MCAN Mortgage Corporation to acquire Xceed Mortgage Corporation

Stock market symbol
TORONTO, March 26, 2013 /CNW/ - MCAN Mortgage Corporation ("MCAN", the 
"Company" or "we") announced today that it has entered into a definitive 
agreement (the "Arrangement Agreement") to acquire all of the issued and 
outstanding common shares of Xceed Mortgage Corporation ("Xceed") for $1.75 
per share, for a total consideration of approximately $53.0 million (the 
"Transaction") paid with a combination of cash and common shares of MCAN. 
The Transaction will be effected pursuant to a plan of arrangement under 
Section 182 of the Business Corporations Act (Ontario) and is expected to 
close within approximately 90 days. The Transaction is subject to Xceed 
shareholder approval, court and regulatory approvals and other closing 
conditions as described below. 
Under the terms of the Arrangement Agreement, Xceed shareholders will, for 
each share held, receive at their election, subject to adjustment: (i) 0.118 
MCAN common shares or (ii) $1.75 in cash, or a combination thereof, subject to 
a maximum of $30.3 million in aggregate cash being paid. The consideration 
represents a premium of 16.67% to Xceed's closing price per share on the 
Toronto Stock Exchange (the "TSX") as at March 25, 2013 and a 7.03% premium to 
Xceed's 30-day volume weighted average price per share as at close of markets 
on March 25, 2013. Assuming the maximum cash consideration is elected to be 
received by the Xceed shareholders, the equity component of the purchase price 
will be approximately $22.7 million and, upon completion of the Transaction, 
existing Xceed shareholders will own approximately 7.54% of MCAN on a fully 
diluted basis. 
This Transaction provides MCAN with a unique opportunity to acquire an 
established mortgage origination and underwriting platform that is expected to 
deliver incremental asset growth and potential for increased income for 
MCAN. Cash and other liquid assets, including Canada Mortgage and Housing 
Corporation ("CMHC") insured mortgages, are expected to represent a 
significant proportion of Xceed's assets at closing. In addition, the 
acquisition provides new equity for MCAN on a cost effective basis, providing 
it with capacity to achieve its growth objectives. 
"We are pleased to announce this strategic acquisition that will add scale to 
our operating platform and expand our origination capability for single family 
residential mortgages," said William Jandrisits, MCAN's President and Chief 
Executive Officer. "We expect the addition of Xceed's CMHC origination and 
underwriting capabilities combined with MCAN's existing operations and 
superior access to capital will contribute to long-term, sustainable earnings. 
In addition, the acquisition of Xceed will allow MCAN to work more closely 
with MCAP Commercial LP to further lever MCAN's single family residential 
operations. MCAP is currently the sub-servicer of Xceed's mortgages." 
Michael Misener, MCAN's Vice President and Chief Investment Officer, 
commented: "We are pleased to welcome Xceed's team of experienced underwriting 
professionals who will work with us through all phases of the origination, 
funding and portfolio management of the single family mortgage business." 
Xceed is an attractive acquisition target as it has wound down its 
securitization vehicles in recent years, decreasing its exposure to capital 
markets. MCAN expects the acquisition to benefit the Company in the following 
key ways: 

    --  Xceed's origination and underwriting infrastructure and
        technology will provide support to MCAN's existing growth
    --  Xceed's database management and reporting capabilities will
        enhance MCAN's portfolio management.
    --  The acquisition of Xceed's CMHC approved lender status (subject
        to regulatory approval) will provide MCAN with the opportunity
        to expand the scope of its operations.

MCAN expects that the ongoing management of the Xceed business will be 
integrated quickly following completion of the Transaction, as renewal and 
underwriting services will continue to be provided by Xceed (as a wholly owned 
subsidiary of MCAN), and subservicing services will continue to be provided by 

The Board of Directors of Xceed, acting on the unanimous recommendation of a 
special committee of independent directors and a fairness opinion provided by 
Canaccord Genuity Corp., has unanimously approved the Transaction and 
recommended that Xceed shareholders vote in favour of the Transaction. 
Xceed's directors, senior management and certain other major shareholders, 
representing, in aggregate, approximately 48.54% of Xceed's outstanding 
shares, have entered into customary lock-up agreements pursuant to which, 
among other things, they have agreed to vote their shares in favour of the 

Pursuant to the Arrangement Agreement, the Transaction is subject to certain 
customary conditions, including: (i) court approval; (ii) the approval of not 
less than 66⅔% of the votes cast by Xceed shareholders at a meeting to 
consider the Transaction; (iii) stock exchange and regulatory approvals; and 
(iv) the satisfaction of certain other closing conditions customary for 
transactions of this nature. The Arrangement Agreement provides for, among 
other things, a non-solicitation covenant on the part of Xceed, subject to 
customary "fiduciary out" provisions and a right in favour of MCAN to match 
any superior proposal. The Arrangement Agreement also provides for a 
termination fee of $2 million payable by Xceed or MCAN in certain specified 
circumstances and reciprocal expense reimbursement payments of $750,000 in 
certain specified circumstances. Xceed shareholders are expected to vote on 
the Transaction at the end of May 2013.

A material change report, which provides more details on the Transaction and 
the Arrangement Agreement will be filed with the Canadian securities 
regulators and will be available under MCAN's profile on SEDAR at and on MCAN's website at The terms and 
conditions of the Arrangement Agreement will be summarized in Xceed's 
management information circular and proxy circular, which will be filed and 
mailed to Xceed shareholders and available under Xceed's profile on SEDAR at

Forward-Looking Information

This press release may contain forward-looking statements, including 
statements regarding the proposed acquisition by MCAN of all of the issued and 
outstanding shares of Xceed and certain strategic benefits and operational, 
competitive and cost efficiencies expected to result from the Transaction. 
These forward-looking statements can generally be identified as such because 
of the context of the statements and often include words such as MCAN 
"believes", "anticipates", "expects", "plans", "estimates" or words of a 
similar nature. These statements are based on current expectations, and are 
subject to a number of risks and uncertainties that may cause actual results 
to differ materially from those contemplated by the forward-looking 
statements. Some of the factors that could cause such differences include 
legislative or regulatory developments, competition, technology change, global 
market activity, interest rates, changes in government and economic policy and 
general economic conditions in geographic areas where MCAN operates. 
Reference is made to the risk factors disclosed in MCAN's Annual Information 
Form dated March 21, 2012 which are incorporated herein by reference. The 
completion of the Transaction is subject to customary closing conditions, 
termination rights and other risks and uncertainties including, without 
limitation, court, shareholder and regulatory approvals. Accordingly there 
can be no assurance that the Transaction will occur, or that it will occur on 
the terms and conditions contemplated in this press release. The Transaction 
could be modified, restructured or terminated. There can also be no 
assurance that the strategic benefits and operational, competitive and cost 
efficiencies expected to result from the Transaction will be fully realized. 
These and other factors should be considered carefully and undue reliance 
should not be placed on MCAN's forward-looking statements. Subject to 
applicable securities law requirements, MCAN does not undertake to update any 
forward-looking statements.

About MCAN

MCAN is a public company listed on the 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) 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 also participates in the Canada Mortgage Bonds program, and other 
securitizations of insured mortgages.

MCAN Mortgage Corporation

William Jandrisits President and Chief Executive Officer (416) 591-2726

Tammy Oldenburg Vice President and Chief Financial Officer (416) 847-3542

SOURCE: MCAN Mortgage Corporation

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CO: MCAN Mortgage Corporation
ST: Ontario

-0- Mar/26/2013 22:27 GMT

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