Founders Advantage Capital Corp.
TSX VENTURE : FCF

Founders Advantage Capital Corp.

December 14, 2016 07:30 ET

DLC Enters Letter of Intent to Acquire Marlborough Stirling Canada Limited

CALGARY, ALBERTA--(Marketwired - Dec. 14, 2016) - Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the "Corporation" or "FA Capital") is pleased to announce that its subsidiary Dominion Lending Centres ("DLC") has entered into a letter of intent to acquire all of the securities of Marlborough Stirling Canada Limited ("MSC") for an aggregate purchase price of $5.5 million. The acquisition is expected to close on or about December 15, 2016. It is currently contemplated that the securities of MSC will be acquired by a new corporation ("Acquireco") which is 70% owned by DLC and 30% owned by a third-party. Funding to complete the acquisition will be provided by DLC and the third-party partner proportionate to their shareholdings in Acquireco. FA Capital owns a 60% interest in DLC.

MSC provides software and services to the Canadian mortgage lending industry under the following three product lines: MorWEB; Omiga; and Optimus. MorWEB offers web-based mortgage origination functionality designed specifically for mortgage brokers. Omiga is a multi-channel data capture software that allows for the processing of mortgage applications (including underwriting, risk assessment, offer production and funds disbursement). Optimus is a post-completion software service offering payment processing, reporting and arrears management, property tax management and securitization.

MSC is one of two providers that have been approved to provide a connectivity platform between Canadian lenders and mortgage brokers. In consideration for the MSC services, Canadian lenders pay MSC fees based on the funded volume of mortgages. To date, a single MSC competitor has dominated the lender connectivity marketplace and MSC has a small percentage of the marketplace. DLC anticipates it can increase MSC's market share by having more DLC mortgage brokers use the MSC platform.

Gary Mauris, President of DLC commented: "We believe this transaction is a significant step forward for the DLC group of companies. It provides us an additional origination delivery platform and allows us to have material influence on user experience, data management, and will easily allow us to add additional revenue streams under a central platform."

About DLC

DLC group of companies is Canada's leading and largest mortgage brokerage with $33 billion in funded mortgages in 2015. DLC group of companies operates through three main subsidiaries, Dominion Lending Centres, Mortgage Centre Canada and Mortgage Architects and has operations in all 13 provinces and territories. DLC group of companies' extensive network includes over 5,000 agents, 325 franchises and 650 locations. Headquartered in British Columbia, DLC group of companies was founded in 2006 by Gary Mauris and Chris Kayat.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation seeks to win mandates by appealing to the segment of the market which is not aligned with traditional private equity control, royalty monetizations or related structures. The Corporation's innovative platform offers disproportionate incentives (contractually) for growth in favour of our partner entrepreneurs. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to continue to manage the business with a long-term partner.

The Corporation's common shares are listed on the TSX Venture Exchange under the symbol "FCF".

For further information please refer to the Corporation's website at www.advantagecapital.ca.

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 RELEASE.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "will", "expect", "plan", "schedule", "intend", "propose", or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • completion of the transaction on the terms set out herein;

  • timing of closing of the transaction; and

  • that MSC can increase its market share by having more DLC mortgage brokers use the MSC platform.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • that all closing conditions will be satisfied or waived; and

  • that the parties will be able to successfully negotiate the definite agreements.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • the failure to obtain necessary approvals and consents to complete the transaction;

  • the satisfaction or waiver of all closing conditions;

  • the transaction will not yield the anticipated benefits to DLC or the Corporation; and

  • the risks and uncertainties applicable to DLC's operations.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled "Risk Factors" in the Corporation's current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

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