TORONTO, June 2, 2017 /CNW/ - The Westaim Corporation
("Westaim" or the "Company") (TSXV: WED) is pleased to announce
that it has successfully closed its previously announced
transaction with Fairfax Financial Holdings Limited
(TSX:FFH)(TSX:FFH.U) and certain of its subsidiaries (collectively,
"Fairfax"), pursuant to which Fairfax has agreed to invest up to
C$100 million in Westaim.
Fairfax has agreed to purchase, on a private placement basis, 5%
interest rate preferred securities (the "Preferred Securities") in
an aggregate amount of up to C$100
million, issuable in tranches of not less than C$25 million. Westaim has closed today an initial
sale of Preferred Securities to Fairfax for C$50 million (the "Initial Tranche"), and has
discretion until January 1, 2018 to
require Fairfax to purchase all or part of the remaining 5,000,000
Preferred Securities, for up to C$50
million, with any such purchase to be completed not less
than 20 business days following the giving of notice by Westaim to
Fairfax. The Preferred Securities are subordinate secured
securities that will mature on May 26,
2116 but may be repaid, in whole or in part, by Westaim at
any time after June 2, 2022 and at
any time after June 2, 2020 if the
volume-weighted average trading price of its common shares (the
"Common Shares") for any 10 day period prior to the date on which
the applicable redemption notice is given is at least C$5.60 per Common Share.
Westaim also issued 28,571,430 common share purchase warrants
(the "Warrants"), each exercisable for one Common Share at an
exercise price of C$3.50. The
Warrants will vest proportionately based on the aggregate
percentage of Preferred Securities purchased by Fairfax with an
aggregate of 14,285,715 Warrants having vested today based on the
closing of the Initial Tranche. Each vested Warrant is exercisable
on or prior to June 2, 2022, but the
expiry date will be extended to June 2,
2024 if the volume-weighted average trading price of the
Common Shares for the 10 day period ending on June 2, 2022 is less than C$5.60 per Common Share. After June 2, 2020, Westaim can also elect to require
early exercise of the Warrants if the volume-weighted average
trading price of the Common Shares for any 10 day period prior to
the election is at least C$5.60 per
Common Share.
Fairfax has also agreed to invest up to US$500 million in investments sourced by
Westaim's affiliate, Arena Investors, LP ("Arena Investors").
Fairfax's commitment to invest an initial US$125 million with Arena Investors was triggered
by its purchase of the Initial Tranche of Preferred Securities
today. Subject to the satisfaction of certain conditions (including
Westaim's compliance with the indenture governing the Preferred
Securities), Fairfax has agreed to invest an additional
US$125 million with Arena Investors
upon the next C$25 million drawdown
of Preferred Securities by Westaim, and an additional US$250 million upon the final C$25 million drawdown of Preferred Securities by
Westaim.
The proceeds from the Private Placement will be used by Westaim
for potential acquisitions and for general corporate purposes.
Fairfax will have the right to nominate one director to the
board of directors of Westaim as long as it owns, directly or
indirectly, 5% of all outstanding Common Shares (determined on a
partially diluted basis).
If the Warrants are fully exercised, Fairfax would own
approximately 16.6% (9.1% if only the Warrants which vested today
are exercised) of the issued and outstanding Common Shares
(calculated based on the number of Common Shares issued and
outstanding today being 143,186,718 and assuming the exercise in
full of the Warrants). Prior to the transactions described above,
Fairfax did not own any securities of Westaim.
The aforementioned securities were acquired by Fairfax for
investment purposes and in the future, it may discuss with
management and the board of directors of Westaim any of the
transactions listed in clauses (a) to (k) of item 5 of 62-103F1 and
may further purchase, hold, vote, trade, dispose or otherwise deal
in the securities (including any Common Shares received on exercise
of the Warrants) in such manner as it deems advisable to benefit
from changes in market prices of such securities, publicly
disclosed changes in the operations of Westaim, its business
strategy or prospects or from any material transaction involving
Westaim. An early warning report will be filed by Fairfax in
accordance with applicable securities laws and will be available on
SEDAR at www.sedar.com or may be obtained directly from Fairfax
upon request at 416-367-4941 (Attention: John Varnell, Vice President, Corporate
Development) or at the address immediately below:
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario M5J 2N7
The Preferred Securities and the Common Shares of Westaim
issuable upon exercise of the Warrants are subject to a four-month
hold period from the date of closing of the Private Placement.
About Westaim
Westaim is a Canadian investment company specializing in
providing long-term capital to businesses operating primarily
within the global financial services industry. The Company
invests, directly and indirectly, through acquisitions, joint
ventures and other arrangements, with the objective of providing
its shareholders with capital appreciation and real wealth
preservation. Westaim's strategy is to pursue investment
opportunities with a focus towards the financial services industry
and grow shareholder value over the long term. Westaim's
investments include significant interests in HIIG and the Arena
Group. HIIG, the HIIG Partnership, Arena, the Arena Group,
Arena Finance, Arena Origination and Arena Investors are defined in
the notes to Westaim's audited consolidated financial statements
for the years ended December 31, 2016
and 2015 and the MD&A. Westaim's common shares are listed
on the TSX Venture Exchange under the trading symbol WED.
Except for statements of historical fact contained herein,
information in this press release may constitute "forward-looking
information" within the meaning of Canadian securities laws. Other
than statements of historical fact, all statements that involve
various known and unknown risks, uncertainties and other factors
are "forward-looking statements". There can be no assurance that
such statements will prove accurate. Results and future
events could differ materially from those anticipated in such
statements. These forward-looking statements are based on current
expectations that are subject to risks, uncertainties and
assumptions and Westaim can give no assurance that these
expectations are correct. Westaim's actual results could differ
materially from those anticipated by forward-looking statements for
various reasons generally beyond our control, including but not
limited to: (i) whether we will require Fairfax to purchase
additional Preferred Securities; (ii) whether the Warrants will be
exercised in full or at all; (iii) changes in market conditions or
deterioration in underlying investments; (iv) general economic,
market, financing, regulatory and industry developments and
conditions; and (v) other risk factors set forth in Westaim's
annual information form for its fiscal year ended December 31, 2016. Readers of this press release
are cautioned not to place undue reliance on these "forward-looking
statements". Except as otherwise required by applicable law,
Westaim expressly disclaims any intention or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or otherwise.
Neither 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 release.
SOURCE Westaim Corporation