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Additional disclosure

TIMIA also wishes to provide the following additional disclosure to supplement the disclosure in the Circular regarding the Transaction. Capitalized terms not otherwise defined below have the meaning given to them in the Circular.

As indicated in the Circular, in accordance with Multilateral Instrument 61-101 – Protection of securityholders during special operations (” MI 61-101 “), the transaction requires the approval of a majority of minority shareholders because Mr. Kenneth Thomson , a director of the Company, indirectly owns or controls approximately 33% of Brightpath Capital and a significant interest in the limited partnership of Brightpath Mortgage LP. At the meeting, the transaction must be approved by a simple majority of the holders of common shares and preferred shares present at the meeting, each voting separately as a class, after excluding all common shares and shares Preferred shares of TIMIA held directly and indirectly by Mr. Thomson. As of the date hereof, Mr. Thomson directly and indirectly owns and controls 5,000,000 Common Shares and 3,500,000 Preferred Shares.

The Circular contains information that summarizes the background to the transaction, including a brief summary of the fairness opinion obtained in respect of the transaction. TIMIA wishes to supplement the disclosure provided.

As indicated in the Circular, in December 2021 , the Company’s management has identified Brightpath as a potential acquisition opportunity. Consequently, in December 2021 , the Company’s management provided a draft non-binding letter of intent to Brightpath’s shareholder group to determine whether Brightpath’s shareholder group was aligned with the objective of completing a potential transaction. At these initial stages, there was no commitment from the Company to proceed with a potential transaction and the Company’s Board of Directors had not been notified of the transaction. Recognizing Mr. Thomson’s interest in Brightpath and the potential transaction, from that point on, Mr. Thomson withdrew from the negotiation process. Mr. Thomson was also protected by a firewall to access documentation relating to the potential transaction.

In mid-January, Brightpath’s shareholder group advised company management that they were interested in pursuing a potential transaction. The Company has not actively participated in discussions with Brightpath’s shareholder group since mid-December 2021 at mid-January 2022 .

On January 19, 2022 , the Company’s management first presented the potential transaction at a meeting of the TIMIA Board of Directors. The transaction was presented with a valuation of $30.5 million based on a multiple of Brightpath’s expected 2021 pre-tax net income plus the net increase in deferred transaction costs. At the board meeting, the board assessed the potential transaction and identified a number of items for management review and consideration. These elements included reviewing the purchase price and payment options, assessing shareholder approval requirements, determining the merits of a fairness opinion and its cost, and strategic fit assessment. The board asked management to report back after reviewing these items. Mr. Thomson did not participate in these deliberations.

At a future meeting of the Board of Directors on March 14, 2022 , management reported, noting that shareholder approval would be required and a fairness opinion would be recommended. At that time, the board set up the special committee composed of John Lederman and Paul Geyer , both independent directors, to review and further investigate the Brightpath transaction. Mr. Thomson did not participate in these deliberations.

Following the meeting of the board of directors of the March 14, 2022 management, led by mike walkinshaw entered into intensive negotiations with Brightpath’s shareholder group, led by Blake Albright . Mr. Albright deals at arm’s length with the Company. Mr. Thomson did not participate in the negotiations on behalf of either party. Mr. Walkinshaw reported on the progress of the negotiations to the special committee and incorporated his recommendations into the negotiations. When negotiating the terms of the Transaction, the board and the special committee took into account the following non-exhaustive list of factors in determining the consideration to be paid: the market value of the TIMIA securities that may be issued as consideration; Brightpath’s historical and expected net income; Brightpath’s discounted cash flow; strategic considerations, including changes in the macroeconomic environment and the benefits of diversifying the Company’s lending activities; valuation multiples of companies comparable to Brightpath; and improvement in Brightpath’s first quarter 2022 net income. During this period, access to transaction documentation and negotiations was limited to the Special Committee and Mr. Walkinshaw.

Following the March 14, 2022 board meeting, the special committee engaged MNP LLP to prepare the fairness opinion. MNP LLP was engaged on a fixed fee and working fee basis. A copy of the Fairness Opinion is available on TIMIA’s profile at www.sedar.com. The Fairness Opinion was an important factor on which the Special Committee relied in recommending that the Board approve the Transaction. The Special Committee also relied on the above factors in deciding to recommend the Transaction.

About Brightpath

Brightpath specializes in arranging mortgages for the self employed, new to the country, experiencing credit issues or considering renovation/turnaround projects. Our knowledge and experience, efficient service and no-nonsense approach to lending are just a few of the reasons to choose Brightpath Capital for financing needs. We also offer bridge financing for residential properties with flexible terms. Private mortgages at very competitive conditions. Interest only payments. Fully open terms. For more information, please visit: www.brightpath.ca

The company democratizes private credit for investors by offering a wide range of specialized private credit opportunities with transparency and efficiency, facilitated by the company’s proprietary technology platform. These high-yield lending opportunities are offered through operating divisions: Timia Capital, which offers revenue-based investments to fast-growing software-as-a-service (or SaaS) companies in the North America and Pivot Financial which specializes in asset-based private lending targeting middle market borrowers in Canada . The Company deploys funds on behalf of limited partnerships, institutions, retail investors, high net worth individuals, its management team and shareholders. For more information on TIMIA and SaaS loans, please visit www.timiacapital.com . For more information on Specialized Private Credit and Pivot, please visit: www.pivotfinancial.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Forward-looking information

Certain information and statements contained in this press release contain and constitute forward-looking information or forward-looking statements as defined by applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements normally contain words such as “believe”, “expect”, “anticipate”, “plan”, “intend”, “continue”, “estimate”, “may”, “will” , “should”, “ongoing”‘ and similar expressions, and in this press release, include any statements (express or implied) regarding the meeting, the negotiation of definitive agreements for the transaction and expectations regarding the completion of the transaction.

Forward-looking statements are not guarantees of future performance, actions or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate under the circumstances, including, without limited to, the following assumptions: The Company and Brightpath will be able to negotiate definitive agreements regarding the Transaction, that the shareholders of the Company will approve the Transaction, the expected benefits of the Transaction, the assumptions regarding the growth general economic conditions and the absence of unforeseen changes in the Company’s legislative and regulatory framework. Although management believes the forward-looking statements are reasonable, actual results could differ materially due to risks and uncertainties associated with and inherent in the Company’s business. The material risks and uncertainties applicable to the forward-looking statements set forth herein include, but are not limited to, that the Company may have insufficient financial resources to achieve its objectives; that the Transaction may not be completed on terms acceptable to the Company, or at all; the availability of other suitable investments to the Company on terms which it deems acceptable or not at all; the successful completion of investment exits on terms that constitute a gain where no such exit is currently anticipated; intense competition in all aspects of business; reliance on limited management resources; general economic risks; new laws and regulations and litigation risks. Although TIMIA has attempted to identify factors that could cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be those anticipated, predicted, estimated. or planned. In addition, many factors are beyond TIMIA’s control. Accordingly, readers should not place undue reliance on forward-looking statements. TIMIA undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof, except as required by law. All forward-looking statements contained in this press release are qualified by this cautionary statement.

SOURCE Timia Capital Corp.

Quote View original content: http://www.newswire.ca/en/releases/archive/May2022/30/c9976.html

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