INTENTION TO COMPLETE US$16 MILLION SENIOR SECURED TERM LOAN
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
VANCOUVER, BC, Feb. 5, 2023 /CNW/ - BBTV Holdings Inc. (TSX: BBTV) (the "Company"), a media tech company that uses technology enabled solutions to help content creators and influencers become more successful, is pleased to announce it has entered into a non-binding term sheet for a US$16 million senior secured term loan (the "Term Loan") from MEP Capital Holdings III, L.P. ("MEP"), an arm's length investment capital firm based in New York.
The Term Loan will bear interest at 16% per annum and mature on the 4th anniversary of the closing date of the Term Loan. Interest is payable on a quarterly basis, with the principal payable upon maturity. Ten million (US $10 million) of the Term Loan is committed, with approximately US $6 million being conditional upon a performance target related to the Company's top Base Solution Channels and Content Management business being met for H1 2023 (the "Performance Target"). The Company intends to use the proceeds of the Term Loan for working capital and to pay-out the Company's CAD overdraft facility with a Canadian chartered bank.
The Term Loan will be secured by a perfected, sole first-priority security interest in all tangible and intangible assets of the Company and its Canadian and U.S. wholly-owned subsidiaries, now existing or acquired (the "Loan Security"), subject to certain carve-outs or pari passu rights in favour of UFA Film und Fernseh GmbH ("UFA") which holds a convertible promissory note from the Company due May 26, 2026. MEP and UFA are expected to enter into an intercreditor agreement providing, among other things, for the priorities of the two lenders with respect to the Loan Security. All of the Company's active direct and indirect wholly-owned subsidiaries will act as co-borrowers or guarantors of the Term Loan.
In connection with the Term Loan the Company will issue MEP a share purchase warrant (a "Warrant") to purchase in aggregate that number of Subordinate Voting Shares that is equal to 2% of the Company's fully diluted Subordinate Voting Shares as determined on the "Warrant Share Calculation Date" (see further details below), provided that MEP shall not be permitted to exercise this Warrant to acquire beneficial ownership of, or control or direction over, securities of the Company carrying more than 9.9% of voting rights attached to the Company's outstanding voting securities. The Warrant Share Calculation Date is (a) the date MEP determines to exercise the Warrants; (b) the date of conversion of the first of the Company's securities convertible into Subordinate Voting Shares on a non-fixed price basis that results in one percent (1.0%) or more of such Subordinated Voting Shares being issued and outstanding on a fully-diluted basis, and (c) the closing date of the Company's next equity financing for not less than US$5 million led by a non-affiliated reputable investor. The Warrants are exercisable at CAD$0.01 per Subordinate Voting Share for a period of 8 years, with the Warrants being exercisable at the option of the holder on a cashless basis. The Warrants entitle MEP to certain standard anti-dilution protections for reclassification and corporate reorganizations. In the event the Performance Target is not met, then the number of Subordinate Voting Shares issuable upon exercise of the Warrants will be reduced to 1% of the Company's fully diluted Subordinate Voting Shares.
MEP and the Company negotiated the Term Loan and the Warrant at arm's length.
Closing of the Term Loan, including issuance of the Warrant, is subject to, among other things, the completion of due diligence and definitive agreements, as well as conditional approval of the Toronto Stock Exchange ("TSX"). In addition, issuance of the Warrant requires approval of the Company's shareholders under the rules of the TSX for the following reasons: 1) the exercise price of the Warrants is less than the market price required by section 607(i) of the TSX Company Manual, being the 5 day VWAP on the date notice was filed with TSX ending on February 2, which is $0.68. The exercise price of $0.01 is a discount to market of 98.5%; and 2) the number of Subordinate Voting Shares that may be issued on exercise of the Warrants, which is 2% of the fully diluted Subordinate Voting Shares determined as at the Warrant Share Calculation Date could be greater than 25% of the number of securities of the Company currently outstanding, on a non-diluted basis, as the number of Subordinate Voting Shares issuable on exercise of the Warrant is not fixed at the time of entering into the Term Loan. Section 607(g)(i) of the TSX Company Manual requires security holder approval if the number of Subordinate Voting Shares issued upon exercise of the Warrants could exceed this 25% threshold. The Company intends to rely on an exemption from the requirement to obtain shareholder approval at meeting and to instead obtain such shareholder approval by way of written consent pursuant to Section 604(d) of the TSX Company Manual.
As at the date of this press release, the Company has 33,269,751 shares outstanding on a fully diluted basis. If the Warrant Share Calculation Date was the date of this press release, then upon full exercise of the Warrants, MEP would be entitled to receive 665,395 Subordinate Voting Shares in aggregate upon full exercise of the Warrants. Of our current issued and outstanding shares, this is 3.1%. If the Company's outstanding shares on a fully diluted basis were to increase to 5 times the current number as at the Warrant Share Calculation Date, then the Company would have 166,348,755 shares outstanding on a fully diluted basis and MEP would be entitled, upon full exercise of the Warrants, to receive 3,326,975 Subordinate Voting Shares, which is 15.5% of our current outstanding shares. As at the date of this press release, the Company has a combined total of 21,484,238 Subordinate Voting Shares and Multiple Voting Shares outstanding, of which 25% is 5,371,059. For this scenario, the Company's fully diluted Subordinate Voting Shares on the Warrant Share Calculation Date would need to be 268,552,950 shares.
To the Company's knowledge, no person other than the Company's founder and CEO, holds more than 10% of the Company's outstanding securities. As of the date of this news release, the CEO holds, directly or indirectly, 6,408,505 (100%) Multiple Voting Shares and 587,104 (3.89%) Subordinate Voting Shares, for a total of 6,995,609 shares, which is 32.56% of the Company's total issued and outstanding shares and represents 81.7% of the total votes which may be cast by all shareholders. The issuance of Subordinate Voting Shares to MEP upon exercise of the Warrants will not affect control of the Company.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in the United States nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the 1933 Act), or any state securities laws and may not be offered or sold in the United States unless registered under the 1933 Act and any applicable securities laws of any state of the United States or an applicable exemption from the registration requirements is available.
For more information visit www.the Company.com.
About the Company
The Company is a global media and technology company headquartered in Vancouver, Canada. The Company's mission is to help content creators become more successful. With creators ranging from individuals to global media brands, the Company provides comprehensive, end-to-end Solutions to increase viewership and drive revenue powered by its innovative technology, while allowing creators to focus on their core competency – content creation. In December 2021, the Company had the fourth most unique monthly viewers among digital platforms with more than 600 million globally, who consumed more than 35 billion minutes of video content . (www.the Company.com)
 Calculations and classifications made by the Company based on data from Comscore's "Top 12 Countries = December 2021 comScore Video Metrix Media Trend – Multi-Platform – Top 100 Video Properties Report"; Top 12 countries represent ~50% of world's digital population.
Links to SEDAR filings, conference call recordings and press releases are available on the investor website at: https://investors.the Company.com/
For further information please contact:
Media Relations: firstname.lastname@example.org
Investor Relations: email@example.com
This press release contains "forward–looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is not information about historical facts but instead represents the Company's intentions, beliefs, plans, goals, objectives and strategies regarding future events and results. Forward-looking information contained in this press release includes, without limitation, the terms of the Term Loan and the Warrant, statements that the Term Loan will close, and the Company will issue MEP the Promissory Note and Warrants; the use of proceeds of the Term Loan, the Note will bear interest at 16% per annum and mature on the 4th anniversary of the closing date of the Term Loan, and the Company will pay interest on a quarterly basis; the Company will meet the Performance Target; the Term Loan will be secured; that the Warrants will entitle MEP to purchase in aggregate that number of Subordinate Voting Shares that is equal to 2% of the Company's fully diluted Subordinate Voting Shares as determined on the Warrant Share Calculation Date; the three scenarios for possible share issuances if the Warrant Share Calculation Date was the date of this press release, if the Company's outstanding shares on a fully diluted basis were to increase to 5 times the current number as at the Warrant Share Calculation Date, and if MEP were to receive 25% of the current outstanding shares; calculations of the CEO's holdings the event the Warrant is exercised immediately upon Closing of the Term Loan; the Warrant issuance not affecting control of the Company; the Company will receive approval of the TSX; and the Company's intent to use the proceeds of the Term Loan for working capital and to pay-out the Company's CAD overdraft facility with a Canadian chartered bank.
Forward-looking information is subject to known and unknown risks, uncertainties, and other factors, many of which are beyond the Company's control, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk that the Company's assumptions on which its forward-looking information is based may not be accurate. The terms of the Term Loan and the Warrants are subject to change as the parties negotiate the definitive documents. The closing of the Term Loan and the issuance of the Warrant will be subject to the satisfaction of certain conditions including, but not limited to, the receipt of all necessary approvals, the completion of an intercreditor agreement with UFA, and the absence of material adverse changes. There can be no assurance that the parties will enter into the definitive documentation, or if definitive documentation is entered into, that the terms of the Term Loan and the Warrants and the conditions to receiving the proceeds of the Term Loan will be as disclosed above, that the necessary approvals will be obtained, that the Term Loan will close as anticipated, or that MEP will exercise the Warrants. Other risks that may impact the closing of the Term Loan, or the use of proceeds, include the Company's significant reliance on its relationship with one digital platform; the impact of the continuing COVID-19 pandemic and of the current recessionary environment; the risks of potential claims of infringement by the Company or its content providers of third party intellectual property and other rights; changes in laws and regulations; as well as other factors discussed in the Company's Final Long Form Prospectus dated October 22, 2020, its Annual Information Form dated March 29, 2022 and in our MD&A dated November 14, 2022 each filed on sedar at www.sedar.com and in the Company's other filings with the Canadian securities regulatory authorities at www.sedar.com. The Company does not undertake any obligation to update any forward–looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
SOURCE BBTV Holdings Inc.
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