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
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).
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”).
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.