/NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
VANCOUVER, BC, Feb. 5, 2023
/CNW/ - BBTV Holdings Inc. (TSX: BBTV) (the "Company"), a media
tech company that uses technology enabled solutions to help content
creators and influencers become more successful, is pleased to
announce it has entered into a non-binding term sheet for a
US$16 million senior secured term
loan (the "Term Loan") from MEP Capital Holdings III, L.P. ("MEP"),
an arm's length investment capital firm based in New York.
The Term Loan will bear interest at 16% per annum and mature on
the 4th anniversary of the closing date of the Term
Loan. Interest is payable on a quarterly basis, with the principal
payable upon maturity. Ten million (US $10
million) of the Term Loan is committed, with approximately
US $6 million being conditional upon
a performance target related to the Company's top Base Solution
Channels and Content Management business being met for H1 2023 (the
"Performance Target"). The Company intends to use the
proceeds of the Term Loan for working capital and to pay-out the
Company's CAD overdraft facility with a Canadian chartered
bank.
The Term Loan will be secured by a perfected, sole
first-priority security interest in all tangible and intangible
assets of the Company and its Canadian and U.S. wholly-owned
subsidiaries, now existing or acquired (the "Loan Security"),
subject to certain carve-outs or pari passu rights in favour
of UFA Film und Fernseh GmbH ("UFA") which holds a convertible
promissory note from the Company due May
26, 2026. MEP and UFA are expected to enter into
an intercreditor agreement providing, among other things, for the
priorities of the two lenders with respect to the Loan Security.
All of the Company's active direct and indirect wholly-owned
subsidiaries will act as co-borrowers or guarantors of the Term
Loan.
In connection with the Term Loan the Company will issue MEP a
share purchase warrant (a "Warrant") to purchase in aggregate that
number of Subordinate Voting Shares that is equal to 2% of the
Company's fully diluted Subordinate Voting Shares as determined on
the "Warrant Share Calculation Date" (see further details below),
provided that MEP shall not be permitted to exercise this Warrant
to acquire beneficial ownership of, or control or direction over,
securities of the Company carrying more than 9.9% of voting rights
attached to the Company's outstanding voting securities. The
Warrant Share Calculation Date is (a) the date MEP determines to
exercise the Warrants; (b) the date of conversion of the first of
the Company's securities convertible into Subordinate Voting Shares
on a non-fixed price basis that results in one percent (1.0%) or
more of such Subordinated Voting Shares being issued and
outstanding on a fully-diluted basis, and (c) the closing date of
the Company's next equity financing for not less than US$5 million
led by a non-affiliated reputable investor. The Warrants are
exercisable at CAD$0.01 per Subordinate Voting Share for a period
of 8 years, with the Warrants being exercisable at the option of
the holder on a cashless basis. The Warrants entitle MEP to certain
standard anti-dilution protections for reclassification and
corporate reorganizations. In the event the Performance Target is
not met, then the number of Subordinate Voting Shares issuable upon
exercise of the Warrants will be reduced to 1% of the Company's
fully diluted Subordinate Voting Shares.
MEP and the Company negotiated the Term Loan and the Warrant at
arm's length.
Closing of the Term Loan, including issuance of the Warrant, is
subject to, among other things, the completion of due diligence and
definitive agreements, as well as conditional approval of the
Toronto Stock Exchange ("TSX"). In addition, issuance of the
Warrant requires approval of the Company's shareholders under the
rules of the TSX for the following reasons: 1) the exercise price
of the Warrants is less than the market price required by section
607(i) of the TSX Company Manual, being the 5 day VWAP on the date
notice was filed with TSX ending on February
2, which is $0.68. The
exercise price of $0.01 is a discount
to market of 98.5%; and 2) the number of Subordinate Voting Shares
that may be issued on exercise of the Warrants, which is 2% of the
fully diluted Subordinate Voting Shares determined as at the
Warrant Share Calculation Date could be greater than 25% of the
number of securities of the Company currently outstanding, on a
non-diluted basis, as the number of Subordinate Voting Shares
issuable on exercise of the Warrant is not fixed at the time of
entering into the Term Loan. Section 607(g)(i) of the TSX
Company Manual requires security holder approval if the number of
Subordinate Voting Shares issued upon exercise of the Warrants
could exceed this 25% threshold. The Company intends to rely
on an exemption from the requirement to obtain shareholder approval
at meeting and to instead obtain such shareholder approval by way
of written consent pursuant to Section 604(d) of the TSX Company
Manual.
As at the date of this press release, the Company has 33,269,751
shares outstanding on a fully diluted basis. If the Warrant
Share Calculation Date was the date of this press release, then
upon full exercise of the Warrants, MEP would be entitled to
receive 665,395 Subordinate Voting Shares in aggregate upon full
exercise of the Warrants. Of our current issued and outstanding
shares, this is 3.1%. If the Company's outstanding shares on
a fully diluted basis were to increase to 5 times the current
number as at the Warrant Share Calculation Date, then the Company
would have 166,348,755 shares outstanding on a fully diluted basis
and MEP would be entitled, upon full exercise of the Warrants, to
receive 3,326,975 Subordinate Voting Shares, which is 15.5% of our
current outstanding shares. As at the date of this press
release, the Company has a combined total of 21,484,238 Subordinate
Voting Shares and Multiple Voting Shares outstanding, of
which 25% is 5,371,059. For this scenario, the Company's fully
diluted Subordinate Voting Shares on the Warrant Share Calculation
Date would need to be 268,552,950 shares.
To the Company's knowledge, no person other than the
Company's founder and CEO, holds more than 10% of the Company's
outstanding securities. As of the date of this news release, the
CEO holds, directly or indirectly, 6,408,505 (100%) Multiple Voting
Shares and 587,104 (3.89%) Subordinate Voting Shares, for a total
of 6,995,609 shares, which is 32.56% of the Company's total issued
and outstanding shares and represents 81.7% of the total votes
which may be cast by all shareholders. The issuance of
Subordinate Voting Shares to MEP upon exercise of the Warrants will
not affect control of the Company.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy the securities in the United States nor shall there be any sale
of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the 1933 Act), or any state
securities laws and may not be offered or sold in the United States unless registered under the
1933 Act and any applicable securities laws of any state of
the United States or an applicable
exemption from the registration requirements is available.
For more information visit www.the Company.com.
About the Company
The Company is a global media and technology company
headquartered in Vancouver,
Canada. The Company's mission is to help content creators
become more successful. With creators ranging from individuals to
global media brands, the Company provides comprehensive, end-to-end
Solutions to increase viewership and drive revenue powered by its
innovative technology, while allowing creators to focus on their
core competency – content creation. In December 2021, the Company had the fourth most
unique monthly viewers among digital platforms with more than 600
million globally, who consumed more than 35 billion minutes of
video content [1]. (www.the Company.com)
[1] Calculations and classifications made by the Company based
on data from Comscore's "Top 12 Countries = December 2021 comScore Video Metrix Media Trend –
Multi-Platform – Top 100 Video Properties Report"; Top 12 countries
represent ~50% of world's digital population.
Links to SEDAR filings, conference call recordings and press
releases are available on the investor website at:
https://investors.the Company.com/
For further information please contact:
Media Relations: pr@bbtv.com
Investor Relations: ir@bbtv.com
Forward-looking Statements
This press release contains "forward–looking information" and
"forward-looking statements" within the meaning of applicable
securities laws (collectively, "forward-looking information").
Forward-looking information is not information about historical
facts but instead represents the Company's intentions, beliefs,
plans, goals, objectives and strategies regarding future events and
results. Forward-looking information contained in this press
release includes, without limitation, the terms of the Term Loan
and the Warrant, statements that the Term Loan will close, and the
Company will issue MEP the Promissory Note and Warrants; the use of
proceeds of the Term Loan, the Note will bear interest at 16%
per annum and mature on the 4th anniversary of the
closing date of the Term Loan, and the Company will pay interest on
a quarterly basis; the Company will meet the Performance Target;
the Term Loan will be secured; that the Warrants will entitle MEP
to purchase in aggregate that number of Subordinate Voting Shares
that is equal to 2% of the Company's fully diluted Subordinate
Voting Shares as determined on the Warrant Share Calculation Date;
the three scenarios for possible share issuances if the Warrant
Share Calculation Date was the date of this press release, if the
Company's outstanding shares on a fully diluted basis were to
increase to 5 times the current number as at the Warrant Share
Calculation Date, and if MEP were to receive 25% of the current
outstanding shares; calculations of the CEO's holdings the event
the Warrant is exercised immediately upon Closing of the Term Loan;
the Warrant issuance not affecting control of the Company; the
Company will receive approval of the TSX; and the Company's intent
to use the proceeds of the Term Loan for working capital and to
pay-out the Company's CAD overdraft facility with a Canadian
chartered bank.
Forward-looking information is subject to known and unknown
risks, uncertainties, and other factors, many of which are beyond
the Company's control, that may cause actual results, performance
or achievements to be materially different from those expressed or
implied by such forward-looking information, including but not
limited to the risk that the Company's assumptions on which its
forward-looking information is based may not be accurate. The terms
of the Term Loan and the Warrants are subject to change as the
parties negotiate the definitive documents. The closing of the Term
Loan and the issuance of the Warrant will be subject to the
satisfaction of certain conditions including, but not limited to,
the receipt of all necessary approvals, the completion of an
intercreditor agreement with UFA, and the absence of material
adverse changes. There can be no assurance that the parties
will enter into the definitive documentation, or if definitive
documentation is entered into, that the terms of the Term Loan and
the Warrants and the conditions to receiving the proceeds of the
Term Loan will be as disclosed above, that the necessary approvals
will be obtained, that the Term Loan will close as anticipated, or
that MEP will exercise the Warrants. Other risks that may impact
the closing of the Term Loan, or the use of proceeds, include the
Company's significant reliance on its relationship with one digital
platform; the impact of the continuing COVID-19 pandemic and of the
current recessionary environment; the risks of potential claims of
infringement by the Company or its content providers of third party
intellectual property and other rights; changes in laws and
regulations; as well as other factors discussed in the Company's
Final Long Form Prospectus dated October 22,
2020, its Annual Information Form dated March 29, 2022 and in our MD&A dated
November 14, 2022 each filed on sedar
at www.sedar.com and in the Company's other
filings with the Canadian securities regulatory authorities
at www.sedar.com. The Company does not undertake any
obligation to update any forward–looking information, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable law.
BBTV-F
SOURCE BBTV Holdings Inc.