MCAN Mortgage Corp. (TSX:MKP) has entered into a definitive agreement to acquire Xceed Mortgage Corp. (TSX:XMC) from Akemis Holding Corp., Windsor Private Capital LP, Chiefswood Holdings Limited, Directors, senior management and other shareholders for Xceed Mortgage Corp. for CAD 47.9 million on March 26, 2013. Under the terms of the arrangement agreement, Xceed shareholders will receive at their election, 0.118 MCAN common shares or CAD 1.75 in cash, or a combination ... thereof, subject to a maximum of CAD 30.3 million in aggregate cash being paid. Xceed’s Directors, senior management and certain other major shareholders, representing approximately 48.54% of Xceed’s outstanding shares, have entered into customary lock-up agreements pursuant to which, among other things, they have agreed to vote their shares in favour of the transaction. The arrangement agreement also provides for a termination fee of CAD 2 million payable by Xceed or MCAN in certain specified circumstances and reciprocal expense reimbursement payments of CAD 0.75 million in certain specified circumstances. MCAN expects that the ongoing management of the Xceed business will be integrated quickly following completion of the transaction, as renewal and underwriting services will continue to be provided by Xceed (as a wholly owned subsidiary of MCAN), and subservicing services will continue to be provided by MCAN. The transaction is subject to certain customary conditions including court approval, the approval of not less than 66% of the votes cast by Xceed shareholder, stock exchange and regulatory approvals, execution of non solicitation agreement, lock up agreement, minimum cash balance, dissenter right limited, resignation of Directors, amendment to certificate of incorporation and the satisfaction of certain other customary closing conditions. The Board of Directors of Xceed, acting on the unanimous recommendation of a special committee of independent Directors has unanimously approved the transaction and recommended that Xceed shareholders vote in favour of the transaction. Xceed shareholders are expected to vote on the transaction at the end of May 2013. If all necessary approvals are obtained, the proposed transaction is expected to complete on or about June 24, 2013. Canaccord Genuity Corp. acted as financial advisor and Norton Rose Canada LLP acted as legal advisor for Xceed. Neil Sheey of Goodmans LLP acted as legal advisor to MCAN. Cameron M. Rusaw of Davies Ward Phillips and Vineberg LLP acted as legal advisor to Xceed. Computershare Investor Service Inc. acted as depository for MCAN.
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