ST. JOHN'S, Newfoundland and Labrador--(BUSINESS WIRE)--BPLI Holdings Inc. ("BPLI" or the "Company") (TSXV: BPLI) is pleased to announce that it has entered into a definitive arrangement agreement (the "Arrangement Agreement") today with Rizbollo Holdings Limited ("Rizbollo") and Name 3 Capital Inc. ("Name 3"), entities controlled by Emad Rizkalla ("Rizkalla"), director and Chief Executive Officer of the Company and Derrick Rowe ("Rowe"), director and Executive Chairman of the Company, respectively. Pursuant to the Arrangement Agreement, among other things, Rizbollo and Name 3, through 12491125 Canada Inc., a company owned by Rizbollo and Name 3 (the "Purchaser"), have agreed to acquire all of the issued and outstanding common shares of BPLI ("Shares") not already owned or controlled by Rizbollo and Name 3 for $0.23 per Share (the "Per Share Consideration") in an all-cash transaction for an aggregate purchase price of approximately $7 million (the "Transaction"). A transaction price of $0.23 per Share represents a 46% premium to BPLI’s average volume-weighted average price for the 20-day period preceding the date of this announcement.
Recommendation of the BPLI Special Committee and Board of Directors
In connection with the Transaction, BPLI formed a special committee comprised of its independent directors to consider, evaluate and negotiate the proposal from Rizbollo and Name 3 (the "Special Committee"). After extensive review and negotiation of the terms of the Transaction, and after receiving advice of outside legal and financial advisors, the Special Committee determined that the consideration to be received by the shareholders under the Transaction is fair, from a financial point of view, to the minority shareholders and provided its unanimous recommendation of the Transaction to the BPLI board of directors. The BPLI board of directors, having received and considered the recommendation of the Special Committee, and in consultation with its outside financial and legal advisors, and with Rizkalla and Rowe abstaining, determined that the Transaction is in the best interests of the Company and is fair, from a financial point of view, to the shareholders (other than Rizbollo and Name 3) and has unanimously resolved to recommend that the shareholders vote in favour of the Transaction at an annual and special meeting of shareholders to be held in late March 2021 (the "Meeting").
Each of the directors and the executive officers of the Company as well as an institutional investor and a number of employees have entered into voting support agreements pursuant to which each has committed to vote in favour of the Transaction. In the aggregate, parties holding or controlling 87.64% of the total number of issued and outstanding BPLI common shares (and 51.72% of the shares to be counted in the minority shareholder approval described above) have agreed to vote in favour of the Transaction.
Additional Transaction Details
The Transaction will be completed by way of a plan of arrangement under the Canada Business Corporations Act and will require approval by at least 66 2/3 % of the votes cast by shareholders of BPLI present in person or by proxy at the Meeting.
Completion of the Transaction is also subject to a number of other conditions, including court approval and minority shareholder approval, in accordance with applicable securities laws as described below, the proposed debt financing described below, approval by the TSX Venture Exchange (the "TSXV") and other conditions customary in transactions of this nature.
The Transaction will be financed by two loans – a term loan and bridge facility – totaling approximately $7.3 million to be obtained by the Purchaser from a chartered bank and secured, in part, by a guarantee of, and security from the Company, including an assignment of approximately $1.8 million of the Company’s term deposits and credit balances, on terms and conditions to be agreed to by the Company and all subject to the required disinterested shareholder and TSXV approvals (the "Loans").
The Transaction is considered a "business combination" subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). MI 61-101 provides that, in certain circumstances, where a "related party" (as defined in MI 61-101) of an issuer is acquiring the issuer, such transaction may be considered a "business combination" for the purposes of MI 61-101 and may be subject to minority shareholder approval, formal valuation and other requirements. Rizkalla and Rowe are each major shareholders of the Company, beneficially owning or controlling approximately 58% and 16.40%, respectively, of the issued and outstanding common shares of the Company, as well as being directors and executive officers of the Company and thus qualify as "related parties" for the purposes of MI 61-101. Consequently, minority shareholder approval of the BPLI shareholders will also be required for the Transaction and the Loans. It is expected that the Transaction (including the Loans) will be exempt from the formal valuation requirement of MI 61-101, as BPLI is not listed on a specified market set out in section 4.4(1)(a) of MI 61-101.
Pursuant to the Transaction, 30,000 Shares beneficially owned by Rizkalla and 1,900,878 Shares beneficially owned by and/or controlled by Rowe will receive the Per Share Consideration. Pursuant to the Arrangement Agreement, Rizbollo may elect to donate 2,500,000 Shares to a registered charity prior to the filing of Articles of Arrangement which, if completed would entitle the recipient charity to receive the Per Share Consideration in respect of those donated Shares.
The Transaction is expected to close by mid-April 2021, following which the Company will be delisted from the TSXV. BPLI expects to mail an information circular in February 2021 in connection with the Meeting.
The Arrangement Agreement includes customary provisions relating to non-solicitation, subject to customary "fiduciary out" provisions that entitle BPLI to consider and accept a superior proposal if the Purchaser does not match the superior proposal.
All out-of-pocket third party transaction expenses incurred from the date of the Arrangement Agreement in connection with the Transaction shall be paid by the Company, whether or not the Transaction is consummated unless the Arrangement is not consummated as a result of a breach of any term of the Arrangement Agreement by Acquisitionco, Rizbollo or Name 3.
Further details regarding the terms of the Transaction are set out in the Arrangement Agreement, which will be publicly filed by BPLI under its profile at www.sedar.com. Additional information regarding the terms of the Arrangement Agreement and the background of the Transaction will be provided in the information circular for the special meeting of shareholders.
Blair Franklin Capital Partners Inc. ("Blair Franklin") is acting as financial advisor and Dentons is serving as legal advisor to the Special Committee. Stewart McKelvey is acting as legal advisor to the Company. Goodland Buckingham is acting as legal advisor to the Purchaser. Blair Franklin has provided a verbal opinion to the Special Committee and BPLI’s board of directors that, subject to certain assumptions, limitations and qualifications which will be set out in its written fairness opinion to be included in the Company’s circular for the special meeting, the consideration to be received by shareholders of BPLI pursuant to the Transaction is fair, from a financial point of view, to shareholders of BPLI, other than Rizkalla and Rowe.
Normal Course Issuer Bid
In connection with the Transaction, the Company will cancel its automatic share purchase plan announced on June 26, 2020 and suspend its normal course issuer bid as soon as it is permitted to do so.
BPLI Holdings Inc. is the holding company for its investments in Bluedrop Training and Simulation and Bluedrop Learning Networks. Our companies are innovators in both the development of workplace e-learning and simulation as well as the way large organizations deliver, track and manage training. Our two divisions serve the world’s leading aerospace and defence organizations as well as broad cross sections of organizations focused on managing system wide health and safety and developing the skills of external workforces. BPLI is creating the workforce of the future by improving the effectiveness, speed and cost of training delivery and management.
For more information, visit www.bpli.ca. You can follow us on Twitter: @Bluedrop_BPL.
Forward Looking Statements
This news release may contain "forward-looking information" as defined in applicable Canadian securities legislation. Such forward-looking statements typically contain statements with words such as "anticipate", "expect", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. More particularly and without limitation, this news release contains forward-looking information and statements concerning the anticipated benefits of the Transaction, the provision of sufficient financing to complete the Transaction, the Loans, the anticipated timing for the special meeting of shareholders to approve the Transaction, the timing for closing the Transaction. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding future plans and objectives of BPLI, constitute forward-looking information that involve various known and unknown risks, uncertainties, and other factors outside management’s control. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect including, but not limited to, BPLI's failure to complete the Transaction or obtain the required approvals or the failure of the Purchaser to obtain acceptable financing to complete the transaction.
Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Company relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. There can be no assurance that such information will prove to be accurate and actual results and future events could differ materially from those anticipated in such forward-looking information.
For additional information with respect to risk factors applicable to BPLI, reference should be made to the Company's continuous disclosure materials filed from time to time with securities regulators. The forward-looking information contained in this release is made as of the date of this release and BPLI does not undertake to update publicly or revise the forward-looking information contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
No regulatory authority has approved or disapproved the adequacy or accuracy of this news release.