TORONTO, ONTARIO--(Marketwired - April 9, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
Mint Technology Corp. (TSX VENTURE:MIT) ("Mint" or the "Company") announces today that it intends to offer (a) $7,038,000 of gross proceeds through the sale of up to $8.5 million of Series VII Debentures (the "Series VII Debentures") and bonus common shares at the rate of one share for every $1.00 of Series VII Debentures, (b) and gross proceeds of $20,000,000 - $40,000,000 through the sale of a minimum of $22.7 million and a maximum of $44.5 million subscription receipts (the "Subscription Receipts") convertible into Series X Debentures (the "Series X Debentures"), and (c) up to $100,000 of Series Y Debentures (the "Series Y Debentures"). Mint has engaged Portfolio Strategies Securities Inc. (PSSI) to act as agent in connection with these private placements and the private placements will proceed on a brokered private placement basis.
The Company has received subscriptions for approximately $4.3 million through the sale of $5.4 million face value of the Series VII Debentures as part of the first closing of the Series VII Debentures. The Company will close on additional subscriptions for Series VII Debentures at a later date.
Mint's Executive Chairman, Chris Hogg, said today, "Mint has chosen to continue to fund its growth using debt securities instead of equity. Mint is at a significant turning point in its business plan and funding the considerable opportunities in this fast growing region is paramount to maintaining and building upon our market share which now extends across 4 countries with a strong partnership in Saudi Arabia, a joint venture company in Egypt and our three operating subsidiaries in the UAE and Qatar. The Company's management believes that for as long as there appears to be a disconnect between the trading value of the Company's common shares and the value of the platform and business model being built, debt will always be a more efficient option than equity and the dilution that it might cause at these trading levels."
Mr. Hogg also said, "The interest rate of the offered securities reflects more the equity nature of the investment risk of such a substantial financing than typical debt securities risk."
"While the junior equity market in Canada remains soft, the debt markets, particularly for fast growing businesses like Mint, continue to strengthen. Mint will deploy this capital into business growth and upon higher equity prices, will look to rebalance the debt/equity ratios of the Company over the coming years. The structure, particularly of Series X, is conducive to this strategy given the 6 year term of the debenture and the fact that first two years interest is compounded and added to the principal thereby preserving cash until that time."
The Company outlines the details of the financings as follows:
Series VII Debentures
PSSI has agreed to raise up to $7,038,000 through the sale of up to $8.5 million of Series VII Debentures, together with one bonus common share for every $1.00 of Series VII Debenture purchased. The Series VII Debentures will bear interest at 12% per annum and will mature on the second anniversary of the first closing of the private placement (provided that Mint may prepay the Series VII Debentures at any time). The Series VII Debentures will be sold at a discounted price of $828 per $1000 of debentures, resulting in an effective interest rate of 25% per annum to maturity. The debentures will be secured against the assets of Mint and will rank behind the Series 1 through Series VI Debentures issued by Mint. The Series VII Debentures will not be listed on any exchange.
PSSI will receive a cash commission of 4% of the gross proceeds received by Mint from the sale of Series VII Debentures.
The proceeds from the sale of Series VII Debentures will be used for increasing inventory capital in Mint Electronic Payment Services, LLC ("MEPS"), Mint Capital LLC, working capital and to pay debts.
Listing of Debentures on CNSX
Mint has applied to list its Series I debentures, Series II debentures and Series VI debentures on the Canadian National Stock Exchange (CNSX). The funding of the Series VII Debenture private placement will be facilitated by trades in the Series I debentures, Series II debentures and Series VI debentures to a purchaser introduced by PSSI. Those trades will occur at discounts to face value such that the purchaser will have an effective yield of 25% on the debentures purchased. The sellers of the Series I debentures, Series II debentures and Series VI debentures will reinvest some of the proceeds of sale in the Series VII Debenture offering. It is expected that the initial closing of the Series VII Debenture offering will occur on or about April 11, 2013.
Series X Debentures
PSSI has agreed to raise gross proceeds of a minimum of $20 million and a maximum of $40 million through the sale of Subscription Receipts at a price of $880 per Subscription Receipt. Each Subscription Receipt will be automatically converted into $1,000 of Series X Debentures upon the satisfaction of certain conditions for no additional consideration and without any further action by the holder. The Series X Debentures will mature 6 years from the closing date of the Series X private placement.
The Series X Debentures will bear interest at 19.75% per annum for the first three years (being a yield of approximately 25% based on the discounted subscription price). For the first 24 months from the date of issue of the Series X Debenture, the interest will be compounded and added to the principal on a quarterly basis. If at the end of the third year the total debt/EBITDA ratio of Mint is less than 3 (the "Coupon Reset 1 Test"), the interest rate will fall to 15% in the fourth and fifth years and will fall to 12% in the sixth year. If the Coupon Reset 1 Test is not met, the interest rate will be raised to 25% in the fourth year. If at the end of the fourth year, the total debt/EBITDA ratio of Mint is less than 3 (the "Coupon Reset 2 Test"), the interest rate will fall to 15% in the fifth and sixth years. If the Coupon Reset 2 Test is not met, the interest rate will be raised to 25% in the fifth and sixth years. Interest will be payable on a quarterly basis.
The Series X Debentures will be secured against the assets of Mint and its subsidiary Mint Middle East LLC, including its ownership stake in MEPS.
The gross proceeds from the offering of Subscription Receipts (the "Escrowed Proceeds") will be held in an interest bearing escrow account. The Escrowed Proceeds will be released from escrow to Mint, PSSI's commission will be released to PSSI, and accrued interest will be released to holders of Subscription Receipts only if and when all of the release conditions are met (the "Escrow Release Conditions"). The Escrow Release Conditions include the satisfaction of the conditions set out below under "Debenture Conditions".
If the Escrow Release Conditions are not satisfied on or before September 30, 2013 (the "Escrow Deadline"), the Escrowed Proceeds plus accrued interest shall be used by Mint to repurchase the Subscription Receipts for cancellation at a redemption price per Subscription Receipt equal to the issue price plus accrued interest earned in the escrow account.
For the first $20 million of gross proceeds received from the sale of Subscription Receipts, PSSI will receive a cash commission of 6% of the gross proceeds received by Mint plus 1,000,000 broker warrants (the "Broker Warrants"), on a post-consolidation basis. The Broker Warrants will be exercisable for a five year period at a price equal to the closing price on the first trading day following the Share Consolidation (described under "Debenture Conditions"). PSSI will receive a cash commission of 6% of the gross proceeds over $20 million from the sale of Subscription Receipts plus 500,000 Broker Warrants for each $5 million of gross proceeds raised above $20 million. Payment of the commissions is subject to satisfaction of the Escrow Release Conditions.
PSSI shall have the right of first refusal for 36 months to arrange for any subsequent debt or equity financing up to $50 million in Mint or any of Mint's subsidiaries.
The use of funds for Series X will comprise cash collateral to secure bank guarantees to fund the expansion of MEPS, general working capital and fixed asset purchases for MEPS, discharge of certain liabilities of both the Company and its payroll card subsidiary, Mint Middle East LLC, working capital and fixed asset purchases for Mint Egypt, working capital for Mint's recently announced Services Agreement with Saudi Arabia Investment Bank and general working capital.
Series Y Debentures
PSSI has agreed to raise gross proceeds of a minimum of $100,000 through the sale of Series Y Debentures of Mint. Mint will apply to list the Series Y Debentures on the CNSX. The Series Y Debentures will mature 2 years from the closing date of the private placement.
The Series Y Debentures will bear interest at 13% per annum. The Series Y Debentures will be secured against a portfolio of loan receivables originated through Mint Capital LLC. Mint expects that future issuances of Series Y Debentures will be used to fund microfinance loans originated through Mint Capital LLC.
As a condition of the offering of both the Series VII Debenture offering and the Series X Debenture offering, Mint has agreed to the following:
(i) Mint has agreed that no later than 75 days following the closing of
the offering of Series VII Debenture, Mint will consolidate its common
shares on a minimum basis of seven old common shares of Mint for one
new common share of Mint (the "Share Consolidation"), subject to
approval of shareholders and the TSX Venture Exchange.
Chris Hogg also said today, "The stock consolidation will enable the Company to trade in a category of equity which may secure the attention of analysts and investors that are unable to support stocks with a trading price at Mint's current levels."
(ii) No later than 75 days following the closing of the offering of Series
VII Debentures, Mint will hold a meeting of shareholders to approve,
among other things, new Board Nominations and the Share Consolidation.
(iii) Chris Hogg, the Executive Chairman of Mint, has agreed to retire as
Executive Chairman of Mint upon the appointment of a new independent
non-executive Chairman. Both Chris Hogg and Nabil Bader continue in
their leadership roles as both full time executives of the Company and
Directors of the Company.
Michael Pesner, Director, said today, "It has always been the intent of the Company to appoint an independent non-executive Chairman. Chris Hogg's continuing contribution, both in terms of strategic direction and leadership of the executive management team continues as before and we believe an independent non-executive Chairman will promote not only good corporate governance, but free Chris up to focus on continuing to grow the business in partnership with Nabil Bader, our President and Group CEO."
Mint has agreed that additional changes in the Board of Directors will occur, details of which are under discussion. Details of the changes will be released as soon as available.
Mint is required to obtain approval of the Series VII Debenture offering and the Subscription Receipt offering from the TSX Venture Exchange. The Series VII Debentures and bonus shares, the Subscription Receipts and the Series Y Debentures will all be subject to a four month hold period from the date of issue.
On February 6, 2013 and March 15, 2013, Mint announced of the receipt of a subscription agreement for $1,370,000 in preferred shares as part of its on-going equity raise. This subscription agreement has yet to close as the funds are earmarked as part of the MEPS cash collateral referred to above. MEPS is in the process of assigning its cash collateral supported bank guarantee facilities in favor of Etisalat and following the closing of the debenture issues, this will be completed.
Certain statements in this news release constitute "forward-looking" statements. These statements relate to future events or our future performance. Forward looking statements include the timing of closing the offering, the anticipated use of proceeds and the receipt of the required approvals. All such statements involve substantial known and unknown risks, uncertainties and other factors which may cause the actual results to vary from those expressed or implied by such forward-looking statements. In addition to other risks, the closing of the offerings could be delayed if Mint is not able to obtain necessary approvals when planned and the offering will not be completed at all if approvals are not obtained or some other condition to the closing is not satisfied. Forward-looking statements involve significant risks and uncertainties, they should not be read as guarantees of future performance or results, and they will not necessarily be accurate indications of whether or not such results will be achieved. Actual results could differ materially from those anticipated due to a number of factors and risks. Although the forward-looking statements contained in this news release are based upon what management of Mint believes are reasonable assumptions on the date of this news release, Mint cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and Mint disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
ABOUT MINT TECHNOLOGY CORP.
Established in 2004, Mint is the world's first vertically integrated prepaid card and payroll services provider with its own ATM network, payment processing platform and proprietary branded card product delivered to workers in the United Arab Emirates and expanding to other parts of the Middle East. Mint operates through 4 subsidiaries, Mint Middle East LLC, a payroll card services provider; Mint Capital LLC, a financial products distribution company; Mint Global Processing Inc., a fully integrated third party processing platform; and MEPS, a mobile airtime POS and Merchant network solutions business. Mint has 108 employees in 8 offices in UAE (3), Qatar, Jordan, Egypt, USA and Canada where Mint is listed on the TSX Venture Exchange: MIT.
For additional information please visit www.mintinc.com.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Mint Technology Corp.
President & CEO
Mint Technology Corp.
Head of Compliance and Investor Relations
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