NOT FOR DISTRIBUTION IN THE UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
MONTRÉAL, Dec. 16, 2015 /CNW Telbec/ - IOU Financial Inc. (TSX Venture Exchange: IOU) ("IOU Financial" or the "Company"), a leading online lender to small businesses, is pleased to announce that it has closed a third and final tranche of its previously announced private placement of 10% convertible unsecured subordinated debentures (the "Debentures") for gross proceeds of $1,000,000 (the "Third Tranche") with FinTech Ventures Fund, LLLP ("FinTech"), an affiliate of Qwave Capital LLC, a major shareholder and insider of IOU Financial. This purchase has allowed IOU Financial to reach the maximum gross proceeds of $11,500,000 in principal amount of Debentures sold by way of private placement.
The Debentures will mature on December 31, 2020, bear interest at a rate of 10% per annum, payable monthly and commencing on December 31, 2015, and are convertible at their holders' option into common shares of IOU Financial ("Common Shares") at a price of $0.75 per Common Share (the "Conversion Price"), representing a conversion rate of 1,333.33 Common Shares for each $1,000 principal amount of Debentures. The Company will have the right to force the conversion of the Debentures into Common Shares at any time on or after December 31, 2018 should the 20-day volume weighted average price of the Common Shares on the TSX Venture Exchange (the "TSX-V") exceed 125% of the Conversion Price.
The net proceeds of the Third Tranche will be used primarily by IOU Financial to finance small business loans in the Company's target markets and for general corporate purposes. The Third Tranche is subject to final approval of the TSX-V.
No brokers were engaged for the Third Tranche. Pursuant to applicable securities laws, all securities issued pursuant to the Third Tranche are subject to a hold period of four months plus one day following the closing of the Third Tranche. The Debentures will not be listed or posted for trading on the TSX-V.
The purchase of $1,000,000 in principal amount of Debentures by FinTech is a related party transaction within the meaning of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101") and Policy 5.9 – Protection of Minority Security Holders in Special Transactions of the TSX-V. In connection with this related party transaction, the Company is relying on the formal valuation and minority approval exemptions of respectively subsection 5.5(a) and 5.7(1)(a) of Regulation 61-101 as neither the fair market value of the Debentures purchased by FinTech nor the fair market value of the consideration therefor exceeds 25% of IOU Financial's market capitalization. The Board of Directors of IOU Financial has unanimously approved such purchase. A material change report in respect of this related party transaction will be filed by the Company but could not be filed earlier than 21 days prior to its completion due to the fact that the transaction was still subject to confirmation of FinTech's suitability by the TSX-V.
This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.
About IOU Financial
IOU Financial provides small businesses throughout the U.S. access to the capital they need to seize growth opportunities quickly. Typical customers include medical and dental practices, grocery and retail stores, restaurant and hotel franchisees and e-commerce companies. In a unique approach to lending, IOU Financial's advanced, automated application and approval system accurately assesses applicants' financial realities, with an emphasis on day-to-day cash flow trends. It makes loans of up to $150,000 to qualified applicants within a few business days, with affordable charges favorable to cash-flow management. IOU Financial's speed and transparency make it a trusted alternative to banks. To learn more visit: www.ioufinancial.com.
Forward Looking Statements
Certain information set forth in this news release may contain forward-looking statements. Forward-looking statements are statements, other than statements of historical fact, that address or discuss activities, events or developments that IOU Financial expects or anticipates may occur in the future. These forward looking statements can be identified by the use of words such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future economic conditions and courses of action, as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are subject to risks and uncertainties and no assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU Financial will derive from them. A number of factors could cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, risks related to the Company's incapacity to execute on its business plan, risks inherent in growing a new business, dependence on third-party service providers, competition, regulatory risk, dependence on key personnel, risks related to rapid growth of IOU Financial, security and confidentiality risk, risk related to inability to attract borrowers and lenders, technological development risk, IT disruptions, maintenance of client relationships, litigation risk, volatility of stock price, and other factors that are beyond its control. Additional information concerning these and other factors can be found beginning on page 17 under the heading "Risks and Uncertainties" in IOU Financial's management's discussion and analysis dated November 23, 2015, which is available under IOU Financial's profile on SEDAR at www.sedar.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE IOU FINANCIAL INC.