Difference Capital acquires 5.25% stake in Michael Wekerle’s Wekerloo Development

CPE News (2/19/2019) – Difference Capital Financial Inc. (TSX: DCF) has announced a $2.1 million investment in Wekerloo Development Inc. (WDI), the parent company of the Waterloo Innovation Network Group of Companies (WIN).

DCF converted an existing loan of $1 million in principal amount plus accrued interest of $100,000, and invested a further $1 million of new funds, into the equity of WDI. As a result, DCF now owns 5.25% of the common shares of WDI. The balance of WDI is owned by Michael Wekerle, Executive Chair of DCF, and owner of 46% of DCF common shares.

The Transaction places an equity value on WDI of $40 million. WDI also granted to DCF a 2-year option to purchase additional common shares that would bring DCF’s total ownership stake to 10.25%, at an exercise price per share that is a 25% premium to the Transaction price.

WDI consists of six buildings formerly owned by Blackberry and two empty lots representing an aggregate of approximately 335,000 square feet of rentable commercial space. The properties are situated across the street from the University of Waterloo. Tenants of WIN include many successful emerging technology companies of the region.

photo credit: Waterloo Innovation Network

News Release

Difference Capital Announces Investment in Tech-focussed Waterloo Real Estate

TORONTO, Feb. 19, 2019 — Difference Capital Financial Inc. (“DCF” or the “Company”) (TSX:DCF), announces that it has made a $2.1 million strategic investment in Wekerloo Development Inc. (“WDI”), the parent company of the Waterloo Innovation Network Group of Companies (“WIN”). WDI consists of six buildings and two empty lots representing an aggregate of approximately 335,000 square feet of rentable commercial space. The majority of the properties are situated across the street from the University of Waterloo, in Waterloo, Ontario. Tenants of WIN include many successful emerging technology companies of the region.

DCF converted an existing loan of $1 million in principal amount plus accrued interest of $100,000, and invested a further $1 million of new funds, into the equity of WDI (the “Transaction”). As a result, DCF now owns 5.25% of the common shares of WDI. The balance of WDI is owned by Michael Wekerle, Executive Chair of DCF, and owner of 46% of its common shares. The Transaction places an equity value on WDI of $40 million.

As part of the Transaction, WDI also granted to DCF a 2-year option (the “Option”) to purchase additional common shares that would bring DCF’s total ownership stake to 10.25%, at an exercise price per share that is a 25% premium to the Transaction price. The Company has not yet sought approval from the TSX, nor has such approval yet been granted, to exercise the Option.

The Board of DCF had long been considering an investment in commercial real estate focussed on serving tenants in the technology sector. As the Transaction was entered into with a party related to the Company, it was evaluated and recommended for approval by a Special Committee consisting of independent members of the Company’s board of directors.

The board of directors of DCF, with Mr. Wekerle recusing himself due to his conflict of interest, approved the Transaction. In addition, the Transaction constitutes a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of securities being issued to the Related Party nor the consideration being paid by the Related Party exceeded 25% of the Company’s market capitalization.

The Transaction was also subject to the approval of the Toronto Stock Exchange. Conditional approval was received from the TSX and such conditions have been met today.

The Company anticipates WDI generating income in the near term and believes that it offers the opportunity for significant capital appreciation over the next several years.

Please refer to the section regarding forward-looking statements which form an integral part of this release.

About Difference Capital Financial Inc.

Difference Capital Financial Inc. invests in and advises growth companies. We leverage our capital market expertise to help unlock value in technology, media and healthcare companies as they approach important milestones in their business
lifecycle.

Contact Information
Henry Kneis
Chief Executive Officer
(416) 649-5090
www.differencecapital.com