TORONTO, May 13, 2024
/CNW/ - Genifi inc. (TSXV:GNFI) ("genifi" or the "Company")
announced today that at the request of the Ontario Securities
Commission it is providing certain additional background
information in respect of the proposed privatization transaction
described in the Company's press release and the Company's
information circular (the "Circular"), each dated April 22, 2024 filed on SEDAR+ at
www.sedarplus.ca.
Earnout
As noted in the Circular, the Company will be entitled to
receive an earnout (the "Earnout") payment from UST Global
(Canada) Inc. in respect of the
sale of TCB Corporation that took place in January 2023. The
Earnout is to be calculated based on the achievement of certain
revenue and EBITDA targets between the date of the sale and
June 30, 2024 with the payment to be
made within 60 days of the end of the earnout period.
The special committee of the board of directors formed to review
the transaction (the "Special Committee") did not believe it was
advisable to wait for the final determination of the Earnout amount
before entering into the privatization agreement and putting the
transaction before shareholders for approval for a number of
reasons including, without limitation, (i) given the timing of the
earnout payment, waiting for the final determination would entail
waiting for up to an additional four months (and potentially longer
if there was a disagreement regarding the amount of the Earnout)
during which time the Company would be incurring expenses
associated with being a public company which would negatively
impact the ultimate purchase price; (ii) there was no guarantee
that Mr. Beckerman would leave the offer open at the proposed
purchase price (or agree to complete the transaction at all) until
the time the Earnout was finalized; (iii) the Special Committee was
comfortable with the estimate of the Earnout that was used by Evans
& Evans in the preparation of its fairness opinion and believed
that waiting for the final figure was not worth the risk of
potentially losing the transaction and/or ending up with a lower
purchase price as a result of the delay and/or the final Earnout
figure; and (iv) the audit of the financial statements for the year
ended December 31, 2023 provided the
Special Committee with additional comfort as the value of the
Earnout placed on the audited balance sheet was reviewed by the
Company's auditors as part of their audit and found to be in line
with the estimate provided by Evans & Evans.
Voting Trust
As noted in the Circular, Mr. Beckerman had previously entered
into a voting trust agreement with a number of arm's length
shareholders currently holding an aggregate of 15,527,274 common
shares of the Company ("Common Shares") . These agreements provide
Mr. Beckerman with the right to vote such Common Shares on matters
put before the shareholders. Given that Beckerman is an interested
party in the proposed transaction and that the transaction will
have a fundamental impact on the rights of shareholders, Mr.
Beckerman agreed that he will not direct the voting of the
15,257,274 Common Shares that are otherwise subject to the voting
trust agreement and will permit such arm's length shareholders to
vote the Common Shares in respect of the transaction in their sole
discretion.
It was determined that the waiver of the voting trust was
reasonable in the context of the proposed transaction for the
following reasons: (i) the holders of the Common Shares that are
parties to the agreement are arm's length parties to Mr. Beckerman
and not acting jointly and/or in concert with Mr. Beckerman; (ii)
when the voting trust agreements were entered into it was never
intended that the voting trust agreement would take away what, in
the case of the proposed transaction, amounts to a decision as to
whether or not to dispose of the Common Shares and if the proposed
transaction had been structured as an insider bid or other type of
share purchase, then these holders would be entitled to make a
decision in respect of their securities; (iii) although the
counterparties to the voting trust agreement have contractually
agreed to allow Mr. Beckerman to vote their Common Shares, the
proxies and meeting materials for these shares are still sent
directly to the holders (or their brokers) and in respect of past
shareholders meetings Mr. Beckerman has not been strictly enforcing
this agreement due to, among other things, the responsiveness of
the counterparties for requests for access to the proxies; and (iv)
where counterparties to the voting trust agreements hold their
shares through a broker it will not be possible to determine if
their shares have been voted for or against the transaction making
it impossible to know whether to remove votes from the vote count
for the meeting.
Transaction Structure
The Company confirms that the structure of the proposed
transaction (i.e. a share consolidation) was proposed by Mr.
Beckerman when he brought forward the transaction to the Company's
board of directors.
Liquidation Estimate
As referenced in the Circular, Evans & Evans in preparing
the fairness opinion indicated a range of values for the Company in
the liquidation scenario. The Company confirms that the
Special Committee was aware of this range when negotiating the
terms of the privatization agreement with Mr. Beckerman.
About genifi inc.:
Genifi (formerly Prodigy Ventures) delivers Fintech innovation,
with its cutting-edge platforms: IDVerifact for digital identity
verification, and tunl.chat for generative AI chat. Genifi has been
recognized as one of Canada's
fastest-growing companies and is committed to driving innovation in
the Fintech industry.
Forward-Looking and Cautionary Statements
Certain information set out in this news release constitutes
forward-looking information. Forward looking statements are often,
but not always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "intend", "could", "might", "should", "believe" and similar
expressions. Forward looking information includes without
limitation, statements regarding the completion of the going
private transaction. Although genifi believes that the expectations
reflected in such forward-looking statements are based upon
reasonable assumptions, and that information obtained from third
party sources is reliable, they can give no assurance that those
expectations will prove to have been correct. Readers are cautioned
not to place undue reliance on forward-looking statements included
in this document, as there can be no assurance that the plans,
intentions or expectations upon which the forward-looking
statements are based will occur. The forward-looking information is
based on certain assumptions, which could change materially in the
future, including the assumption that the Company is able to effect
the privatization using the proposed method, the Company is able to
obtain the necessary regulatory and shareholder approvals, the
parties are able to satisfy or waive, if waiver is possible, the
conditions to completing the transaction. By their nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or other future events, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. These risks and uncertainties include, among other
things, risk factors set forth in genifi's Management's Discussion
and Analysis for the period ended December
31, 2023, a copy of which is filed on SEDAR+ at
www.sedarplus.ca. Readers are cautioned that this list of risk
factors should not be construed as exhaustive. These statements are
made as at the date hereof and unless otherwise required by law,
genifi does not intend, or assume any obligation, to update these
forward-looking statements.
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.
SOURCE genifi inc.
