Stock market symbol
TSX: MKP
TORONTO, June 3, 2015 /CNW/ - MCAN Mortgage Corporation
("MCAN", the "Company" or "we") announced today that the Company
has filed a circular in respect of a rights offering (the
"Offering") to raise maximum proceeds of $15,326,315.60. The Company has received final
approval from its principal regulator, the Ontario Securities
Commission. Subject to receipt of final approval from the
securities commissions in each of the relevant offering
jurisdictions and the Toronto Stock Exchange (the "TSX"), each
holder of MCAN's common shares ("Common Shares") as of the close of
business on June 16, 2015 (the
"Record Date") will be issued one right (a "Right") for each Common
Share held. The combination of fifteen Rights and
$10.90 (the "Exercise Price") will
entitle a Rightsholder to subscribe for one Common Share at or
before 4:00 pm (Toronto time) on July
10, 2015 (the "Expiry Time"). Rights not exercised at or
before the Expiry Time will be void and will have no value.
Rightsholders will be entitled to subscribe for additional Common
Shares, if available, at the Exercise Price per share. The
Offering is of 21,091,274 Rights to subscribe for up to 1,406,084
common shares at a price of $10.90
per share.
As at May 20, 2015, MCAN's
directors and officers held directly or indirectly 5,063,625 Common
Shares. Certain of the directors and officers have indicated that
they intend, subject to market conditions, to exercise directly or
indirectly some or all of the Rights they receive under the
Offering.
"We are pleased to announce a capital raise in the form of a
rights offering", said William
Jandrisits, MCAN's President and Chief Executive
Officer. "The rights issuance provides an attractive
opportunity for shareholders to acquire MCAN stock at a 15%
discount, while at the same time providing MCAN with a low cost of
capital to further grow our corporate assets and core
earnings. We expect a significant level of participation from
our existing shareholders which includes both current and former
directors, officers and staff".
The net proceeds of this Offering (assuming all Common Shares
are subscribed for and after payment of the estimated expenses of
$125,000) will be approximately
$15,201,315.60. The completion of the
Rights Offering is not conditional upon the Company receiving any
minimum amount of subscriptions from shareholders.
The intention of the Rights Offering is to raise capital to fund
further growth of the Company's mortgage lending businesses in the
normal course, consistent with the Company's stated business and
objectives. The net proceeds raised through the Rights Offering
will provide the Company with capital that qualifies as both
regulatory and mortgage investment capital. Accordingly, this
capital will enable the Company to issue additional term deposits
which, together with the net proceeds raised through the Rights
Offering, will be used to fund further business opportunities
through the origination of mortgages. The Company anticipates that
the majority of the net proceeds raised through the Rights Offering
will be used to fund mortgage origination opportunities in its
single family residential lending business. The Company may also
use net proceeds raised through the Rights Offering to originate
mortgages in its other (that is, non-single family residential)
mortgage lending businesses.
Further Information: The Rights Circular
will be filed on the System for Electronic Document Analysis and
Retrieval ("SEDAR") at www.sedar.com and on the Company's website
at www.mcanmortgage.com.
MCAN is a public company listed on the Toronto Stock Exchange
("TSX") under the symbol MKP and is a reporting issuer in all
provinces and territories in Canada. MCAN also qualifies as a
mortgage investment corporation ("MIC") under the Income Tax Act
(Canada) (the "Tax Act").
MCAN's primary objective is to generate a reliable stream of
income by investing its corporate funds in a portfolio of mortgages
(including single family residential, residential construction,
non-residential construction and commercial loans), as well as
other types of financial investments, loans and real estate
investments. MCAN employs leverage by issuing term deposits
eligible for Canada Deposit Insurance Corporation ("CDIC") deposit
insurance up to a maximum of five times capital (on a
non-consolidated tax basis in the MIC entity) as permitted by the
Tax Act. The term deposits are sourced through a network of
independent financial agents. As a MIC, MCAN is entitled to deduct
from income for tax purposes 100% of dividends, except for capital
gains dividends, which are deducted at 50%. Such dividends
are received by the shareholders as interest income and capital
gains dividends, respectively.
MCAN's wholly-owned subsidiary, Xceed, focuses on the
origination and sale to third party mortgage aggregators of
residential first-charge mortgage products across Canada. As
such, Xceed operates primarily in one industry segment through its
sales team and mortgage brokers.
MCAN also participates in the market MBS program and the CMB
program.
A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND
STATEMENTS
This press release contains "forward-looking statements" within
the meaning of applicable Canadian securities laws. The words
"may," "believe," "will," "anticipate," "expect," "planned,"
"estimate," "project," "future," and other expressions that are
predictions of or indicate future events and trends and that do not
relate to historical matters identify forward-looking statements.
Such statements reflect management's current beliefs and are based
on information currently available to management. The
forward-looking statements in this press release include, among
others, statements and assumptions with respect to:
- successful completion of the Offering
- the current business environment and outlook;
- possible or assumed future results;
- ability to create shareholder value;
- business goals and strategy;
- the stability of home prices;
- effect of challenging conditions on us;
- factors affecting our competitive position within the housing
markets;
- sufficiency of our access to capital resources; and
- the timing of the effect of interest rate changes on our cash
flows.
The material factors or assumptions that were identified and
applied by us in drawing conclusions or making forecasts or
projections set out in the forward-looking statements include, but
are not limited to:
- the Company's ability to successfully implement and realize on
its business goals and strategy;
- factors and assumptions regarding interest rates;
- housing sales and residential mortgage borrowing
activities;
- the effect of competition;
- government regulation of the Company's business;
- computer failure or security breaches;
- future capital and funding requirements;
- the value of mortgage originations;
- the expected margin between interest earned on mortgage
portfolios and interest paid on deposits;
- the relative continued health of real estate markets;
- acceptance of the Company's products in the marketplace;
- availability of key personnel;
- the Company's operating cost structure; and
- the current tax regime.
Reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors, which may cause the actual results to differ
materially from the anticipated future results expressed or implied
by such forward-looking statements. Factors that could cause actual
results to differ materially from those set forth in the
forward-looking statements include, but are not limited to:
- global market activity;
- worldwide demand for and related impact on commodity
prices;
- changes in government and economic policy;
- changes in general economic, real estate and other
conditions;
- changes in interest rates;
- changes in MBS spreads and swap rates;
- MBS and mortgage prepayment rates;
- mortgage rate and availability changes;
- adverse legislation or regulation;
- availability of CMB and MBS issuer allocation;
- technology changes;
- confidence levels of consumers;
- ability to raise capital and term deposits on favourable
terms;
- our debt and leverage;
- competitive conditions in the homebuilding industry, including
product and pricing pressures;
- ability to retain our executive officers and other
employees;
- litigation risk;
- relationships with our mortgage originators;
- ability to realize anticipated benefits from the acquisition of
Xceed; and
- additional risks and uncertainties, many of which are beyond
our control, referred to in this press release and our other public
filings with the applicable Canadian regulatory authorities.
Subject to applicable securities law requirements, we undertake
no obligation to publicly update any forward-looking statements
whether as a result of new information, future events or
otherwise. However, any further disclosures made on related
subjects in subsequent reports should be consulted.
SOURCE MCAN Mortgage Corporation