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Vertex One Asset Management Inc. Announces Fund Mergers and Other Proposals

VANCOUVER , Oct. 11, 2019 /CNW/ – Vertex One Asset Management, Inc. ("Vertex One") announced today that it intends to merge each of the Vertex Growth Fund and the Vertex Fund into the Vertex Enhanced Income Fund (the "Merger"). The Merger is being proposed in connection with the purchase agreement (the "Agreement") between Vertex One and PenderFund Capital Management Ltd. ("Pender"), pursuant to which Pender has agreed to acquire the investment fund management contracts for five investment funds managed by Vertex One: the Vertex Value Fund, Vertex Enhanced Income Fund, Vertex Growth Fund (the "Public Funds"), Vertex Fund and Vertex Managed Value Portfolio (together with the Public Funds, the "Funds") (the "Proposed Transaction"). In connection with the Proposed Transaction, Pender has assessed the Funds, along with the investment funds it currently manages, and has concluded that it would be desirable to proceed with the Merger in connection with the Proposed Transaction. Upon completion of the Proposed Transaction and the Merger, and subject to receipt of all regulatory and unitholder approvals and certain other conditions of closing, the Vertex Enhanced Income Fund will be the continuing fund and will be renamed the "Pender Enhanced Income Fund."

In connection with the Proposed Transaction, Vertex One and Pender intend to implement certain additional changes, subject to receipt of all regulatory and unitholder approvals. The following is a summary of the proposed changes affecting the Funds:

(a) The manager of each Fund will change from Vertex One to Pender;

(b) The auditor of each Fund will change from PricewaterhouseCoopers LLP to KPMG LLP effective on or about January 1, 2020 ;

(c) The Vertex Growth Fund and the Vertex Fund will merge into the Vertex Enhanced Income Fund;

(d) The fundamental investment objectives of the Vertex Enhanced Income Fund will be amended to allow Pender to consistently apply its value-based investment process;

(e) The method in which certain operating expenses are charged to each Fund will be replaced with a fixed-rate administration fee;

(f) The management fee on Class B units of the Vertex Enhanced Income Fund will increase by 0.25%; and

(g) The trust agreements of each Fund, each between CIBC Mellon Trust Company and Vertex One, will be amended in order to provide the ability to allocate capital gains to redeeming unitholders in a tax and/or cost-efficient manner,

(collectively, the "Proposals").

The completion of the Proposed Transaction and the Proposals remains subject to the receipt of all necessary regulatory approvals and approval by the unitholders of each of the Funds. Vertex One will hold a special meeting of each Fund's unitholders (the "Meetings") for the purpose of considering and voting on resolutions in connection with the Proposed Transaction and the Proposals. Further details of each of the Proposals will be provided to unitholders in a management information circular that will be sent to unitholders in connection with the Meetings. Subject to customary closing conditions, including regulatory and unitholder approvals, the Proposed Transaction and each of the Proposals are expected to be completed on, or about, December 15, 2019 (except as otherwise noted above in the case of the change of auditor).  

As required by National Instrument 81-107 – Independent Review Committee for Investment Funds and the Agreement, Vertex One will present the Proposals to the Independent Review Committee (the "IRC") of each of the Public Funds, which acts in an advisory capacity representing the interests of the Public Funds and unitholders with respect to conflict of interest matters. The IRC will be asked to review the Proposals and determine that, if implemented, each Proposal would achieve a fair and reasonable result for the Public Funds.     

Upon completion of the Proposed Transaction, and subject to receipt of all regulatory and unitholder approvals, (i) Pender will become the investment fund manager and portfolio manager of the Funds; (ii) KPMG LLP will become the auditor of the Funds; (iii) the Vertex Growth Fund will merge into the Vertex Enhanced Income Fund, and the Vertex Fund will merge into the Vertex Enhanced Income Fund; (iv) the fundamental investment objectives of the Vertex Enhanced Income Fund will change; (v) the method in which certain operating expenses are charged to each Fund will be replaced with a fixed-rate administration fee; (vi) the management fee on Class B units of the Vertex Enhanced Income Fund will increase by 0.25%; and (vii) the trust agreement of each Fund will be amended to permit the trustee on behalf of the Fund to allocate capital gains to redeeming unitholders in a tax and/or cost-efficient manner.

The Public Funds are offered publicly pursuant to a simplified prospectus dated June 28, 2019 , as amended by Amendment No. 1 dated September 6, 2019 (the "Simplified Prospectus"), and the Vertex Fund and Vertex Managed Value Portfolio are offered privately pursuant to offering memorandums dated September 30, 2019 . Additional details regarding the Proposed Transaction and the other changes affecting the Public Funds are set out in the Simplified Prospectus, annual information form and fund facts for the Public Funds, and amendments thereto, which are available at www.vertexone.com or at www.sedar.com.

About PenderFund Capital Management Ltd.

Pender was founded in 2003 and is an independent, employee-owned investment firm located in Vancouver, British Columbia . Our goal is to protect and grow wealth for our investors over time. We have a talented investment team of expert analysts, security selectors and independent thinkers who actively manage our suite of niche investment funds, exploiting inefficient parts of the investing universe to achieve our goal. Visit www.penderfund.com

About Vertex One Asset Management Inc.

As one of the longest-running alternative investment managers in Canada , Vertex One Asset Management is proud to be a Canadian-run, employee-owned firm, delivering over 20 years of quality alternative investment solutions for retail and institutional investors.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Fund Facts and the Simplified Prospectus for the funds before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Information in this news release, other than statements of historical fact, may be forward-looking information. Forward-looking information contained in this news release includes, but is not limited to, statements regarding the timing and completion of the Proposed Transaction, including the acquisition of the investment fund management contracts of the Funds by Pender, the timing and completion of the Proposals, including the Merger, the proposed Meetings of unitholders of the Funds, the mailing of meeting information in connection with these Meetings, and unitholder, IRC and regulatory approval for the Proposed Transaction and the Proposals. By their very nature statements that constitute forward-looking information are subject to numerous risks and uncertainties, some of which are beyond Vertex One's and Pender's control. These risks include, but are not limited to, the ability of Vertex One and Pender to obtain unitholder and regulatory approval for the Proposed Transaction and the Proposals, and the satisfaction of the other conditions of set out in the Agreement. Although forward-looking information contained in this press release is based upon what management of Vertex One believes are reasonable assumptions, there can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Any forward-looking information in this news release is provided as at the date of this news release, based upon the opinions and estimates of management and information available to management as at the date of this news release. Vertex and Pender undertake no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on forward-looking information contained in this news release.

SOURCE Vertex One Asset Management Inc.


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