SOURCE: Timbercreek Mortgage Investment Corporation

Timbercreek Mortgage Investment Corporation logo

SOURCE: Timbercreek Senior Mortgage Investment Corporation

Timbercreek Senior Mortgage Investment Corporation logo

May 13, 2016 08:02 ET

Timbercreek MIC and Timbercreek Senior MIC Provide Update on Previously Announced Merger

TORONTO, ON--(Marketwired - May 13, 2016) - Toronto Stock Exchange: TMC and MTG

Timbercreek Mortgage Investment Corporation (TSX: TMC) ("TMIC") and Timbercreek Senior Mortgage Investment Corporation (TSX: MTG) ("TSMIC") announced they have received an interim order from the Ontario Superior Court of Justice (Commercial List) (the "Interim Order") with respect to the previously announced combination of TMIC and TSMIC to be completed by way of a plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). The combined entity would be named Timbercreek Financial Corp. ("Timbercreek Financial" or the "Company").

The Interim Order, among other things, authorizes each of TMIC and TSMIC to call and hold an annual and special meeting of shareholders (the "TMIC Meeting" and the "TSMIC Meeting," respectively) to consider the Arrangement. In accordance with the Interim Order, the TMIC Meeting will be held on June 22, 2016 at 9:00 a.m. (Toronto time) and the TSMIC Meeting will be held on June 22, 2016 at 10:00 a.m. (Toronto time). Both the TMIC Meeting and the TSMIC Meeting will be held at the offices of McCarthy Tétrault LLP, Suite 5300, TD Bank Tower, 66 Wellington Street West, Toronto, Ontario. The hearing date for the application for the Final Order of the Court is scheduled for June 29, 2016, if the required approvals from the shareholders of TMIC and TSMIC are obtained.

The board of directors (with recommendations of their respective special committees) of TMIC and TSMIC have unanimously recommended that their shareholders vote in favour of the proposed transactions to be considered at the TMIC Meeting and TSMIC Meeting.

"I am very excited about the potential that the combined company will have," states Andrew Jones. "As we have discussed over the past few quarters, management and both boards have spent a considerable amount of time reviewing various ways to enhance shareholder value. Having come to the end of this process, we firmly believe this is the best option to achieve that objective for both companies over the short-term and the long-term."

Transaction Benefits to TMIC and TSMIC Shareholders

  • Enhanced Capital Markets Profile  - Timbercreek Financial will have a book value of approximately $650 million, more than double the size of any other publicly traded MIC. Greater market capitalization, float and liquidity are key factors in attracting investors (particularly institutions), acquisition opportunities and research coverage.
  • Book Value and Earnings Per Share Accretion  - Timbercreek Financial is targeting an EPS of approximately $0.721 on a stabilized basis over the next 12 months, which will be an improvement from the EPS generated by both companies in 2015. The increase in EPS will be primarily achieved through savings in management fees and operational costs. Timbercreek Financial intends to distribute 95% of annual earnings while reinvesting the remainder in the business to grow book value and future earnings.
  • Superior Diversified Portfolio Delivering a Strong Risk-Adjusted Yield  - The combined portfolio, along with a new $350 million credit facility, will result in a mortgage portfolio of approximately $1 billion, providing substantially better diversification for investors. The increased credit capacity will help to reduce Timbercreek Financial's overall cost of capital while at the same time increasing earnings potential. The lower cost of capital will allow the Company to target higher quality, lower interest rate loans, improving the risk profile of the portfolio and the universe of lending opportunities for the Company.
  • Reduced Management Fees and Improved Alignment of Interests  - The elimination of TMIC's performance fee and the reduction of its management fee from 1.2% to 0.85% of gross assets are positive improvements for TMIC shareholders. In return for the long-term fee reduction, TMIC will issue 782,830 shares (at book value) to TAMI, substantially increasing its ownership of the company and alignment with all shareholders.
  • Simplified Structure with Cost Synergies  - The combination creates a single entity, reducing market confusion between the different portfolios and the relative merits of the respective strategies. Adjustments to the investment criteria will permit Timbercreek Financial to monetize on investment opportunities, creating benefits in addition to the operational synergies that are expected.

TMIC and TSMIC have prepared a joint information circular ("Joint Circular") with respect to the Arrangement and the related transactions that will be mailed to shareholders of TMIC and shareholders of TSMIC of record as of May 11, 2016. The Joint Circular is available on SEDAR at www.sedar.com under TMIC's issuer profile and TSMIC's issuer profile or on the respective issuer website:

http://www.timbercreekmic.com/investor-information/arrangement-details

http://www.timbercreekseniormic.com/investor-information/arrangement-details

About TMIC and TSMIC

TMIC and TSMIC provide investors with an opportunity to invest in a diversified portfolio of mortgage and loan investments originated and underwritten by their manager, Timbercreek Asset Management Inc. ("TAMI"). TMIC and TSMIC focus on capital preservation and the generation of attractive, stable returns, allowing for the payment of monthly dividends to shareholders.

Disclaimers

This news release contains forward-looking statements about TMIC, TSMIC and the entity that will result from their combination. Forward-looking statements are typically identified by words such as "expect", "is scheduled" ,"anticipate", "believe", "foresee", "see", "could", "intend", "plan", "seek", "strive", "will", "may", "potential" and "should" and similar expressions concerning matters that are not historical facts. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to the completion of the Arrangement and the conditions and approvals required with respect thereto. TMIC and TSMIC have based these forward-looking statements on factors and assumptions about current conditions and expected future developments in relation to the proposed transactions and the proposed timing of the transaction and that all conditions precedent to completing the Arrangement will be met. There can be no assurance that the Arrangement will occur or that the anticipated strategic benefits and operational, competitive and cost synergies will be realized. The Arrangement is subject to various regulatory approvals and the fulfillment of certain other conditions, including shareholder approvals, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The Arrangement could be modified, restructured or terminated.

Readers are cautioned that the foregoing list of factors is not exhaustive. Other risks and uncertainties not presently known to TMIC, TSMIC and TAMI or that TMIC, TSMIC and TAMI presently believe are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional information on these and other factors that could affect the operations or financial results of TMIC or TSMIC are included in reports filed by TMIC and TSMIC with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TMIC's, TSMIC's and TAMI's expectations only as of the date of this presentation. TMIC, TSMIC, TAMI and the combined entity disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The information concerning each of TMIC and TSMIC contained in this press release has been provided by TMIC and TSMIC, as applicable. Although neither TMIC nor TSMIC has knowledge that would indicate that any of information about the other is untrue or incomplete, neither TMIC nor TSMIC assumes any responsibility for the accuracy or completeness of information about the other.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

The EPS estimate assumes market fundamentals are consistent with those present at the time of this press release and that targeted rates and fees are achieved and additional credit is deployed within 12 months of the effective date of the Arrangement. The estimated EPS is approved by the manager of TMIC and TSMIC as of the date of this press release and it is for the purpose of showing potential accretion to the combined entity compared to the pre-amalgamation entities. This information may not be appropriate and should not be used for other purpose. Please also see the other assumptions and risk factors set out in this press release under "Disclaimers."

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