Dominion General Investment Corporation
TSX VENTURE : DGA.P

May 03, 2016 16:46 ET

Dominion General Investment Corporation Enters Into Share Purchase Agreement Relating to Proposed Qualifying Transaction With Hampton Equity Partners Limited

TORONTO, ONTARIO--(Marketwired - May 3, 2016) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Dominion General Investment Corporation ("Dominion") (TSX VENTURE:DGA.P), a capital pool company as defined under Policy 2.4 of the TSX Venture Exchange (the "TSXV"), today announced that it has entered into a definitive agreement dated April 29, 2016 (the "Share Purchase Agreement") pursuant to which it will acquire all of the outstanding shares of Hampton Equity Partners Limited ("Hampton") to complete an arm's length qualifying transaction (the "Transaction") in accordance with the policies of the TSXV. The Transaction is structured as a reverse take-over and as a result Hampton will become a wholly-owned subsidiary of Dominion at the time of the completion of the Transaction. As previously disclosed on December 15, 2015, all matters set out in the management information circular dated September 28, 2015 for the 2015 Annual and Special Meeting of Shareholders held on October 27, 2015 relating to the Transaction, including the change of name and redesignation of share classes of Dominion, were approved by shareholders. In connection with the completion of the Transaction Dominion will change its name to 'Hampton Financial Corporation'. The Share Purchase Agreement will be made available on SEDAR at www.sedar.com. Dominion has received conditional approval of the Transaction from the TSXV and to have the subordinate voting shares of the Resulting Issuer (as defined below) ("Resulting Issuer Subordinate Voting Shares") listed for trading on the TSXV following the Transaction. Dominion anticipates closing the Transaction on or before May 31, 2016. References to "Resulting Issuer" in this document mean Hampton Financial Corporation (formerly Dominion) following the completion of the Transaction and the issuance of the Final Exchange Bulletin by the TSXV. Completion of the Transaction and listing of the Resulting Issuer Subordinate Voting Shares on the TSXV is subject to a number of conditions including, but not limited to: completion of the Minimum Offering (as defined below), receipt of final approval from the TSXV for the listing of the Resulting Issuer Subordinate Voting Shares on the TSXV and/or other actions necessary to complete the Transaction and for the issuance of the Final Exchange Bulletin by the TSXV.

About Hampton

Hampton is an Ontario corporation which operates, through its wholly-owned subsidiary, Hampton Securities Limited ("HSL"), a Canadian boutique investment dealer delivering wealth management and capital markets services, supported by 37 advisors and associates. HSL also engages in proprietary trading activities for its own account. HSL, is a full service investment dealer, regulated by IIROC and registered in Alberta, British Columbia, Manitoba, Nova Scotia, Northwest Territories, Ontario, and Quebec.

HSL has been offering wealth management services since its inception in the late 1990s, with its principals having a considerably longer tenure in the industry. As of March 31, 2016, HSL's Private Client Group had approximately $651 million in assets under administration and currently employs a team of 24 active dealing representatives, providing investment advice and portfolio management services (internally and through third-party portfolio managers). Clients have the option of fee-based or transactional-based pricing for services as well as holding their investments in registered plans (for retirement, education, savings, etc.).

HSL offers a broad range of investment banking services and solutions primarily to small and mid-size public and private issuers, including private placements, initial public offerings and secondary offerings of equity and debt securities as well as providing sponsorship and advisory services to issuers seeking to list on the TSXV. HSL has experience in all sides of the capital pool company ("CPC") transaction, including: creating and financing CPCs, advising on potential qualifying transactions, sponsoring private issuers for prospective qualifying transactions, and acting as a dealer for concurrent financings completed by target companies.

Since inception in the late 1990s, HSL has been actively engaged in proprietary trading for its own capital focusing on TSX listed large and mid-cap equities. Market dynamics have changed over the years and in 2014, HSL streamlined its trading operations to focus primarily on high-yield and income generating securities, utilizing its existing trading and borrowing facilities with a major Canadian bank. The objectives of HSL's propriety trading activities are to achieve predictable and sustainable cash flow to supplement other revenues of HSL as well as help fund potential strategic acquisitions. Hampton completed a private placement of $3.85 million in the fall of 2014 in furtherance of HSL's streamlined proprietary trading activities. The proprietary trading activities were simulated for a period of approximately one year to develop operational proficiency.

Currently, HSL is aggressively working to increase its scale with a mandate of recruiting reputable advisors and evaluating acquisition opportunities, while continuing to fund its proprietary trading activities for long term cash flow growth and stability.

Summary of Financial Information for Hampton

The following table sets forth selected historical financial information for Hampton for the financial years ended 2015, 2014 and 2013.

Fiscal years ended August 31, *
Condensed financial statements 2015 2014 2013
$000s $000s $000s
Statement of Loss and Comprehensive Loss Data
Total revenues 5,290 7,525 7,742
Net loss (2,615) (870) (1,637)
Comprehensive loss (2,619) (803) (1,599)
Cash dividends declared - - -
Statement of Financial Position Data
Current assets 1,111 7,619 2,271
Total assets 3,078 8,660 2,997
Current liabilities 2,478 6,514 3,130
Total liabilities 2,478 6,514 3,130
Total shareholders' equity (deficiency) 600 2,146 (133)
Total liabilities and shareholders' equity 3,078 8,660 2,997

* Selected information is derived from audited financial statements which are prepared in accordance with IFRS. All amounts indicated are in Canadian dollars.

Proposed Hampton Financing

Before the effective time of the Transaction, Hampton proposes to complete a brokered private placement offering of Hampton subscription receipts ("Subscription Receipts") of a minimum of $2,000,000 (2,000,000 Subscription Receipts) (the "Minimum Offering") and up to $20,000,000 (20,000,000 Subscription Receipts) (the "Maximum Offering") at the price ("Offering Issue Price") of $1.00 per Subscription Receipt (the "Offering"). Completion of the Minimum Offering is a pre-condition to completing the Transaction. Paradigm Capital Inc. (the "Agent") has agreed to act as lead agent and sole book-runner on a best efforts agency basis in relation to the Offering. Hampton has granted to the Agent an option (the "Over-allotment Option") exercisable up to 48 hours prior to closing of the Offering to arrange for the purchase of up to an additional 15% of the number of Subscription Receipts at the Offering Issue Price. If the Over-allotment Option is exercised by the Agent the total gross proceeds raised could be up to $23,000,000 and the total number of Subscription Receipts issued could be up to 23,000,000. Immediately prior to the Transaction and upon the satisfaction of certain conditions, each Subscription Receipt shall be automatically exercised without any further action of the holder and for no additional consideration for 0.8 common shares in the capital of Hampton ("Hampton Common Shares"). Pursuant to the Transaction, holders of Hampton Common Shares will receive one Resulting Issuer Subordinate Voting Share in exchange for each 0.8 of a Hampton Common Share held (equivalent to 1.25 Resulting Issuer Subordinate Voting Shares in exchange for each one (1.0) Hampton Common Share held). Subject to certain exceptions, the Agent will be entitled to receive a cash commission equal to 7% of the gross proceeds from the Offering (the "Agent's Cash Commission") together with compensation options (the "Agent's Compensation Options") equal to 7% of the Subscription Receipts sold pursuant to the Offering, each Agent's Compensation Option exercisable at $1.00 to acquire 0.8 Hampton Common Shares for a period of 36 months. Unexercised Agent's Compensation Options will be exchanged for Resulting Issuer Compensation Options.

The funds available to the Resulting Issuer, after giving effect to the Transaction, assuming completion of the Minimum Offering and Maximum Offering (with exercising the Over-allotment Option to its full extent, in the case of the Maximum Offering), respectively, are expected to be used, principally, for the expenses relating to completing the Transaction as well as to fund proprietary trading activities and/or potential strategic acquisitions, with any excess to be used for working capital purposes, as described in the table below.

Principal Use of Funds Minimum Offering (2) Maximum Offering (3)
$ $
Invested in securities for proprietary trading and/or for strategic acquisitions 1,700,000 21,180,000
Operations of the Resulting Issuer 1,500,000 1,500,000
Transaction expenses (Note 1) 200,000 200,000
Other working capital purposes 425,000 425,000
Total funds available 3,825,000 23,305,000
Notes:
(1) Expenses include listing fees, professional services and miscellaneous costs; not including expenses of Offering (see footnotes 2 and 3 below).
(2) Total funds available and working capital is net of expenses of Minimum Offering, estimated to be $100,000, and Agent's Cash Commission of $140,000, assuming completion of the Minimum Offering only.
(3) Total funds available and working capital is net of expenses of Maximum Offering, estimated to be $150,000, and Agent's Cash Commission of $1,610,000, assuming completion of the Maximum Offering and with exercising the Over-allotment Option to its full extent.

There may be circumstances however, where for sound business reasons a reallocation of funds may be necessary.

About the Transaction

Pursuant to the Share Purchase Agreement the Resulting Issuer will issue 1.25 Resulting Issuer Subordinate Voting Shares for each one outstanding Hampton Common Share and 1.25 multiple voting shares of the Resulting Issuer ("Resulting Issuer Multiple Voting Shares") for each one outstanding class A share of Hampton ("Hampton Class A Shares"). Each Resulting Issuer Multiple Voting Share will entitle the holder to 20 votes and each Resulting Issuer Subordinate Voting Share will entitle the holder to one vote at meetings of the shareholders of the Resulting Issuer. The Agent's Compensation Options will be exchanged for compensation options of the Resulting Issuer ("Resulting Issuer Compensation Options") exercisable to purchase one Resulting Issuer Subordinate Voting Share for each 0.8 of a Hampton Common Share purchasable under the Agent's Compensation Options (equivalent to the purchase of one (1) Resulting Issuer Subordinate Voting Share for $1.00). Under the terms of the Share Purchase Agreement, assuming the Minimum Offering former holders of Hampton Common Shares will be issued and will hold approximately 10,618,670 Resulting Issuer Subordinate Voting Shares representing approximately 80.4% of the outstanding Resulting Issuer Subordinate Voting Shares (or approximately 37.4% of the total number of outstanding Resulting Issuer Subordinate Voting Shares and Resulting Issuer Multiple Voting Shares (together, the "Resulting Issuer Shares") and approximately 3.4% of the voting rights in respect of the Resulting Issuer Shares, and assuming the Maximum Offering and exercise of the Over-Allotment Option to its full extent, former holders of Hampton Common Shares will be issued and will hold approximately 31,618,670 Resulting Issuer Subordinate Voting Shares representing approximately 92.4% of the outstanding Resulting Issuer Subordinate Voting Shares (or approximately 64.1% of the total number of outstanding Resulting Issuer Shares) and approximately 9.4% of the voting rights in respect of the Resulting Issuer Shares. Pursuant to the Share Purchase Agreement the former holder of Hampton Class A Shares will be issued and will hold approximately 15,149,845 Resulting Issuer Multiple Voting Shares representing 100% of the Resulting Issuer Multiple Voting Shares, or approximately 53.4% of the total number of outstanding Resulting Issuer Shares in the case of the Minimum Offering and approximately 30.7% of the total number of outstanding Resulting Issuer Shares in the case of the Maximum Offering and exercise of the Over-Allotment Option to its full extent, being approximately 95.8% of the voting rights in respect of the Resulting Issuer in the case of the Minimum Offering and approximately 89.9% of the voting rights in respect of the Resulting Issuer in the case of the Maximum Offering and exercise of the Over-Allotment Option to its full extent. Accordingly, the Transaction will constitute a reverse take-over of Dominion.

The completion of the Transaction is conditional on achieving the Minimum Offering and obtaining all necessary regulatory approvals in connection with the matters described above and other conditions customary for a transaction of this type.

Immediately after the completion of the Transaction, on a non-diluted basis the shareholders of Dominion will own 2,591,700 Resulting Issuer Subordinate Voting Shares and the shareholders of Hampton will own approximately between 10,618,670 Resulting Issuer Subordinate Voting Shares (assuming the Minimum Offering) and 31,618,670 Resulting Issuer Subordinate Voting Shares (assuming the Maximum Offering and exercise of the Over-allotment Option to its full extent).

Peter M. Deeb, the Chairman and Chief Executive Officer of Hampton will, following the Transaction and the Offering, control, directly or indirectly, 476,500 Resulting Issuer Subordinate Voting Shares, representing approximately 3.6% of the total number of issued and outstanding Resulting Issuer Subordinate Voting Shares in the case of the Minimum Offering and approximately 1.4% of the outstanding Resulting Issuer Subordinate Voting Shares in the case of the Maximum Offering and exercise of the Over-allotment Option to its full extent and 15,149,845 Resulting Issuer Multiple Voting Shares, representing 100% of the total number of issued and outstanding Resulting Issuer Multiple Voting Shares. Following the Transaction and assuming the Minimum Offering Mr. Deeb will control approximately 96% of the votes of the Resulting Issuer and assuming the Maximum Offering and the exercise of the Over-allotment Option to its full extent Mr. Deeb will control approximately 90% of the votes of the Resulting Issuer.

Arm's Length Transaction

The Transaction is an arm's length transaction in accordance with the policies of the TSXV and is not subject to Dominion shareholder approval.

Proposed Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.

Peter M. Deeb, Chairman of the Board and Chief Executive Officer

Peter Deeb has been an investment advisor and entrepreneur for more than 25 years. As founder and Chairman of HSI, his experience includes developing proprietary investment strategies for corporate and individual clients. Mr. Deeb has played an active role in the regulatory development of the investment industry in Canada, having served as Chairman of the Ontario District Counsel of IIROC and as Chairman of its National Advisory Committee. Mr. Deeb is a member of the board of RIFT Energy Corporation and The Canadian Opera Company.

Mark George, Chief Financial Officer and Corporate Secretary

Mark George is the Chief Financial Officer and Secretary of HEPL and also holds senior financial and operational management positions in HSI (including its wholly-owned subsidiaries, HSL, Hampton Insurance Brokers Inc. and Hampton Securities (USA), Inc.) as well as in Deeb & Company Limited and Hampton Capital Corporation. Mr. George joined HSL in March 2011 as Chief Operating Officer.

Previously, Mr. George was Senior Vice President & Chief Financial Officer, as well as Interim President & Chief Executive Officer, with Knowledge First Financial, a securities dealer and investment fund manager in the business of distributing and administering education savings plans across Canada. Prior to 2001, Mr. George held senior financial and operational management roles in technology, entertainment and manufacturing organizations. He began his career with a predecessor accounting firm of PwC Canada.

Mr. George earned his Bachelor of Commerce degree from the University of Toronto and obtained his Chartered Professional Accountant (CPA) and Chartered Accountant (CA) designations. Mr. George also holds his ICD.D designation from the Institute of Corporate Directors.

John H. Sununu, Director

John H. Sununu was born in Havana, Cuba. He graduated from the Massachusetts Institute of Technology. He received his bachelor's degree in 1961, a master's degree in 1962, and a Ph.D. in mechanical engineering in 1966. He was a mechanical engineering professor at Tufts University from 1966 to 1968 and associate dean of the College of Engineering until 1973. From 1963 until his election as governor, he served as president of JHS Engineering Company and Thermal Research Inc. He represented Salem in the New Hampshire State Legislature from 1973-1974. He became New Hampshire's 75th Governor on January 6, 1983, and served three consecutive terms. Mr. Sununu served on the Advisory Board of the Technology and Policy Program at MIT from 1984-1989. On January 21, 1989, Governor Sununu was commissioned Chief of Staff to President George H. W. Bush, serving in the White House until March 1, 1992. He is a member of the National Academy of Engineers' Committee on Public Engineering Policy and has served as a member of the President's Council on Environmental Quality Advisory Committee. Mr. Sununu chaired the National Governors Association, the Coalition of Northeastern Governors, and the Republican Governors Association. From 1992 until 1998, he co-hosted CNN's nightly Crossfire program, a news/public affairs discussion program. He is president of JHS Associates, Ltd. He is also a member of the National Academy of Engineering.

Robert Sherman, Vice Chairman of the Board of Directors

Robert (Bob) Sherman is a senior investment advisor with over 25 years in the investment industry. Prior to entering the investment industry, Mr. Sherman was employed in the treasury and finance departments for a group of Canadian mining companies.

Mr. Sherman received two Bachelor's Degrees in Computer Science from the University of Western Ontario. He is a Fellow of the Canadian Securities Institute. Outside of HSI, Mr. Sherman is the Past President of the Lions Club of Toronto and remains a Trustee of a Charitable Foundation that targets social work and leadership initiatives.

Kenneth Lipson, Director

Ken Lipson has 28 years' experience with real estate asset management companies. He began his career at Bramalea Limited at the age of 22, was the Founder of Hampton Realty Partners Limited, President of Quorum REIT Canada, and a director of Transportaction Lease Systems Inc. and has continued to hold senior roles in several other asset-based development ventures. Mr. Lipson is a principal at TMDL Asset Management Inc., an owner-operator and developer of senior living apartments and senior living lifestyle communities (since 1988), and has experience in the acquisition, ownership, development and management of properties and investments in both Canada and the United States, with a focus on delivering value and superior service levels to shareholders and residents. He is a member of the Advisory Committee of Timbercreek Mortgage Investment Corporation. Mr. Lipson is also a former member of the Canadian Finance & Lease Association, Fair Rental Policy Organization, the Greater Toronto Apartment Association and a former Group Leader of the Young Entrepreneur's Organization. He also is a former member of the Apartment Executive of the Urban Development Institute. Mr. Lipson has a BA from the University of Toronto, as well as an MBA from Western University, Ivey Business School.

The following is a brief description of each of the executive officers and directors for HSL.

Cheryl de Montigny, Chief Compliance Officer, HSL

Cheryl de Montigny has worked in the securities industry for over twenty-five years. She has over fifteen years serving in a senior management role in the compliance departments of multiple financial institutions including HSL, Blackmont Capital Corporation and Octagon Capital Corporation.

George Karkoulas, President - Private Client Group, HSL

George Karkoulas possesses over 30 years of experience in the financial services industry. Prior to joining HEPL, Mr. Karkoulas worked at Raymond James and Canaccord Genuity. He was previously the President of CIBC Discount Brokerage.

Clifton Rose, Director, HSL

Clifton Rose is a Senior Investment Advisor and has been a member of the investment industry for over 40 years.Mr. Rose's experience encompasses a wide range of administrative and back office operations, covering client accounting, auditing, securities handling, trading, and research at firms including Ames, Dominick & Dominick, McLeod Young Weir, Canarim, and Davidson & Partners. Over the last 28 years, he has worked in an advisory capacity at such firms as Davidson Partners, Midland Walwyn, Merrill Lynch, and HSL.

Michael J. Deeb, Director, HSL

Michael Deeb is a senior investment advisor with over 20 years in the Canadian investment industry. Mr. Deeb started his career on the institutional trading desk with Midland Walwyn in 1993. In 1998, he changed his focus and became and investment advisor with Midland's private client group. In December 2000 he moved his practice to HSL, where he currently has $230 million of client assets under administration.

Filing Statement

In connection with the Transaction and pursuant to TSXV requirements Dominion has filed a filing statement dated April 29, 2016 (the "Filing Statement") on SEDAR (www.sedar.com). The Filing Statement contains details regarding the Transaction, the Offering, Dominion, Hampton and the Resulting Issuer.

The information provided in this press release regarding Hampton, HSL and the Resulting Issuer has been provided by Hampton and has not been independently verified by Dominion.

The securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.

Cautionary Statements

Completion of the Transaction and listing of the Resulting Issuer Subordinate Voting Shares on the TSXV is subject to a number of conditions including, but not limited to: completion of the Minimum Offering, receipt of final approval of the TSXV for the listing of the Resulting Issuer Subordinate Voting Shares on the TSXV and/or other actions necessary to complete the Transaction and for the issuance of the Final Exchange Bulletin by the TSXV. There can be no assurance that the Minimum Offering will be completed, that the Transaction will be completed, or that the other actions necessary for the TSXV to issue its Final Exchange Bulletin will be completed.

Investors are cautioned that, except as disclosed in the Filing Statement prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

Notice on forward-looking statements

This release includes forward-looking statements regarding Dominion, Hampton, the Resulting Issuer and their respective businesses, as well as forward-looking statements regarding the Transaction and the Offering. Such statements are based on the current expectations and views of future events of the management of each entity, respectively, and are based on assumptions and subject to risks and uncertainties. Although the management of Hampton believes that the assumptions underlying the statements relevant to the business of Hampton and proposed future business of the Resulting Issuer are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this release, including completion of the Offering and the Transaction (and the proposed terms upon which each is proposed to be completed) and the ability of the Resulting Issuer and HSL to execute on their respective business plans, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding the investment industry, market conditions, economic factors, loss of key employees, the abilities of management of the Resulting Issuer to attract and retain executive management and/or members of its Board of Directors, the abilities of management of the Resulting Issuer to manage and to operate its business. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Dominion undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Readers are referred to the 'Cautionary Statements Regarding Forward-Looking Information' and 'Risk Factors' sections of the Filing Statement.

Contact Information

  • Dominion General Investment Corporation
    Steven Mintz
    Chief Executive Officer
    (416) 865-7209

    Hampton Equity Partners Limited
    Peter Deeb
    Chief Executive Officer
    (416) 862-8651