TORONTO, June 3, 2019 /CNW/ - Callidus Capital Corporation
("Callidus" or the "Company") (TSX:CBL) today announced that it has
entered into an agreement (the "Bluberi Agreement") with certain
investment funds managed by The Catalyst Capital Group Inc. (the
"Catalyst Funds") to sell the shares of Bluberi Gaming Canada Inc.
("Bluberi") owned by Callidus and to assign the debt owing by
Bluberi to Callidus and its subsidiary (the "Bluberi Debt") to the
Catalyst Funds (the "Bluberi Transaction"). The purchase
price to be paid by the Catalyst Funds for the shares is
$92.7 million, and for the Bluberi
Debt is the amount of that debt outstanding on closing.
The purchase price will be satisfied by setting off $92.7 million of the indebtedness of Callidus
owing to the Catalyst Funds under Callidus' subordinated bridge
facility and by the Catalyst Funds assuming a portion of the
indebtedness owing by Callidus to the lenders under the Company's
collateralized loan agreement equal to the amount of the Bluberi
Debt on the Closing Date.
Callidus' board of directors (the "Board"), having received the
unanimous recommendation of the special committee of independent
directors of the Board (the "Special Committee"), has unanimously
determined (with the Board members nominated by the Catalyst Funds
abstaining) that the Bluberi Transaction is in the best interests
of the Corporation and that the consideration under the Bluberi
Transaction is fair to the shareholders other than the Catalyst
Funds and their related parties (the "Minority Shareholders"), and
unanimously recommends (with the Board members nominated by the
Catalyst Funds abstaining) that the Minority Shareholders vote FOR
the Bluberi Transaction.
BDO Canada LLP was retained by the Special Committee to prepare
a valuation and fairness opinion, which concluded that as of the
date of the opinion, and subject to the assumptions, limitations
and qualifications contained therein, the fair market value of the
Bluberi shares is between $84.5
million and $100.9 million and
that the consideration to be received by Callidus pursuant to the
Bluberi Transaction is fair from a financial point of view to the
Minority Shareholders. The purchase price for the shares of
Bluberi of $92.7 million is the
mid-point of the valuation range.
In order to enable shareholders to consider the Bluberi
Transaction, Callidus' shareholders meeting previously scheduled
for June 26, 2019 will now be held on
July 2, 2019. Callidus and the
Catalyst Funds anticipate that, if approved by Minority
Shareholders, the Bluberi Transaction will be completed shortly
after the shareholders meeting.
Callidus acquired control of Bluberi in February 2017 pursuant to a formal restructuring
proceeding in Quebec. Bluberi is a
Drummondville, Quebec-based gaming
company that specializes in the development of casino games that
are installed in electronic gaming machines and leased or sold to a
variety of licensed casinos and gaming establishments.
Callidus first approached the Catalyst Funds regarding a
potential transfer of Bluberi in March
2019 as a result of regulatory challenges associated with
Callidus' ownership of Bluberi. In particular, regulators in
Maryland and certain other states
and provinces in which Bluberi operates and intends to operate in
the future require extensive disclosure relating to significant
shareholders of Callidus on the basis that they are presumed to
have influence on the operations of Bluberi.
Callidus understands that Braslyn Ltd. is the holder of
approximately 14.5% of the outstanding common shares of the Company
and that Braslyn, as a matter of general policy, does not make
regulatory filings that might subject it to legal obligations in
jurisdictions in which it does not operate.
In the absence of such disclosure by Braslyn, Bluberi is not
able to comply with state licensing disclosure requirements or to
submit new licensing applications in Maryland and certain other states and
provinces. An inability to comply with these requirements
limits Bluberi's current business and growth plans, and negatively
impacts Bluberi's value, operating results and cash
flows.
The BDO valuation and fairness opinion assumes that these
regulatory requirements will no longer be applicable after
June 30, 2019. As the purchase price
for the Bluberi shares is equal to the mid-point of BDO's valuation
range, the Special Committee believes that the Bluberi Transaction
will allow Callidus to get full value for Bluberi as if the
regulatory issues were resolved. In addition to resolving the
regulatory issues, the Bluberi Transaction will enable the Company
to significantly reduce its debt and focus on its core lending
business.
The Catalyst Funds and their affiliates currently own
approximately 72.2% of the Company's common shares. As a
result, the Bluberi Transaction is a "related party transaction"
and must be approved by a majority of the votes cast at a meeting
of shareholders by Minority Shareholders.
Completion of the Bluberi Transaction is subject to certain
closing conditions including obtaining third party consents.
In the event any required consents in connection with the
assignment of the Bluberi Debt are not obtained, the sale of the
shares of Bluberi will proceed but the Bluberi Debt will not be
assigned and amendments will be made to the loan agreement
including to provide for guarantees of the Bluberi Debt by the
Catalyst Funds.
The Bluberi Agreement also includes provisions permitting
Callidus to solicit other proposals for the acquisition of Bluberi
at any time until Minority Shareholders have approved the Bluberi
Transaction, and to terminate the Bluberi Agreement if the
Corporation accepts a superior proposal or changes its
recommendation subject to payment of a termination fee to the
Catalyst Funds of $4.64 million.
Callidus is also entitled to participate in any after-tax
appreciation in value received by the Catalyst Funds if they enter
into an agreement to sell Bluberi within six months of closing and
that sale is completed within nine months of closing.
Further information regarding the Bluberi Transaction will be
included in the management information circular expected to be
mailed to shareholders on or before June 10,
2019. Copies of the Bluberi Agreement and the information
circular will be available on SEDAR at www.sedar.com. The
description of the Bluberi Agreement in this press release is
qualified in its entirety by reference to the complete text of the
Bluberi Agreement.
Forward-Looking Statements
This press release contains forward-looking information within the
meaning of applicable securities laws ("forward-looking
statements"), including forward-looking statements relating to the
completion of the Bluberi Transaction and the consequences of its
completion. Such forward-looking statements involve known and
unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, performance or achievements to differ
materially from the anticipated results, performance or
achievements or developments expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to, the risk that the conditions to the Bluberi
Transaction, including receipt of Minority Shareholder approval,
are not satisfied; the risk that a party to the Bluberi Agreement
becomes entitled to exercise its right to terminate the Bluberi
Agreement and exercises that right; and other risks, factors and
assumptions discussed in the section entitled, "Risk Factors" in
the Annual Information Form of the Company dated April 1, 2019 and other documents filed by the
Company with the Ontario Securities Commission and other securities
regulators across Canada. If any
such risks actually occur, they could impact the potential for
discussion, agreement or completion of a transaction and/or
materially adversely affect the Company's business, financial
condition or results of operations. In that case, the trading price
of the Company's common shares could decline, perhaps materially.
Readers are cautioned not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made.
Forward-looking statements are provided for the purposes of
providing information about management's current expectations and
plans relating to the future. Readers are cautioned that such
information may not be appropriate for other purposes. The Company
does not undertake or accept any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements to reflect any change in the Company's expectations or
any change in events, conditions or circumstances on which any such
statement is based, except as required by law.
About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a
Canadian company that specializes in innovative and creative
financing solutions for companies that are unable to obtain
adequate financing from conventional lending institutions. Unlike
conventional lending institutions who demand a long list of
covenants and make credit decisions based on cash flow and
projections, Callidus credit facilities have few, if any, covenants
and are based on the value of the borrower's assets, its enterprise
value and borrowing needs. Further information is available on our
website, www.calliduscapital.ca.
SOURCE Callidus Capital Corporation