Loyalist Group Limited
TSX VENTURE : LOY

Loyalist Group Limited

June 22, 2015 06:00 ET

Loyalist Announces Proposed Non-Brokered Financing

TORONTO, ONTARIO--(Marketwired - June 22, 2015) - Loyalist Group Limited ("Loyalist" or the "Company") (TSX VENTURE:LOY) announces a proposed non-brokered financing to raise gross proceeds of a minimum of $2.5 million and a maximum of $8.0 million (the "Offering").

The Offering is expected to be completed in two stages, with the first stage closing on or about June 26, 2015. The first stage closing will be inclusive of a $1.5 million minimum commitment from Company insiders, consisting of directors, officers, management, and employees. The second stage is expected to close on or before July 3, 2015.

"We are communicating additional details surrounding the terms of our proposed non-brokered private placement to all stakeholders inside and outside the Company. We believe a fair and transparent approach is the best path to put Loyalist back on sound footing and rebuild confidence with all parties. We are enthusiastic about the progress we have made thus far, and are energized about the work we have ahead of us. I would like to personally thank all stakeholders for their trust and support through this important period," said Shawn Klerer, Chief Executive Officer.

Under the proposed terms of the Offering, the Corporation will issue up to 800,000 units (the "Units") at a price of C$10.00 per Unit for gross proceeds of C$8,000,000.

The net proceeds of the Offering will be used solely to fund the Company's working capital requirements during the expected period of forbearance under the Company's proposed agreement with Bank of Montreal (the "Senior Lender"). No portion of the net proceeds of the Offering will be used to repay any outstanding indebtedness (consisting of loans, credit facilities, and debentures) of the Company, including amounts owing to the Senior Lender.

Each Unit will consist of one preferred share of the Company (a "Preferred Share") and 83.33 Common Share purchase warrants (a "Warrant"). Subject to the receipt of all necessary approvals, the Company currently anticipates that the Preferred Shares and Warrants will include the following terms:

PREFERRED SHARES

  • Mandatory cash redemption by the Company 24 months after issuance (the "Mandatory Redemption Date") for an amount equal to the original issue price plus any accrued but unpaid dividends on the Preferred Shares (the "Redemption Price").
  • Optional cash redemption by the Company at any time prior to the Mandatory Redemption Date for an amount equal to the Redemption Price.
  • No Payment in Kind (PIK) rights.
  • Non-voting and non-convertible.
  • Annual dividend rate of nine percent (9%) of the issue price, to be declared and paid on a quarterly basis; provided, however, that the payment of dividends will be subject to the prior consent of the Senior Lender during the forbearance period.
  • No dividends shall be paid on any common shares of the Company unless dividends are contemporaneously paid on the Preferred Shares in the amount noted above.

WARRANTS

  • Based upon the issuance of a maximum of 800,000 Units, up to 66.66 million common share purchase warrants will be issued (83.33 warrants per Unit x 800,000 Units).
  • Each whole Warrant will entitle the holder to acquire one common share of the Company at a price of $0.12 per share for a period of 24 months following the closing of the Offering.
  • If at any time following the one year anniversary of the closing of the Offering, the closing price (or the average of the 'bid' and the 'ask', if not traded) of the common shares of the Company exceeds $0.25 per share for a period of 20 consecutive trading days, the Company may in its sole discretion elect to accelerate the expiry of the Warrants to the date that is 20 trading days after the date of issuance of a news release announcing the new expiry date.

OTHER MATTERS

In connection with the Offering, the Company may pay finder's fees to certain arm's length finders in an amount not exceeding 8% of the aggregate gross proceeds of the Offering, which fees may, at the election of the applicable finder, be paid in cash or common shares of the Company, subject to all necessary approvals.

Completion of the Offering is subject to certain conditions including, but not limited to: (a) the execution by the Company of a forbearance agreement with the Senior Lender providing for a repayment date of no earlier than September 15, 2015; and (b) the receipt of all necessary approvals, including the approval of the TSX Venture Exchange and the securities regulatory authorities. All securities issued by the Company in connection with the Offering will be subject to a statutory four month hold period.

This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Loyalist

Loyalist owns and operates private English as a Second Language (ESL) Schools, Career Colleges and Community Colleges in Toronto, Vancouver, Victoria and Halifax.

Forward-Looking Information and Statements

This news release includes certain forward-looking information and statements within the meaning of Canadian securities laws. Such forward-looking information and statements are not representative of historical facts or information or current condition, but instead represent only the Company's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control. Generally, such forward-looking information or statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken, "will continue", "will occur" or "will be achieved". The forward-looking information contained herein includes information concerning the Offering and the proposed completion thereof. By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

Any number of important factors could cause actual results to differ materially from these forward-looking statements as well as future results including, but not limited to, risks relating to: the Company's ability to service its outstanding indebtedness and the impact of that indebtedness on the Company's ability to raise additional capital, fund and maintain operations or meet business objectives; the Company's ability to successfully negotiate a forbearance agreement with Bank of Montreal on terms acceptable to the Company; the Company's ability to comply with the terms of any such forbearance agreement and the consequences of any breach or default thereunder; the ability of the Company to complete the Offering on terms acceptable to the Company or at all; the fact that new management of the Company, including the recently appointed Chief Executive Officer and Chief Financial Officer, have had limited experience with the Company and its operations and have not had sufficient time to fully analyze all facets of the Company's business; the impact of negative or unfavourable rumours in the marketplace on the Company's brands and student enrollment; any of the Company's announced or proposed acquisitions failing to close or becoming delayed before closing; carrying on business and activities in international jurisdiction where Canadian laws do not apply; any loss of certain key personnel; levels of student enrolment; delays in rolling out online education programs; delays to the completion of any planned initiatives or the inability to complete those initiatives; competition in the educational services market; and currency fluctuations. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on any forward-looking information or statements contained in this press release.

The forward-looking information contained in this press release is made as of the date hereof, and the Company does not undertake to update any forward-looking information that is contained or referenced herein, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. All subsequent written and oral forward looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

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.

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