/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN
CANADA ONLY AND IS NOT AUTHORIZED
FOR DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./
CALGARY, Jan. 26, 2017 /CNW/ - Mosaic Capital
Corporation ("Mosaic") (TSX-V Symbols: M,
M.PR.A and M.DB) announced today the closing of its
previously announced private placement (the "Offering") to
Fairfax Financial Holdings Limited and certain of its subsidiaries
(collectively "Fairfax") of: (i) $100
million aggregate principal amount of 6% senior preferred
securities (the "6% Senior Preferred Securities"); (ii)
$50 million aggregate principal
amount of 5% senior secured debentures (the "5% Secured
Debentures"); and (iii) common share purchase warrants (the
"Warrants", together with the 6% Senior Preferred Securities
and the 5% Secured Debentures, the "Securities") entitling
Fairfax to acquire up to 17,026,106 common shares of Mosaic at a
price of $8.81 per common share until
January 26, 2024. If the Warrants are
fully exercised, Fairfax would own approximately 66% of the
currently issued and outstanding common shares of Mosaic. Prior to
the Offering, Fairfax did not own or exercise control over any
securities of Mosaic.
The 6% Senior Preferred Securities bear interest at a rate of 6%
per annum and are unsecured obligations of Mosaic subordinate to
all liabilities of Mosaic, excluding obligations specifically
subordinated to the 6% Senior Preferred Securities. The 6% Senior
Preferred Securities rank senior to Mosaic's existing 7%
convertible unsecured senior subordinated debentures. Until they
are redeemed or retracted on February 10,
2017, Mosaic's existing 10% unsecured subordinated perpetual
preferred securities (the "10% Perpetual Preferred
Securities") and series 1 private yield securities (the
"Private Yield Securities") will rank junior to the 6%
Senior Preferred Securities.
The 6% Senior Preferred Securities are not redeemable by Mosaic
before January 26, 2022 (the "Call
Date"). After the Call Date, the 6% Senior Preferred Securities
may be redeemed at the option of Mosaic at a price per 6% Senior
Preferred Security equal to the greater of: (i) $10; and (ii) the ten-day volume weighted average
trading price of the 6% Senior Preferred Securities.
The 5% Secured Debentures bear interest at a rate of 5% per
annum, mature on January 26, 2024,
are not redeemable before maturity and are secured by a security
interest on all the assets of Mosaic and certain of its
subsidiaries, subject only to the first priority security interest
of ATB Financial.
The Securities and the common shares of Mosaic issuable upon
exercise of the Warrants are subject to a four-month hold period
from the date of closing of the Offering.
In connection with the closing of the Offering, Mosaic entered
into a governance agreement (the "Governance Agreement")
with Fairfax. Pursuant to the terms of the Governance Agreement and
subject to certain conditions therein, Mosaic granted to Fairfax
the right to two board nominations and pro-rata financing
participation rights. These financing rights provide Fairfax with a
pre-emptive right to participate in future common share issuances
by Mosaic up to the extent necessary for Fairfax to maintain its
partially diluted common share ownership position.
Mosaic will use the net proceeds of the Offering to fund the
redemption of Mosaic's 10% Perpetual Preferred Securities and
series A preferred shares (the "Series A Shares"), the
retraction of Mosaic's Private Yield Securities, and for general
corporate purposes. As announced in Mosaic's news release dated
January 9, 2017, the redemption of
the 10% Perpetual Preferred Securities and Series A Shares and the
retraction of the Private Yield Securities is scheduled to occur on
February 10, 2017.
The Warrants were acquired by Fairfax for investment purposes.
Fairfax's determination to exercise the Warrants or not will depend
upon the market price of the common shares of Mosaic, market
conditions, availability of funds, evaluation of alternative
investments and other factors.
An early warning report will be filed by Fairfax in accordance
with applicable securities laws and will be available on SEDAR at
www.sedar.com or may be obtained directly from Fairfax upon request
at the telephone number and address immediately below:
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario M5J 2N7
Telephone: (416) 367-4941
The Securities and the common shares of Mosaic issuable pursuant
to the exercise of the Warrants have not been, nor will they be,
registered under the United States Securities Act of 1933, as
amended, and may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons absent U.S. registration or an applicable
exemption from the U.S. registration requirements. This news
release does not constitute an offer for sale or the solicitation
of an offer to buy securities in the
United States or in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
ABOUT MOSAIC CAPITAL CORPORATION
Mosaic is a Canadian investment company that owns a portfolio of
established businesses which span a diverse range of industries and
geographies. Mosaic's strategy is to create long-term value for its
shareholders through accretive acquisitions, long-term portfolio
ownership, sustained cash flows and organic portfolio growth.
Mosaic achieves its objectives by maintaining financial discipline,
acquiring businesses at attractive valuations, performing extensive
acquisition due diligence, utilizing creative transaction
structuring and working closely with subsidiary businesses after
acquisition.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and
statements within the meaning of applicable Canadian securities
laws (herein referred to as "forward-looking statements") that
involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. All information and statements in this news
release which are not statements of historical fact may be
forward-looking statements. The words "believe", "expect",
"intend", "estimate", "anticipate", "project", "scheduled", and
similar expressions, as well as future or conditional verbs such as
"will", "should", "would", and "could" often identify
forward-looking statements. In particular, forward-looking
statements in this news release include, but are not limited to:
statements with respect to the anticipated use of net proceeds of
the Offering; the timing for the redemption of the 10% Perpetual
Preferred Securities and Series A Shares; the timing for the
retraction of the Private Yield Securities; and the intention of
Fairfax to file an early warning report. Such statements or
information are only predictions and reflect the current beliefs of
management with respect to future events and are based on
information currently available to management. Actual results
and events may differ materially from those contemplated by these
forward-looking statements due to these statements being subject to
a number of risks and uncertainties.
Undue reliance should not be placed on these forward-looking
statements as there can be no assurance that the plans, intentions
or expectations upon which they are based will occur. By their
nature forward-looking statements involve assumptions and known and
unknown risks and uncertainties, both general and specific, that
contribute to the possibility that the predictions and other
forward-looking statements will not occur. Some of the assumptions
made by Mosaic, upon which such forward-looking statements are
based include, but are not limited to: future market conditions
will not be materially different than anticipated by Mosaic; there
will be no material changes to government and environmental
regulations affecting Mosaic or its operations; and the business
operations of the operating businesses of Mosaic will continue on a
basis consistent with prior years.
A number of factors could cause actual results to differ
materially from those expressed or implied by the forward-looking
statements, including, but not limited to: prevailing economic
conditions; unexpected changes in the financial markets (including
in the trading price of the securities of Mosaic); and changes in
the general economic and business conditions of one or more of
Mosaic and its subsidiaries. Should any of the risks or
uncertainties facing Mosaic and its subsidiaries materialize, or
should assumptions underlying the forward-looking statements prove
incorrect, actual results, performance, activities or achievements
could vary materially from those expressed or implied by any
forward-looking statements contained in this news release. Readers
are cautioned that the foregoing list of risks is not exhaustive.
Additional information on these and other factors that could affect
the operations or financial results of Mosaic and its subsidiaries
are included in Mosaic's annual information form for the year ended
December 31, 2015, a copy of which is
available under Mosaic's profile on SEDAR (www.sedar.com).
Although Mosaic believes that the expectations represented by
any forward-looking statements contained herein are reasonable
based on the information available to it on the date of this news
release, management cannot assure investors that actual results,
performance or achievements will be consistent with these
forward-looking statements. Any forward-looking statements herein
contained are made as of the date of this news release and Mosaic
does not assume any obligation to update or revise them to reflect
new information, events or circumstances, except as required by
law.
SOURCE MOSAIC CAPITAL CORPORATION