Cash Offer for Debentures, Redemption of Warrants, Deed of Trust


TORONTO, Nov. 30, 2021 (GLOBE NEWSWIRE) – Stone Investment Group Limited (the “company“) today announced the separation of its debentures and warrants, the repurchase of its warrants for cancellation for $ 0.05 per warrant and an offer to acquire 7,293 debentures for $ 670 per debenture.

Separation of debentures and warrants on November 24, 2021

The Company issued 12,000 units (the “Units“) on December 28, 2006, each unit including a senior secured debenture in the principal amount of $ 1,000 (each a”Debenture“) and 600 common share purchase warrants (the”Mandates“). Effective November 24, 2021, the units separated into 12,000 debentures and 7,200,000 warrants, the holder of one unit becoming the holder of a debenture and 600 warrants thereto. date. The separation of the debentures and warrants necessitated technical modifications to the subscription mandate dated December 28, 2006 (as completed and amended, on “Mandate contract“) and the trust deed dated December 28, 2006 (as completed and amended, the”Deed of trust“).

Redemption of warrants for cancellation at $ 0.05 in cash per warrant

On November 24, 2021, the Company initiated the redemption for cancellation of all warrants at a redemption price of $ 0.05 per warrant payable in cash. The holder of a former unit is now the holder of 600 warrants and will receive a total of $ 30 in cash for those 600 warrants. The redemption of Warrants for cancellation applies to all Noteholders and will be finalized on December 21, 2021. No action is required from the Noteholders.

Cash offer to purchase 7,293 debentures at $ 670 per debenture

Stone-SIG Acquisition Limited (the “Offering“), a wholly owned subsidiary of the Company, offers to purchase 7,293 debentures at an offering price of $ 670 per debenture payable in cash (the”Cash offerThe holder of a former unit is now the holder of a debenture and is offered $ 670 in cash for that debenture. The cash offer is made to all holders of debentures, but only the first 7,293. Debentures duly deposited under the Cash Offer will be accepted by the Offeror A Debentureholder may not participate in the Cash Offer unless the Debentureholder completes and delivers a Letter of Transmittal ( the “Letter of transmittal“), the form of which is given to the Bondholders accompanied by an offer document describing the Cash Offer (the”Offer documentThe offer document contains additional information regarding the cash offer and related transactions. The Offeror will not accept Letters of Transmittal until December 2, 2021, three business days after the launch of the Cash offer The cash offer is expected to close on or around December 21, 2021, but may be completed sooner.

Funding of the cash offer has been arranged

The Bidder entered into a credit agreement dated November 29, 2021 (the “Funding“) with an arm’s length commercial lender (the”LenderThe Debentures acquired under the Cash Offer will be pledged to the Lender as security for the Loan. The Lender will be granted voting rights in respect of the Pledged Debentures. originator on financing are guaranteed by the company The amount of financing provided is limited so that not all debentures can be acquired.

Extension of the maturity date of the debentures to December 28, 2026

The financing is conditional, among other things, on the modification of the trust deed in order to extend the maturity date of the debentures from December 28, 2021 to December 28, 2026.

Other amendments to the trust deed

The financing is also conditional on the amendment of the trust indenture to clarify and complete the provisions relating to a subsidiary of the Company, such as the originator, acquiring and holding the debentures under the cash offer, putting these debentures pledged to the lender and conferring the right to vote on the lender as long as the debentures remain pledged.

Fifth Supplementary Trust Deed

The extension of the maturity date of the Debentures and other amendments to the Indenture are set out in a Supplementary Indenture (the “Fifth Supplementary Trust DeedThe Letter of Transmittal includes the authorization to vote in favor of an Extraordinary Resolution (as that term is defined in the Deed of Trust) to approve and authorize the signing of the Fifth Supplementary Deed of Trust. Fifth Supplementary Indenture is attached to the Letter of Transmittal sent to Debentureholders.

Related party transactions

Richard Stone is a director and senior officer of the Company and of the Offeror. Mr. Stone also owns approximately 45.4% of the outstanding common shares of the Company. As such, Mr. Stone is related to the Company and the Offeror.

Mr. Stone beneficially owns, or exercises control or direction over, 728 Debentures (6.067% of the issued and outstanding Debentures). When an issuer changes the terms of a class of securities and a related party of the issuer beneficially owns or exercises control or direction over securities of that class, the change is a related party transaction under category (h) of the definition of “related party transaction” in section 1.1 of Multilateral Instrument 61-101 – Protection of holders of minority securities in special transactions (“MI 61-101“). Mr. Stone will own or control the Stone Debentures at the time the Extraordinary Resolution is passed, thereby making the Amendment a related party transaction (the”Debenture modification Related party transaction“).

The independent directors of the Company have determined that the Company is in serious financial difficulty and, on this basis, can avail itself of the financial hardship exemption from the minority approval requirement of NI 61-101 (section 5.7 ( 1) (e) of MI 61-101) and the formal assessment requirement of MI 61-101 (section 5.5 (g) of MI 61-101). The Company and the Offeror use these exemptions to proceed with the related party transaction modifying the Debentures without seeking minority approval and without preparing a formal valuation. The independent directors of the Company have determined that the financing and completion of the Cash Offer will improve the Company’s financial prospects and that the related party transaction modifying the Debenture is reasonably necessary to achieve this result.

Material change report

Section 5.2 (2) of MI 61-101 requires an explanation when the issuer files a material change report less than 21 days before the expected closing date of the transaction which is a related party transaction as described in the material change report. In this case, the related party transaction is the related party transaction modifying the debenture, which will be completed on the date of approval of the Fifth Supplementary Trust Indenture. Such approval is expected to be done on or around December 15, which is just short of the 21-day period, but it is possible that it will come a few days earlier depending on how quickly. completed letters of transmittal are received. The Company considers that this shorter period is reasonable and necessary in the circumstances since the Company wishes to improve its financial situation by completing the transaction as soon as possible. In any event, it is not possible to postpone the approval of the Fifth Supplementary Trust Indenture because the conclusion of the purchase of the debentures is set for at least three business days after that date and there is no no time to do it in advance of the holiday season if these key events are delayed. The ability to execute the purchase of the debentures becomes more precarious as the completion date slips into the holiday season.

About Stone Investment Group Limited

The Company is an independent wealth management company. The Company, through its wholly owned subsidiary, Stone Asset Management Limited, structures and manages high quality investment products for Canadian investors.

For more information:
Stone Investment Group Limited
Jason Stone
Investor Relations
T 416 867 2533 T 800 336 9528
E [email protected]
www.stoneco.com

Forward-looking information disclaimer

This press release includes certain “forward-looking statements” under applicable Canadian securities laws that are not historical facts. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements contained in this press release include, but are not limited to, statements regarding: the Debentures, the Cash Offer and the business of the Company. Forward-looking statements are necessarily based on a number of estimates and assumptions which, while believed to be reasonable, are subject to known and unknown risks, uncertainties and other factors that may cause actual results and future events differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other legal, regulatory, political and competitive developments and other risks beyond the control of the Company. Additional risk factors are included in the Company’s MD&A, available under the Company’s profile on SEDAR at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing forward-looking statements are reasonable, we should not place undue reliance on such statements, which speak only as of the date of this press release, and no Assurance cannot be given that these events will occur within the disclosed time frame or not at all. Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


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