MONTRÉAL, May 25, 2017 /CNW Telbec/ - IOU Financial Inc. ("IOU Financial" or the "Company") (TSXV: IOU) is pleased to announce that it closed on the date hereof the brokered portion of its previously announced private placement of common shares (the "Common Shares") for total gross proceeds of approximately $1.2 million, representing 6,075,000 Common Shares. Haywood Securities Inc. ("Haywood") acted as agent under this portion of the private placement. The Common Shares were offered to investors at a price of $0.20 per Common Share (the "Offering Price"). The total gross amount raised under the private placement by IOU Financial, including the amount raised under the brokered portion thereof, is approximately $3.5 million (the "Offering"), representing a total of 17,457,400 Common Shares.
The net proceeds of the Offering will be used primarily by IOU Financial to finance small business loans in the Company's target markets of the United States and Canada and for general corporate purposes.
An insider of IOU Financial, Mr. Evan Price, director, participated in the brokered portion of the private placement. Mr. Price subscribed for a total of 50,000 Common Shares for total gross proceeds of $10,000. The issuance of securities to Mr. Price may be considered a related party transaction within the meaning of Regulation 61-101 respecting protection of minority securityholders in special transactions. However, the private placement is exempt from the valuation and minority approval requirements provided under such regulation since the fair market value of the private placement to related parties is less than 25 per cent of the market capitalization of IOU Financial. The board of directors of IOU Financial has approved the private placement. Mr. Price declared his interest prior to the approval by the board of directors of IOU Financial and abstained from voting thereon.
A material change report in respect of this related party transaction could not be filed earlier than 21 days prior to the closing of the private placement due to the fact that the private placement was still subject to regulatory approval and the terms of the participation of certain of the non-related parties and the related parties in the private placement were not confirmed.
IOU Financial paid Haywood a commission of $90,575 and issued Haywood and other intermediaries a total of 452,875 compensation options, entitling Haywood and such intermediaries to purchase up to 452,875 Common Shares at the Offering Price for a 24 month period after the date hereof. Common Shares issued under the Offering are subject to a standard hold-period, which expires on September 16, 2017 for Common Shares issued in the May 15 closing, and September 26, 2017 for Common Shares issued on the date hereof.
This news release shall not constitute an offer to sell nor the solicitation of an offer to buy nor shall there be any securities of IOU Financial offered in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Common Shares will be offered on a private placement basis in Canada and only to "accredited investors", as such term is defined under applicable Canadian securities laws.
THE SECURITIES WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
Forward Looking Statements
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of IOU Financial including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory approval, the execution of definitive documentation and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. IOU Financial does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.
The TSX-V has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
SOURCE IOU FINANCIAL INC.