Trez Capital Senior Mortgage Investment Corporation Announce Proposed Transition to Public Company Regulatory Regime

CNW Group

Toronto Stock Exchange: TZS

VANCOUVER , Oct. 15, 2013 /CNW/ - Trez Capital Fund Management Limited Partnership (the "Manager"), the manager of Trez Capital Senior Mortgage Investment Corporation (the "Corporation"), announced today that it will seek approval from the shareholders of the Corporation to implement changes in connection with changing the status of the Corporation for purposes of Canadian securities regulations from that of an investment fund to that of reporting issuer that is a public corporation (the "Proposed Transition").  To that end, the Board of Directors of the Corporation has authorized the calling of a special meeting (the "Special Meeting") of its shareholders to be held on November 29, 2013 . The record date for determining shareholders entitled to receive notice of the Special Meeting will be October 29, 2013 , at a location to be determined.

This decision is a pro-active response by the Manager to the proposed regulatory changes (the "Proposed Regulatory Changes") announced by the Canadian Securities Administrators' ("CSA") earlier this year which, if and when implemented, would (among other matters) prohibit the Corporation from continuing to invest in non-government guaranteed mortgages.

Since its inception in 2012, the Corporation has consistently paid out monthly distributions at its targeted levels and net asset value has been relatively stable since its initial public offering. Accordingly, the Manager believes that it is in the best interest of the shareholders of the Corporation that it continues to have the ability to pursue its current objectives and mandate by transitioning to the public company regime.  Such a transition was expressly contemplated by the CSA in the Proposed Regulatory Changes.

Following the Proposed Transition, the Corporation will continue to qualify as a mortgage investment corporation under the Income Tax Act ( Canada ) and will continue to pursue its current investment objectives and strategies. Some key changes to the Corporation will occur as part of the Proposed Transition, including the following:

  Current After Proposed Transition
Continuous Disclosure by
Trez Senior MIC
Semi-annual financial statements
for investment funds,
accompanied by management
reports of fund performance

Publication of net asset value
on a weekly basis

Quarterly portfolio disclosure
Quarterly financial statements
or public companies,
accompanied by management
discussion and analysis

Book value disclosed in
quarterly financial statements
Basis of Accounting Canadian GAAP (Part V) International Financial Reporting
Standards (IFRS)
Class Structure One class of publicly traded
shares
One class of publicly traded
shares, with the ability to issue
other classes of shares
Shareholder Voting Class A Shares are non-voting Class A Shares are fully voting
Liquidity Redeemable annually at net
asset value per share, subject to
a 15% cap
Redemption feature will cease to
exist
Governance Class A Shareholder approval
only required on special
resolutions as per CBCA or the
Articles (no annual shareholder
meetings)

Audit Committee and
Independent Review Committee
Class A Shareholders approve all
matters as per CBCA and articles
(annual meetings of Class A
Shareholders commence in
2014)

Audit and Nomination
Committees
Annual Trailer Fees Annual Trailer Fee of 0.40% No trailer fees paid

The Manager is of the view that the Proposed Transition will provide shareholders of the Corporation with a number of benefits, including:

  • the ability to continue pursuing its current mandate in accordance with its current investment objectives and strategies;

  • the ability to raise additional capital, as needed;

  • the elimination of the trailer fees paid on Class A Shares will leave more of the income generated by the Corporation available for distribution to its shareholders;

  • the grant of full voting rights to Class A Shareholders;

  • increased frequency of financial reporting;

  • the potential for research analyst coverage which does not cover investment funds; and

  • increased stability of capital resulting from the elimination of the redemption feature.

If the Proposed Transition is approved, shareholders of the Corporation will have a one-time opportunity to request that their Class A Shares be redeemed at their net asset value on December 31, 2013 . The number of Class A Shares of the Corporation which can be redeemed on December 31, 2013 will be limited to 15% of its currently outstanding number of shares.

Shareholders will be asked at the Special Meeting to consider and, if thought fit, approve the Proposed Transition and certain related changes including the following:

  • Class A Shares will become fully voting and all redemption rights will be removed from the Class A Shares.

  • The Corporation will be permitted to issue additional classes of shares in the future.

  • Matters requiring shareholder approval will be removed from the Corporation's articles.

  • The Management Agreement for the Corporation will be amended to provide for a termination fee payable to the Manager in the event of termination of the Management Agreement other than for cause.

A notice of meeting and management information circular of the Corporation containing additional information regarding the Proposed Transition is currently expected to be mailed to all shareholders by November 6, 2013 .

For information, please visit www.trezcapital.com.

 

SOURCE Trez Capital Senior Mortgage Investment Corporation

Contact:

Michael Nisker 
President & Chief Executive Officer  
Trez Capital Senior Mortgage Investment Corporation 
416-350-1299 
MichaelN@trezcapital.com

Karyn Phuong 
Vice President, Investor Relations
Trez Capital
647-788-1788
KarynP@trezcapital.com

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