Dominion Lending Centres Announces Intention to Commence Substantial Issuer Bid; Announces Plan to Restructure Credit Facilities

Vancouver, British Columbia – November 29, 2021 – Dominion Lending Centres Inc. (TSXV:DLCG) (“DLC” or the “Corporation”) today announced its intention to commence a substantial issuer bid (the “Offer”) pursuant to which the Corporation will offer to purchase for cancellation up to 3,000,000 of its outstanding common shares (the “Shares”) at a purchase price of $3.75 per Share in cash (the “Purchase Price”). See “Source of Funds and New Credit Facilities” below for details on how the Corporation will fund the Offer.

The closing price of the Shares on the TSX Venture Exchange (the “TSXV”) on November 26, 2021, the last full trading day prior to the Corporation’s announcement of its intention to make the Offer, was $3.35.

The board of directors of the Corporation (the “Board”) believes that the recent trading price of the Shares is not fully reflective of their intrinsic value based on the value of DLC’s assets and its business and future prospects. Accordingly, the Board believes that the Offer is a prudent use of the Corporation’s financial resources given the Corporation’s business profile and assets, current market price of the Shares, capital availability and cash requirements. The Offer provides DLC with the opportunity to return up to $11.25 million of capital to Shareholders who elect to tender while at the same time increasing the proportionate Share ownership of Shareholders who elect not to tender.

The Purchase Price represents a 14.7% premium over the 30-day volume weighted average closing price of the Shares on the TSX for the period ending on November 26, 2021, and a 11.9% premium over the closing price of the Shares on the TSX on November 26, 2021, the last full trading day prior to the Corporation’s announcement of its intention to make this Offer. The number of Shares subject to the Offer represents approximately 6.5% of the total number of Shares outstanding.

Details of the Offer, including instructions for tendering Shares to the Offer and the factors considered by the Board making its decision to approve the Offer, will be included in the formal offer to purchase and issuer bid circular and other related documents (the “Offer Documents”), which are expected to be mailed to shareholders and filed with applicable Canadian Securities Administrators on or about December 1, 2021 on SEDAR at www.sedar.com and on the Corporation’s website at www.dlcg.ca. Shareholders should carefully read the Offer Documents prior to making a decision with respect to the Offer. The Offer will not be conditional on any minimum number of Shares being tendered but will be subject to various other conditions that are typical for a transaction of this nature.

The Offer will expire at 5 p.m. Eastern time on January 11, 2022, unless terminated or extended by the Corporation. If more than 3,000,000 Shares are properly tendered to the Offer, the Corporation will take-up and pay for the tendered Shares on a pro-rata basis according to the number of Shares tendered, except that “odd lot” tenders (of holders beneficially owning fewer than 100 Shares) will not be subject to pro-ration. Assuming that 3,000,000 Shares are purchased pursuant to the Offer, the aggregate purchase price pursuant to the Offer will be $11,250,000.

The Board has authorized the making of the Offer. However, the Board is not making any recommendation to any Shareholders as to whether to tender or refrain from tendering their Shares under the Offer. Shareholders are strongly urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or to refrain from tendering their Shares to the Offer and, if so, how many Shares to tender. The Corporation was authorized by the TSXV to purchase up to 2,332,697 Shares pursuant to a normal course issuer bid (the “NCIB”) that commenced on January 18, 2021 and expires on January 17, 2022. Since January 18, 2021, the Corporation has purchased 296,100 Shares through the NCIB. There will be no further purchases of Shares under the NCIB until after the expiry of the Offer or date of termination of the Offer.

Any questions or requests for information may be directed to Olympia Trust Company, as the depositary for the Offer, as follows: Telephone: Toll Free 1-833-684-1546; Facsimile 1-403-668-8307; or Email cssinquiries@olympiatrust.com.

Source of Funds and New Credit Facilities

DLC has adequate cash on hand or, alternatively, expected available under the credit facilities of the Corporation, to fund the purchase of the maximum number of Shares that could be purchased under the Offer including the related fees and expenses. Accordingly, the completion of the Offer is not conditional on obtaining financing.

The Corporation has received a term sheet from Toronto-Dominion Bank (the “TD Term Sheet”), the lender to the Core Business Operations, providing for a $5 million working capital credit line; a $10 million acquisition credit line; and a $20 million credit line to fund the Offer and a pro rata (40%) dividend to Preferred Shareholders (collectively, referred to as the “New TD Senior Credit Facility”).  Further, the TD Term Sheet also provides the Corporation with a $32 million term loan to facilitate the repayment of all indebtedness of the Corporation under the current Sagard credit facility and to terminate all existing foreign currency forward contracts (referred to as the “New TD Junior Credit Facility”).

Closing of the new credit facilities are subject to customary closing conditions.  As such, the Corporation believes that the possibility to be remote that, if the conditions of the bid are satisfied or waived, that the Corporation will be unable to pay for the Shares deposited under the Offer due to a financing condition not being satisfied. 

The New TD Senior Credit Facility is for a three (3) year term and will be secured by a first charge over all of the Corporation’s “core business assets”.  The proceeds from the New TD Senior Credit Facility will be used to: (i) replace the current credit facilities for the Core Business Operations; (ii) provide the Corporation with $12 million to fund the Offer; and (iii) provide the Preferred Shareholders with dividend in an amount equal to their pro rata share of the borrowings used to fund the Offer.  In the event that 3,000,000 Shares are tendered under the Offer (for cash proceeds of $11.25 million), it is anticipated that the Corporation would pay a dividend to Preferred Shareholders of $7.5 million.  Interest on the New TD Senior Credit Facility is based on the prime borrowing rate plus an additional amount determined based on the Corporation’s total leverage.  On closing of the New TD Senior Credit Facility, the interest rate is anticipated to be equal to the prime borrowing rate.  Upon completion of the Offer, any amounts undrawn on the $20 million credit line will be cancelled. 

The New TD Junior Credit Facility is for a three (3) year term and will be secured by a first charge over all of the Corporation’s “non-core business assets” and a junior security interest over the Corporation’s “core business assets” (subject to certain security-sharing rights of the Preferred Shareholders).  The proceeds from the New TD Junior Credit Facility will be used to repay the existing Sagard credit facility and to terminate all existing foreign currency forward contracts.  Interest on the New TD Junior Credit Facility is based on the prime borrowing rate plus an additional amount determined based on the Corporation’s total leverage.  On closing of the New TD Junior Credit Facility, the interest rate is anticipated to be prime plus 75 bps and any undrawn amount under the facility will be cancelled. 

The Corporation expects to close the New TD Senior Credit Facility and the New TD Junior Credit Facility prior to the end of 2021.

About Dominion Lending Centres Inc.

The DLC Group is Canada’s leading network of mortgage professionals. The DLC Group operates through Dominion Lending Centres and its three main subsidiaries, MCC Mortgage Centre Canada Inc., MA Mortgage Architects Inc. and Newton Connectivity Systems Inc., and has operations across Canada. The DLC Group’s extensive network includes ~7,500 agents and 515 locations. Headquartered in British Columbia, the DLC Group was founded in 2006 by Gary Mauris and Chris Kayat.

Contact information for the Corporation is as follows:

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Forward-Looking Information

This document contains “forward-looking information” within the meaning of Canadian securities laws. Specific forward-looking information includes, without limitation: statements regarding the Offer and the terms thereof, including the maximum number of Shares we may purchase under the Offer; the timing for completion of the Offer; the sources and availability of funding for the Offer; our belief that the Offer is a prudent use of the Corporation’s financial resources; the expected entry into by the Corporation of a new credit facility with a Canadian chartered bank and the use of the proceeds of such facility to repay in full amounts owing under the Sagard credit facility. The forward- looking information in this Offer to Purchase and Circular is presented for the purpose of providing disclosure of the current expectations of our future events or results, having regard to current plans, objectives and proposals, and such information may not be appropriate for other purposes. Such forward-looking information may, without limitation, be preceded by, followed by, or include words such as “expects”, “anticipates”, “targets”, “goals”, “projects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “continues”, “endeavors”, “strives”, “may”, or variations of such words, and similar expressions, that are intended to identify such forward-looking information.

Forward-looking information is provided for the purpose of assisting readers in understanding management’s current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict, including risks related to changes in taxes; changes in foreign currency rates; increased operating, general and administrative, and other costs; changes in interest rates; general business, economic and market conditions; the extent and duration of the COVID-19 pandemic or any similar public health issues that could have an impact on economic or market conditions; our ability to obtain services and personnel in a timely manner and at an acceptable cost to carry out our activities; DLC’s ability to maintain its existing number of franchisees and add additional franchisees; Newton’s ability to grow its submission volumes and number of third-party users is subject to broker and industry adoption of Newton as a connectivity platform; changes in Canadian mortgage lending and mortgage brokerage laws; material decreases in the aggregate Canadian mortgage lending business; changes in the fees paid for mortgage brokerage services in Canada; changes in the regulatory framework for the Canadian housing sector; demand for the Corporation’s products remaining consistent with historical demand; our ability to realize the expected benefits of our Non-Core Assets; the uncertainty of estimates and projections relating to future revenue, taxes, costs, and expenses; changes in, or in the interpretation of, laws, regulations or policies; the outcome of existing and potential lawsuits, regulatory actions, audits, and assessments. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking information. Other than with respect to the Offer, the foregoing and other material risks and uncertainties are discussed in our public filings at www.sedar.com, including in the 2020 Annual Information Form, which is available under the Corporation’s profile on SEDAR at www.sedar.com.

All forward-looking statements attributable to us are expressly qualified by these cautionary statements. Except as required by applicable law, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.