Voxtur Closes Acquisition of Blue Water Financial Technologies and Announces Expansion of Credit Facilities and Private Placement

September 22, 2022

GlobeNewswire — Voxtur is pleased to announce that, further to the news release issued on August 15, 2022, it has completed the acquisition (“Acquisition”) of Blue Water Financial Technologies Holding Company, LLC (“Blue Water”).

“By fusing Blue Water’s digital asset capabilities with Voxtur’s data repository and analytic solutions, we are creating a powerful and sophisticated new platform to streamline mortgage trading,” said Voxtur CEO Jim Albertelli. “This Acquisition allows Voxtur to diversify and expand existing revenue streams from the primary mortgage market, while adding new revenue streams in the secondary market.”

Blue Water is a high-growth business that had approximately US$11.4 million of revenue and US$6.7 million of net income for the fiscal year ending December 31, 2021. For the trailing twelve months (“TTM”) ending July 31, 2022, Blue Water generated approximately US$18 million of revenue and US$11 million of net income, with increasing run rates for revenue and net income during that period1.

Consideration for the Acquisition

RPC Ventures Fund I LP (“RPC”), Blue Water’s largest equity holder, lead the negotiations on behalf of the Blue Water equity holders. RPC is managed by Rice Park Capital Management LP (“Rice Park”).

Total consideration for the Acquisition was approximately US$101 million, consisting of a cash payment in the amount of US$30 million and issuance of 170 million common shares of the Company (“Common Shares”), with 101 million Common Shares being consideration shares issued in 16 equal quarterly installments and 69 million Common Shares being issued in satisfaction of Blue Water’s existing long-term incentive plan and issued in three equal annual installments (collectively, the “Share Consideration”). The Acquisition is subject to customary representations and warranties, and indemnification provisions, and the Share Consideration is subject to adjustment in accordance with the terms set forth in the Membership Interest Purchase Agreement executed on August 12, 2022, in connection with the Acquisition. The issuance of the Share Consideration will not result in the creation of a new Control Person (as that term is defined in the policies of the TSXV).

The Acquisition has been approved by the TSX Venture Exchange (“TSXV”).

Expansion of Credit Facilities

In conjunction with the Acquisition, Voxtur will expand its existing credit facilities with Bank of Montreal’s (“BMO”) Technology & Innovation Banking Group for an additional amount of US$30 million, as previously disclosed in a news release issued by the Company on August 15, 2022. This new credit facility is subject to customary financial and restrictive covenants and is secured by assets of Voxtur and its subsidiaries, consisting primarily of intellectual property and accounts receivable. All proceeds of the expanded credit facilities will be used for costs associated with the Acquisition. In turn, the Company anticipates that new cash flow resulting from the Acquisition will facilitate debt repayment and provide the Company with sufficient liquidity and flexibility to support its ongoing growth prospects.

“We are greatly appreciative of BMO’s ongoing support, which allows us to execute on our strategic vision,” said Voxtur Executive Chairman Gary Yeoman. “This Acquisition is transformative, and we believe it will result in substantial returns for our stakeholders.”

Convertible Preferred Share Offering

The Company has further entered into a subscription agreement dated September 22, 2022, with BMO Capital Partners (“BMOCP”), whereby the Company has agreed to, on a private placement basis, issue 4,081,632 Series 2 Preference Shares (the “Preferred Shares”) to BMOCP at an offering price of CAD$0.98 per Preferred Share (the “Issue Price”) for aggregate gross proceeds of CAD$4 million (the “Private Placement”). The Preferred Shares will not be listed on any exchange and will be subject to certain contractual and legal limitations.

Each Preferred Share will, subject to customary anti-dilution adjustments, be convertible into one Common Share, at the option of BMOC. BMOCP may, at any time within the first three years of issuance, give notice of its election to convert all of its outstanding Preferred Shares into Common Shares, subject to certain conditions. On the third anniversary of the date of issuance of the Preferred Shares, any outstanding Preferred Shares will automatically convert into Common Shares if the volume weighted average price of the Common Shares on such date, calculated based on the 20 trading days prior to such date, is at a premium of 10% or more than the conversion price of CAD$0.98. After the third anniversary of the date of issuance, the Company may at any time elect to redeem all of the outstanding Preferred Shares for a redemption price equal to the issue price plus accrued and unpaid dividends.

Each Preferred Share (i) entitles the holder to one vote at any meeting of shareholders and such shares shall be voted with the Common Shares, and (ii) provides for fixed and cumulative dividends if, as and when declared by the Board of Directors of the Company (“Board”), in an amount equal to twelve percent (12%) per annum on the aggregate Issue Price of such Preferred Shares plus all unpaid accrued and accumulated dividends thereon. All accrued and unpaid dividends on any Preferred Shares shall accumulate and compound quarterly until paid, whether or not declared by the Board. In addition, the holders of Preferred Shares are entitled to participate equally with the holders of Common Shares on any dividends declared on the Common Shares.

The Company intends to use the net proceeds of the Private Placement to fund general corporate and administrative expenses. The issuance of the Preferred Shares is subject to final approval from the TSXV and other customary closing conditions.

“We share Voxtur’s vision and look forward to continuing to work closely with its management team to make progress on the rollout of its suite of leading digital solutions for real estate lending,” said Alex Baniczky, SVP and Head of BMO Capital Partners.

This news release does not constitute an offer to sell or the solicitation of an offer to buy the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold in the United States or to U.S. persons unless registered under the U.S. Securities Act and any applicable state securities laws or an exemption from such registration is available.

About Voxtur

Voxtur is a transformational real estate technology company that is redefining industry standards in a dynamic lending environment. The Company offers targeted data analytics to simplify tax solutions, property valuation and settlement services throughout the lending lifecycle for investors, lenders, government agencies and servicers. Voxtur’s proprietary data hub and workflow platforms more accurately and efficiently value assets, originate and service loans, securitize portfolios and evaluate tax assessments. The Company serves the property lending and property tax sectors, both public and private, in the United States and Canada. For more information, visit www.voxtur.com.

About Blue Water

Blue Water is a leading provider of asset valuation, MSR distribution, MSR hedging, and digital solutions to MSR investors and mortgage lenders. By providing originators and investors the ability to view portfolios and analyze transactional data in real-time, the platform creates a one-stop shop to drive greater liquidity of mortgage assets. Blue Water uses a single platform across all investor types to mitigate timing risk and account for rate changes. Further, cost-minded originators use the platform to reduce margin exposure, lower costs, and streamline their secondary market post-close operations.

Blue Water’s self-service technology can replicate any investor pricing and modeling construct in real time to provide a unique solution tailored to its clients, including private equity investors and investment banks. Blue Water offers a turnkey solution to small financial institutions to source assets in a compliant manner with scale and efficiency. Blue Water manages a dynamic order book that allows systemically important financial institutions (SIFIs) to engage with different originators in a user-friendly asset sourcing SaaS offering. This technology allows a broad investor base to dynamically engage with originators and control their prospects based on asset preference, while giving originators free access to buyer-side liquidity. Separately, Blue Water’s automated advisor platform provides a springboard for investors to source product and deploy capital by leveraging the combined entities comprehensive services. For more information, visit www.bluewater-fintech.com

About Rice Park Capital Management

Rice Park Capital Management LP is a private investment firm managing funds and investment vehicles on behalf of institutional investors, family offices and high net worth individuals. Its investment focus is to deliver cycle-resistant returns to its limited partners by unlocking value in complex opportunities in the residential and commercial mortgage and real estate sectors. For more information, visit www.riceparkcapital.com.

Forward-Looking Information

This news release contains certain forward-looking statements and forward-looking information (collectively, “forward-looking information”) which reflect the expectations of management regarding the Company’s strategic initiatives, plans, business prospects, and opportunities. Forward-looking statements should not be read as guarantees of future events, performance or results, and give rise to the possibility that management’s predictions, forecasts, projections, expectations, or conclusions will not prove to be accurate, that the assumptions may not be correct and that the Company’s future growth, financial performance and objectives and the Company’s strategic initiatives, plans, business prospects and opportunities, including the duration, impact of and recovery from the COVID-19 pandemic, will not occur or be achieved. Any information contained herein that is not based on historical facts may be deemed to constitute forward-looking information within the meaning of Canadian and United States securities laws. Forward-looking information may be based on expectations, estimates and projections as at the date of this news release, and may be identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions. Forward-looking information may include but is not limited to: the positioning and product offerings of Blue Water following the completion of the Acquisition; expectations for the effects of certain milestones or the ability of Blue Water or the Company to successfully achieve certain business objectives; the intended use of proceeds of the Private Placement and the receipt of final approval from the TSXV, the effects of unexpected costs, liabilities or delays; success of software activities; expectations for other economic, business, environmental, regulatory and/or competitive factors related to the Company, or the real estate industry generally; anticipated future production costs; and other events or conditions that may occur in the future. Investors are cautioned that forward-looking information is not based on historical facts but instead reflects estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the information is provided. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance, or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information include but are not limited to: additional costs related to acquisitions; integration of acquired businesses; implementation of new products; changing global financial conditions, especially in light of the COVID-19 global pandemic; reliance on specific key employees and customers to maintain business operations; competition within the Company’s industry; failure to obtain required government or regulatory body approvals for acquisitions; a risk in technological failure, failure to implement technological upgrades, or failure to implement new technological products in accordance with expected timelines; changing market conditions; failure of governing agencies and regulatory bodies to approve the use of products and services developed by the Company; the Company’s dependence on maintaining intellectual property and protecting newly developed intellectual property; operating losses and negative cash flows; and currency fluctuations. Accordingly, readers should not place undue reliance on forward-looking information contained herein.

This forward-looking information is provided as of the date of this news release and, accordingly, is subject to change after such date. The Company does not assume any obligation to update or revise this information to reflect new events or circumstances except as required in accordance with applicable laws.

Voxtur’s common shares are traded on the TSX Venture Exchange under the symbol VXTR and in the US on the OTCQB under the symbol VXTRF.

1TTM revenue and net income represents Blue Water’s unaudited revenue and net income for the twelve (12) months ended July 31, 2022. All amounts are unaudited and subject to final adjustment, prepared in accordance with US GAAP and presented in US dollars unless otherwise noted. Readers are cautioned that past performance is not indicative of future performance.

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