/NOT FOR DISTRIBUTION OR DISSEMINATION INTO
THE UNITED STATES OR THROUGH U.S.
NEWSWIRE SERVICES/
TORONTO, Nov. 8, 2021 /CNW/ - MCAN Mortgage Corporation
("MCAN", the "Company" or "we") (TSX: "MKP")
today announced that it is offering rights
(the "Rights Offering") to eligible holders of its common
shares (the "Common Shares") of record
at the close of business on November
15, 2021 (the "Record Date").
Pursuant to the Rights Offering, each holder of Common Shares
will receive one right (a "Right") for each
Common Share held. Every 14 Rights will entitle the holder to
subscribe for one whole Common Share of the Company at a price of
$16.86 per Common Share (the
"Subscription Price").
MCAN expects to raise gross proceeds of
approximately $33.3 million from the Rights Offering and
intends to use all of the proceeds less offering expenses to fund
the Company's mortgage lending and investment business. The
Company expects the Rights Offering to close during the second week
of December.
"As MCAN continues to show solid growth, we require capital in
order to fund our core business," said Karen Weaver, President and Chief Executive
Officer. "Year to date growth in our corporate assets to
September 30, 2021 was 30%. For
the third year in a row, we will grow our corporate assets above
our 10% target and we look forward to further growth of our core
business into 2022. In order to take advantage of the tax
benefits of a Mortgage Investment Corporation ("MIC") status, we
pay out all of MCAN's non-consolidated taxable income to
shareholders through dividends. As a MIC, we are entitled to
deduct dividends paid up to 90 days after year end from taxable
income. Therefore, we are seeking capital to fund our
continued planned growth. Raising capital through a Rights Offering
provides a benefit to existing shareholders in terms of the cost of
capital raises and the value provided to existing shareholders
should they choose to subscribe. Over the years, our shareholders
have supported and participated in our previous rights offerings,
resulting in full subscriptions. Our June
2021 rights offering was almost 3 times
oversubscribed. Of note, Common Shares issued under the
Rights Offering will be entitled to receive the fourth quarter
dividend of $0.34 per share declared
by the Board."
Directors and senior officers, collectively holding, directly
and indirectly, approximately 1 million Common Shares, have
indicated their intention to exercise some or all of their Rights,
subject to market conditions. Ian Sutherland, a former
director and major shareholder, who continues to hold a significant
position in the Company, has indicated his intention to exercise
some or all of his Rights, subject to market conditions. As
well, the KingSett Canadian Real Estate Income Fund, a significant
shareholder, has indicated its current intention to exercise some
or all of its Rights, subject to market conditions.
The Rights
will trade on the Toronto Stock Exchange under the symbol MKP.RT
commencing on November 12, 2021 and will cease trading at
12:00 p.m. (Toronto time) on December 8, 2021. The ex-rights trading date for
the Common Shares on the Toronto Stock Exchange will be
November 12, 2021. This means that
Common Shares purchased on or following November 12, 2021 will not be entitled to receive
Rights under the Rights Offering. Rights are exercisable
until 5:00 p.m. (Toronto time) on December
8,
2021 (the "Expiry Time"), after which time unexercised Rights
will be void and of no value. Shareholders must hold at least 14
Common Shares to exercise their Rights, as no fractional Common
Shares will be issued.
The Rights Offering includes an additional subscription
privilege under which eligible holders of Rights who fully exercise
their Rights will be entitled to subscribe for additional Common
Shares, if available, that are not otherwise subscribed for in the
Rights Offering.
There are currently 27,646,210 Common Shares
outstanding. Following completion of the Rights Offering, MCAN
expects that there will be approximately 29,620,939 Common Shares
outstanding.
The Rights Offering will be conducted only in the provinces and
territories of Canada (the
"Eligible Jurisdictions"). Accordingly, and subject to the detailed
provisions of a Rights Offering circular (the "Circular"), Rights
will not be delivered to, nor will they be exercisable by, persons
resident outside of the Eligible Jurisdictions. Rather, such Rights
may be sold on their behalf.
Details of the Rights Offering will be set out in a Notice and Circular,
which are available under the
Company's profile on SEDAR
at www.sedar.com. The Notice and accompanying direct
registration system statement and subscription form (the "Rights
DRS Advice")
will be mailed to each eligible shareholder of MCAN as at the
Record Date. To subscribe,
registered shareholders must forward the completed Rights DRS
Advice, together with the applicable funds, to the depositary
and subscription agent, Computershare Investor Services,
Inc., prior
to the Expiry Time. Shareholders who own their Common
Shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials
and instructions from their intermediary.
The Rights and the Common Shares issuable upon exercise of the
Rights have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, and accordingly, the
Rights and the Common Shares are not being publicly offered for
sale in the "United States" or to
"U.S. persons" (as such terms are defined in Regulation S under the
United States Securities Act of 1933, as amended). This press
release does not constitute an offer to sell or the solicitation of
an offer to buy the securities in any jurisdiction. There shall be
no sale of the securities in any jurisdiction in which an offer to
sell, a solicitation of an offer to buy or a sale would be
unlawful.
MCAN is a public company listed on the Toronto Stock Exchange
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").
The Company's primary objective is to generate a reliable
stream of income by investing in a diversified portfolio of
Canadian mortgages, including single family residential,
residential construction, non-residential construction and
commercial loans, as well as other types of securities, loans and
real estate investments. MCAN employs leverage by issuing term
deposits that are eligible for Canada Deposit Insurance Corporation
deposit insurance and are sourced through a network of independent
financial agents. We manage our capital and asset balances based on
the regulations and limits of both the Tax Act and OSFI.
As a MIC, we are entitled to deduct the dividends that we pay
to shareholders from our taxable income. Regular dividends
are treated as interest income to shareholders for income tax
purposes. We are also able to pay capital gains dividends,
which would be treated as capital gains to shareholders for income
tax purposes. Dividends paid to foreign investors may be subject to
withholding taxes. To meet the MIC criteria, 67% of our
non-consolidated assets measured on a tax basis are required to be
held in cash or cash equivalents and residential mortgages.
On March 13, 2020, OSFI had
instructed all federally regulated financial institutions that cash
dividend increases should be halted for the time being. On
November 4, 2021, OSFI has lifted
these restrictions. The Company has paid out a $0.34 per share cash quarterly dividend to
shareholders since the restrictions began. The Board declared a
fourth quarter cash dividend of $0.34
per share payable on January 4, 2022
to shareholders of record on December 15,
2021 and will consider its regular cash dividends in 2022 in
the context of the lifted restriction. In 2020, MCAN's taxable
income per share was greater than its regular cash dividends per
share and so it paid a special share dividend of $0.85 per share in March
2021. Similar to 2020, the Company expects to have taxable
income per share greater than its regular cash dividends per share
and therefore anticipates to distribute a special dividend in the
first quarter of 2022, based on the current economic and interest
rate environment.
MCAN's wholly-owned subsidiary, XMC Mortgage Corporation, is
an originator of single family residential mortgage products across
Canada.
A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND
STATEMENTS
This news release contains "forward-looking information" within
the meaning of applicable securities laws. Forward-looking
information can be identified by words such as: "expect", "intend,"
"plan," "seek," "believe," "estimate," "future," "likely," "may,"
"should," "will" and similar forward-looking language. The expected
proceeds to be raised under the Rights Offering and the use thereof
constitutes forward-looking information. The forward-looking
information contained in this news release is based on a number of
assumptions which we believe to be reasonable, including
assumptions relating to the completion of the Rights Offering and
the timing thereof, the amount of proceeds raised, and the expected
use of proceeds from the Rights Offering. Forward-looking
information entails various risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied in such forward-looking information. Risks that could cause
actual results to differ materially from those expressed or implied
in the forward-looking information contained in this press release
include, but are not limited to, that shareholders will not
exercise all or any portion of the Rights, that the Company may not
be able to find a suitable use of the proceeds of the Rights
Offering, the level of dilution that will be experienced by
shareholders who do not exercise all or a portion of their Rights,
failure to complete or a delay in the Rights Offering for any other
reason, the lack of a trading market for the Rights developing and
the trading price of the Common Shares following completion of the
offering. In addition, general risks relating to capital markets,
economic conditions, regulatory changes, as well as the operations
of our business may also cause actual results to differ materially
from those expressed or implied in such forward-looking
information. Forward-looking information is not a guarantee of
future performance, and management's assumptions upon which such
forward-looking information are based may prove to be incorrect.
Investors are cautioned not to place undue reliance on any
forward-looking information contained herein. The Company disclaims
any obligation to update or revise any forward-looking information
contained in this news release, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
SOURCE MCAN Mortgage Corporation