 3,218,200 non-transferable broker warrants (“Broker Warrants”). 50% of the Underwriters’ commission was paid and 1,609,100 Broker Warrants were issued on the closing of the Offering and the remaining 50% of the cash commission is payable and 1,609,100 Broker Warrants are issuable on the closing of the Acquisition. Each Broker Warrant is exercisable by the holder for one common share of Dealnet for a period of 18 months following the closing of the Offering at a price of $0.55 per Broker Warrant.
All securities issued in the Offering (including any common shares issued on the exchange of the Subscription Receipts) are subject to a hold period of four months and one day, expiring on June 6, 2016.
The Offering is subject to the final approval of the TSX Venture Exchange.
About Dealnet Capital Corp.
Dealnet is an engagement enabled consumer finance company that is initially focused on home improvement finance solutions including heating ventilation and air conditioning financing and leasing. Dealnet leverages its large scale customer service and engagement technology platform to attract home improvement dealers by providing front and back office services to them resulting in dealer origination growth.