Matrix Asset Management Inc.

Matrix Asset Management Inc.

August 08, 2013 17:39 ET

Matrix Obtains $5 Million Secured Debt Financing Commitment

TORONTO, ONTARIO--(Marketwired - Aug. 8, 2013) - Matrix Asset Management Inc. ("Matrix") (TSX:MTA) announces that it has entered into financing arrangements for up to $5 million ("Debt") with an independent Canadian lender ("Lender").

The Debt is to be advanced over three tranches of $1 million, $2 million, and $2 million. The first tranche was advanced to Matrix today. The remaining two tranches will be advanced to Matrix, at its option, upon satisfaction of certain conditions precedent, including completion of due diligence by the Lender and the completion of the sale of GrowthWorks Enterprises Ltd.'s mutual fund business to Marquest Asset Management Inc., which is expected to occur in late August, 2013. The Marquest transaction ("Marquest Transaction") was previously announced by Matrix on June 4, 2013.

The Debt is secured by the assets of Matrix and guaranteed by the assets of certain of its non-registrant subsidiaries. The Debt shall be repaid over 60 months from the date of the advance of each tranche. The Debt bears an interest rate of 12% annually. An annual processing fee of 6.5% of the principal amount of the Debt will also be payable quarterly. An initial structuring fee of 3.5% of the principal of the Debt advanced is also payable to the Lender. Any remaining portion of the Debt may be prepaid after 50% of Debt has been repaid.

A party related to the Lender ("Consultant") will enter into a five year service agreement ("Service Agreement") whereby it will assist Matrix subsidiaries as managers for various venture capital funds to source, oversee, negotiate and close sales of certain underperforming fund portfolio assets. Under the Services Agreement the Consultant will be paid a consulting fee of 1.8% of the net asset value of those portfolio assets (valued at present at approximately $18.1 million). The Services Agreement also provides that the Consultant will also be paid a success fee of 20.0% of the gross proceeds of the sale of any of the portfolio assets, to an aggregate success fee of $1 million for all assets sold. The Services Agreement can be terminated by Matrix at any time subject to the repayment of the Debt owing to the Lender and subject to a payment to the Consultant of consulting fees and success fees otherwise applicable in the 12 months following termination. The applicable managed venture capital funds are not a party to the Services Agreement and will not be responsible for paying any fees to the Consultant.

While Matrix and the Lender have entered into binding legal agreements providing for further loan advances, there can be no assurance that the subsequent loan tranches will be completed on the terms proposed or at all. Likewise while Matrix and the Consultant have entered into the Services Agreement providing for future services to encourage fund portfolio asset sales, there can be no assurance that such fund portfolio asset sales will occur.

Forward looking statements: Certain statements in this press release are forward-looking statements including the statements about future loan advances by the Lender and services by the Consultant. Forward-looking statements are based on beliefs and assumptions at the time the statements are made, including beliefs and assumptions about the satisfaction or waiver of conditions to the closing of the loan advances, including regulatory, stock exchange and third party approvals of the Debt and the Marquest Transaction. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, they are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with securing necessary regulatory, stock exchange and third party approvals for the Debt and the Marquest Transaction, satisfying other conditions to the Debt and Marquest Transaction, risks associated with completing the Debt, the Marquest Transaction and portfolio asset sales under the Services Agreement, and other regulatory requirements. Many of these risks are beyond the control of Matrix. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect or to reflect new information, future unanticipated events or results or other factors.

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