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
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
-- 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
www.sedar.com and on MCAN's website at www.mcanmortgage.com. 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
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
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
To view this news release in HTML formatting, please use the following URL:
CO: MCAN Mortgage Corporation
NI: FIN REL
-0- Mar/26/2013 22:27 GMT
Press spacebar to pause and continue. Press esc to stop.