ESW agrees to sell all of its subordinate voting shares in Optiva
Optiva and ESW agree to enter into separation agreement, intellectual property agreement and mutual multi-party release
Optiva intends to complete subsequent offering of subordinate voting shares and receives non-binding indications of interest for up to $17 million
TORONTO, March 1, 2021 – Optiva Inc. (“Optiva” or the “Company“) (TSX:OPT), the leader in providing communications service providers (CSPs) worldwide with cloud-native revenue management software, announces today that ESW Capital, LLC (“ESW“) has agreed to sell all of its subordinate voting shares of Optiva (the “Shares“) in a private sale to OceanLink Management Ltd., EdgePoint Investment Group Inc., Maple Rock Capital Partners and Meson Capital at $39.90 per Share. Optiva itself will not participate in such sale. ESW has also agreed to terminate all of its related party agreements with Optiva and to waive certain provisions of the warrants to acquire Shares (the “Warrants“) held directly or indirectly by ESW (the “Separation Agreement“).
Optiva also announces today its intention to complete a subsequent private placement offering of its Shares and its receipt of non-binding indications of interest to participate of up to $17 million. The Company intends to provide other eligible investors the opportunity to participate in the offering on the same terms. The definitive terms of any offering will be provided by the Company in a subsequent press release. Any subsequent offering would be subject to receipt of Toronto Stock Exchange approval and other regulatory approvals.
“This separation marks the beginning of a new chapter for Optiva and its stakeholders,” said Lee Matheson, Vice-Chair of Optiva. “Management and the board will now be able to dedicate their full attention and energy to accelerating Optiva’s strategic plan. We look forward to this next phase in the Company’s growth.”
“This sale by ESW of its Optiva shares creates substantial benefits to Optiva by clearing the way for a financing that will allow Optiva to invest in its product roadmap,” said Mr. Matheson. “The separation also enhances the protection of Optiva’s intellectual property, will significantly reduce expenditures on legal and professional fees relating to shareholder disputes going forward and will meaningfully lower risk of dilution to existing shareholders through the shortening of the term of the outstanding warrants held by ESW from approximately six years to two years and removing related dilution provisions.”
ESW Share Sale
OceanLink Management Ltd., EdgePoint Investment Group Inc., Maple Rock Capital Partners and Meson Capital will purchase 1,476,851 Shares from ESW (being all of the Shares held by ESW) at a purchase price of $39.90 per Share for aggregate proceeds to ESW of approximately $58,926,355 (the “ESW Share Sale“).
The Shares acquired in connection with the ESW Share Sale will be subject to a statutory hold period in Canada of four months and one day from the closing date in accordance with applicable securities laws.
The ESW Share Sale is expected to close, subject to satisfaction of all closing conditions, on or prior to March 5, 2021.
Optiva and ESW will enter into the Separation Agreement, pursuant to which, among other things:
(i) ESW and Optiva will agree to certain non-solicitation provisions relating to their respective employees, and ESW will agree to certain non-competition provisions in respect of customers of Optiva;
(ii) the terms of the Warrants held directly or indirectly by ESW will be amended to remove certain anti-dilution provisions, provide Optiva with a right to repurchase Warrants for cancellation and abridge the expiry date to two years from the closing date of the ESW Share Sale. ESW will also provide a proxy and power of attorney to Optiva to vote all Shares issued upon exercise of the Warrants (1); and
(iii) Optiva and ESW will agree to terminate all rights, entitlements, and obligations under previous contractual arrangements between them (other than the Warrants), including, among others, the subscription agreement between Optiva and ESW, which granted ESW director nomination rights in certain circumstances, and the services agreements between Optiva and ESW’s affiliates, DevFactory FZ-LLC and Crossover Markets, Inc.
(1) The Company has provided the TSX with an undertaking not to exercise its right to vote any Shares issued upon exercise of the Warrants.
Resignations and Multi-Party Release
Conditional on the closing of the Separation Agreement, each of Andrew Price and Neeraj Gupta, ESW’s board nominees, have agreed to resign from the board of directors of Optiva.
In addition, Optiva, ESW and certain of its affiliates, and certain shareholders of Optiva have agreed to enter into a mutual multi-party release (the “Mutual Release“) pursuant to which the parties will release each other from certain claims relating to the Company and one another.
Intellectual Property Agreement
ESW and Optiva will enter into an agreement granting intellectual property rights to Optiva with respect to registered intellectual property and will each covenant not to make certain claims with respect to unregistered intellectual property (the “IP Agreement“).
The Toronto Stock Exchange (the “TSX“) has waived the requirement in Section 608 of the TSX Company Manual to obtain shareholder approval for the waiver and amendment of the Warrants because the amendments are being made as part of the Separation Agreement. The amendments include terminating the provision in the Warrants that adjusts the exercise price of the Warrants downward following certain share issuances by Optiva at a price below the strike price of the Warrants; decreasing the term of the Warrants from approximately 6 years remaining to two years; and providing Optiva with the right to settle the Warrants for the in-the-money cash value of the Shares otherwise issuable to ESW upon exercise.
Pursuant to the TSX Company Manual, the amendments to the Warrants will be effective as of the date that is 10 business days from the date hereof.
Early Warning Requirements – EdgePoint
EdgePoint Investment Group Inc. (“EdgePoint”) currently exercises control or direction over 1,047,685 Shares, representing approximately 19.7% of the issued and outstanding Shares. Pursuant to the ESW Share Sale, EdgePoint will acquire 526,290 Shares in its capacity as portfolio manager for an account that it manages. Following completion of the ESW Share Sale, EdgePoint will exercise control or direction over an aggregate of 1,573,975 Shares, representing approximately 29.6% of the issued and outstanding Shares. The total consideration payable by EdgePoint to ESW pursuant to ESW Share Sale is $20,998,971 in cash.
The acquisition of the Shares pursuant to the ESW Share Sale is being made in the ordinary course of business and for investment purposes. EdgePoint may acquire or dispose of additional securities of the Company or may enter into derivative or other transactions with respect to such securities on behalf of accounts it manages.
EdgePoint relies on the private agreement exemption set forth in section 4.2 of National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”). The purchase of the Shares by EdgePoint pursuant to the ESW Share Sale is being made from one person (i.e. ESW). The offer is not being made generally to holders of Shares. The value of the consideration to be paid by EdgePoint for the Shares, including brokerage fees or commissions, is not greater than 115% of the market price of the Shares at the date of the bid as determined in accordance with section 1.11 of NI 62-104.
EdgePoint will prepare and file a report containing the information required by Form 62-103F1 – Required Disclosure under the Early Warning Requirements in connection with the matters referred to in this press release. Once filed, a copy of this report can be obtained by contacting Sayuri Childs, EdgePoint’s Chief Compliance Officer, at (416) 963-9353. EdgePoint’s head office is located at 150 Bloor Street West, Suite 500, Toronto, Ontario M5S 2X9.
Early Warning Requirements – OceanLink
OceanLink Management Ltd. (“OceanLink“) does not currently have beneficial ownership of, or control or direction over, any securities of the Company. Immediately following completion of the ESW Share Sale, OceanLink will have ownership of, or control or direction over, 781,250 Shares, representing 14.7% of the issued and outstanding Shares. The acquisition of the Shares pursuant to the ESW Share Sale is being made in the ordinary course of business and for investment purposes. OceanLink may from time to time in the future acquire or dispose of additional securities of the Company or may enter into derivative or other transactions with respect to such securities on behalf of accounts it manages.
OceanLink will prepare and file a report containing the information required by Form 62-103F1 – Required Disclosure under the Early Warning Requirements in connection with the matters referred to in this press release. Once filed, a copy of this report can be obtained by contacting Lan Zhang, Chief Financial Officer of OceanLink, at 437-249-0202. OceanLink’s address is 2 Bloor Street West, Suite 1702, Toronto, Ontario, M4W 3E2.
About Optiva Inc.
Optiva Inc. is a global leader in providing CSPs with cloud-native revenue management software. CSP operators and mobile virtual network operators can integrate our best-of breed charging engine into a BSS stack or deploy our fully managed, end-to-end, SaaS-based suite. Optiva solutions offer unmatched speed, scale, security and savings. Our market knowledge, analytical insights and unique Customer Success Program ensure telecoms are equipped to achieve their strategic business goals. Established in 1999, Optiva Inc. is on the Toronto Stock Exchange (TSX: OPT). For more information, visit www.optiva.wpengine.com. Optiva’s head office is located at 2233 Argentia Road, East Tower, Suite 302, Mississauga, Ontario, L5N 2X7.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements and forward looking information within the meaning of applicable securities laws including, without limitation, statements regarding the intention to complete a subsequent offering, the receipt of indications of interest to participate in any subsequent offering, the intention to provide other eligible investors the opportunity to participate in any subsequent offering on the same terms, the receipt of approvals for any subsequent offering, the anticipated benefits to the Company of the ESW Share Sale, the anticipated timing of and completion of the ESW Share Sale, the entering into of purchase agreements in connection with the ESW Share Sale, Separation Agreement, IP Agreement and Mutual Release and anticipated board resignations. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or describes a “goal”, or variation of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. There is no assurance that any forward-looking statements will materialize. Risks that could cause our results to differ materially from our current expectations include: the ability of the parties to satisfy the closing conditions to the ESW Share Sale in the expected time or at all, some of which are beyond the control of the parties; the ability of the Company to complete a subsequent offering on the terms described herein or at all; and other risks regarding the Company’s business discussed in the Company’s most recent annual information form, which is available on SEDAR at www.sedar.com and on Optiva’s website at www.optiva.wpengine.com/investors/. The Company disclaims any intention or obligation to update any forward-looking statements, except as required by law, even if new information becomes available, as a result of future events or for any other reason.
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Optiva Announces Sale by ESW