Difference Capital Funding Inc.

TSX VENTURE : DCF


Difference Capital Funding Inc.

November 21, 2012 13:40 ET

Difference Capital Closes on Transactions Valued at $55 Million

TORONTO, ONTARIO--(Marketwire - Nov. 21, 2012) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Difference Capital Funding Inc. ("Difference Capital" or the "Company") (TSX VENTURE:DCF) is pleased to announce that it has closed the second tranche (the "Second Tranche") of the previously announced non-brokered private placement offering (the "Offering") of special warrants (the "Special Warrants") at a price of $0.35 per Special Warrant for aggregate consideration of $13,933,750. The Company has now raised $54,022,438 through the sale of 154,349,782 special warrants under the Offering.

Separately, the Company announces that it has entered into share exchange agreements (the "Share Exchange") with certain shareholders of Ethoca Solutions Inc. ("Ethoca"), to acquire 35,578 shares of Ethoca, for total consideration of $978,395, in exchange for the issuance of 2,795,413 common shares of the Company at price of $0.35 per share.

The Offering

Each Special Warrant entitles the holder to receive one unit (a "Unit") of the Company, for no additional consideration, upon the exercise or deemed exercise of the Special Warrants. Each Unit is comprised of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.60 until October 3, 2014.

The Special Warrants will be deemed to be exercised on the earlier of: (a) March 20, 2013, and (b) the fifth business day after a receipt is issued for a final prospectus ("Qualification Prospectus") qualifying the distribution of the Units. Difference Capital will use commercially reasonable efforts to obtain a receipt for the Qualification Prospectus within 75 days of the closing.

Pursuant to applicable Canadian securities laws, until a receipt is issued for the Qualification Prospectus the Special Warrants and any underlying securities issuable on exercise thereof will be subject to a four-month and one-day hold period from the applicable issue dates expiring on March 20, 2013.

Proceeds from the Second Tranche will be used for general expenses and to diversify the Company's investment strategy.

The Share Exchange

Ethoca is a global collaboration-based technology company serving merchants and card issuing banks in the online payment industry. For further information on Ethoca, visit www.ethoca.com.

Closing of the Share Exchange is subject to the approval of the TSX Venture Exchange (the "TSXV"). The common shares issued in connection with the Share Exchange will be subject to a four-month and one-day hold period from the applicable issue date.

Regulatory Matters

Certain insiders of Difference Capital, including Michael Wekerle, Executive Chairman of the Company, Paul Sparkes, the Executive Vice Chairman of the Company, and Henry Kneis, the Chief Operating Officer and Chief Financial Officer of the Company, subscribed for Special Warrants under the Second Tranche for total gross proceeds of approximately $2.15 million. As such, the closing of the Second Tranche constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the policies of the TSXV. In respect of the Second Tranche, the Company is relying upon the exemptions from the formal valuation and minority shareholder approval requirements pursuant to sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101 on the basis that the Company is not listed on a specified stock exchange and at the time the Offering was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for the transaction, insofar as it involves interested parties (within the meaning of MI 61-101) in the Second Tranche, exceeds 25% of the Company's market capitalization calculated in accordance with MI 61-101.

Additionally, Neil Johnson, the Chief Executive Officer of the Company, will be participating in the Share Exchange as a selling shareholder. As such the Share Exchange constitutes a "related party transaction" within the meaning of MI 61-101 and the policies of the TSXV. In respect of the Share Exchange, the Company is relying upon the exemptions from the formal valuation and minority shareholder approval requirements pursuant to sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101 on the basis that the Company is not listed on a specified stock exchange and at the time the Offering was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for the transaction, insofar as it involves interested parties (within the meaning of MI 61-101) in the Share Exchange, exceeds 25% of the Company's market capitalization calculated in accordance with MI 61-101.

About Difference Capital

Difference Capital Funding Inc. is a publicly listed merchant bank focused on creating shareholder value through strategic investment in, and advisory services for, non-resource growth companies.

For further information on the Company, its management, board and portfolio of investee companies, please visit www.differencecapital.com.

Cautionary Notes

This press release contains forward-looking statements regarding future growth, results of operations, performance, business prospects and opportunities involving the Company. Words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only management's and the board's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve known and unknown risks, assumptions, uncertainties, and other factors that may cause actual results or events to differ materially from what is expressed, implied or forecasted in such forward-looking statements. In addition to the factors the Company currently believes to be material such as, but not limited to, obtaining applicable approvals for the Share Exchange, its ability to achieve its investment and other strategic business objectives, generally, its dependence on the efforts of management, risks associated with fluctuations in net asset value and valuation of the Company's portfolio, its ability to operate on a profitable basis, changes in interest rates, evaluation of its provision for income and related taxes, and other factors, such as general, economic and business conditions and opportunities available to or pursued by the Company, not currently viewed as material could cause actual results to differ materially from those described in the forward-looking statements. Although the Company has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not to be anticipated, estimated or intended. Accordingly, shareholders should not place any undue reliance on forward-looking statements as such information may not be appropriate for other purposes. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release except as required by applicable law.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any of these securities in the United States. Securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended, and applicable state securities laws, or an available exemption from such registration requirements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the proposed transactions and neither of the foregoing entities has approved or disapproved of the contents of this press release.

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