TORONTO, April 29, 2019 – Trez Capital Mortgage Investment Corporation (TSX: TZZ) (the "Company") today announced that its board of directors has declared a special distribution of $0.47 per Class A share of the Company (the "Special Distribution"). The Special Distribution, which constitutes a return of capital pursuant to the winding-up of the Company’s business as approved by Shareholders on June 16, 2016, will be paid on May 22, 2019 to holders of Class A shares of record at the close of business on May 9, 2019. As of April 29, 2019, there were 11,649,711 Class A shares outstanding.
The Special Distribution payment is not subject to any condition, will be made in cash and will be subject to the "Due Bill" trading requirements mandated by the Toronto Stock Exchange (the “TSX”).
Because the amount of the Special Distribution represents a distribution of greater than 25% of the market value of the Class A shares on the declaration date, the TSX has required that the Class A shares will trade on a "Due Bill" basis during the period (the "Due Bill Period") from and including May 8, 2019 until the close of trading on May 22, 2019 (the "Payment Date").
This means that buyers of Class A shares during the Due Bill Period will receive the Special Distribution payment, provided they continue to be holders of the applicable Class A shares on the Payment Date.
The Class A shares will commence trading on an ex-distribution basis (i.e., without an attached "Due Bill" entitlement to the Special Distribution) commencing the opening of trading on May 23, 2019 (i.e., the next trading day after the Payment Date). The Due Bill redemption date will be May 24, 2019. As a result of the Class A shares trading on a Due Bill basis during the Due Bill Period, those entitled to be paid the Special Distribution owing on the Due Bills should expect to receive that payment by the Due Bill redemption date of May 24, 2019.
The Special Distribution represents the first step in the final wind-down plan for the Company. The Company has now disposed of all of its mortgage assets. The remaining activities of the Company involve solely the oversight of ongoing litigation and the maintenance of the Company pending release and discharge of all liabilities, contingent or actual. The expected time frame to obtain the release or discharge of the liabilities is expected to be approximately three to four years. During the final wind-down period, Trez Capital Fund Management Limited Partnership (“Trez”) has agreed to provide routine financial, accounting and reporting services as well as supervision of the ongoing litigation, without charge to the Company. Additional services, if any, will be provided upon terms to be agreed between the Manager and the Company.
Following the payment of the Special Distribution, the next steps to wind down the Company involve the delisting of the Class A shares from the TSX and the making of an application to cease to be a reporting issuer.
On April 16, 2019, the TSX informed the Company that it has put the Company under a listing review to determine if the Company can continue to meet the continued listing requirements of the TSX. It is not expected that the Company will be able to meet such requirements due to the orderly wind-up process. Accordingly, following the payment of the Special Distribution and consistent with the orderly wind-up process, the board of directors plans to seek a voluntary delisting of the Company’s Class A shares from the TSX. Effective upon the date of such delisting, the Class A shares of the Company will no longer be tradeable over the facilities of the TSX. However, Class A shares may continue to be traded privately, subject to compliance with exemptions from applicable securities law. Anyone wishing to trade Class A shares following delisting are advised to seek legal advice to ensure that such transactions are permitted under applicable securities law.
Following the delisting of the Class A shares from the TSX, the Company will make an application to the relevant securities regulatory authorities for an order that the Company has ceased to be a reporting issuer. The order, if granted, is expected to permit the Company to make minimal disclosure to shareholders by press release each quarter. Such disclosure is not expected to include interim financial statements or management discussion and analyses. Audited annual financial statements will continue to be provided to shareholders until dissolution.
After giving effect to the Special Distribution, the Company will have approximately $2.7 million in cash, as a reserve against ongoing expenses and contingent liabilities. Upon release and satisfaction of all liabilities, the Company intends to make a final distribution of all remaining funds to the holders of its Class A shares (the “Final Distribution”). If and to the extent there are proceeds from the ongoing litigation, one or more interim distributions may be made to the holders of the Class A shares prior to the Final Distribution. However, there can be no assurance that any such interim distributions will occur. The formal dissolution of the Company will follow the Final Distribution.
Forward Looking Statements
Certain statements in this news release about Trez Capital Mortgage Investment Corporation (the “Company”), and its business, operations, investments and strategies, and financial performance and condition may constitute forward-looking information, future oriented financial information, or financial outlooks (collectively, “forward looking statements”). The forward-looking statements are stated as of the date of this news release and are based on estimates and assumptions made by Trez Capital Fund Management Limited Partnership (“Trez”) in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Trez believes are appropriate and reasonable in the circumstances. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results, performance and future events could differ materially from those anticipated in such statements. Past performance is not an indication of future returns, and there can be no guarantee that targeted returns or yields can be achieved. Trez refers you to the Company’s public disclosure for information regarding these forward-looking statements, including the assumptions made in preparing forward-looking statements and management’s expectations, and the risk factors that could cause the Company’s actual results, yield, levels of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. Such public disclosure is available on SEDAR and at the request of Trez. This news release does not represent an offer or solicitation to sell securities of the Company.
About the Company
Trez Capital Fund Management Limited Partnership is the manager of and portfolio advisor to the Company. On June 16, 2016 the Shareholders of the Company approved the orderly wind-up of the Company. Under the orderly wind-up plan the Company will distribute the net proceeds through special distributions, the repurchase of shares pursuant to the normal course issuer bid, or otherwise.
For further information:
Chief Executive Officer & Chief Financial Officer
Tel: (604) 630-0775