CPE News (8/9/2021) – EXFO Inc. (NASDAQ: EXFO; TSX: EXF) announced that 11172239 Canada Inc. has agreed to increase the purchase price for the acquisition of all the issued and outstanding subordinate voting shares of EXFO, from US $6.00 to US $6.25 per subordinate voting share not held directly or indirectly by Chairman Germain Lamonde and CEO Philippe Morin.
11172239 Canada Inc., a private company controlled by Lamonde and Morin, has entered into support agreements with Westerly Capital Management LLC, Chris Galvin and EHP Funds Inc., shareholders of EXFO who beneficially own or have control or direction over 3,161,487 subordinate voting shares, or approximately 14.75% of all the issued and outstanding subordinate voting shares of EXFO.
As at July 15, 2021, EXFO had 25,820,245 subordinate voting shares and 31,643,000 multiple voting shares. Lamonde beneficially controls 3,672,474 (14%) subordinate voting shares and 31,643,000 (100%) multiple voting shares representing 61.46% of total outstanding shares with 93.53% voting power. Morin controls 716,830 subordinate voting shares. Collectively 11172239 Canada controls 4,389,304 subordinate voting shares (17%) and 31,643,000 (100%) multiple voting shares.
The new bid price increases transaction value to US $142 million to minority shareholders.
National Bank of Canada and Investissement Québec (IQ) have provided commitment letters for senior and subordinated debt financing, respectively, representing an aggregate principal amount sufficient to cover the purchase of the subordinate voting shares not already owned by 11172239 Canada.
On July 20, 2021, Viavi Solutions Inc. (NASDAQ: VIAV) announced that it increased its “binding proposal” to acquire all of the outstanding subordinate voting shares and multiple voting shares of EXFO from US $7.50 to US $8.00 in cash per share.
Following the announcement, EXFO board clarified about the “unsolicited non-binding proposal” made by Viavi – “The unambiguous statements by the Controlling Shareholder that he rejects the Proposal led EXFO’s Board of Directors to conclude that it will not pursue the Proposal as it is not capable of being completed and therefore, is not a “Superior Proposal” as such term is defined in the Arrangement Agreement.”
photo credit: EXFO
News Release
EXFO Inc. Announces Increase in Purchase Price to $US6.25 for Going-Private Transaction and Entering into Support and Voting Agreements with Large Minority Shareholders
QUEBEC CITY, Aug. 9, 2021 /PRNewswire/ – EXFO Inc. (“EXFO” or the “Corporation”) (NASDAQ: EXFO) (TSX: EXF), announces that 11172239 Canada Inc. (the “Purchaser”) has agreed to increase the purchase price for the acquisition of all the issued and outstanding subordinate voting shares of EXFO, from US $6.00 to US $6.25 per subordinate voting share not held directly or indirectly by Germain Lamonde and Philippe Morin. The parties have also amended the arrangement agreement dated June 7, 2021, as amended on July 6, 2021 and July 12, 2021 accordingly. The terms and conditions of the Arrangement Agreement otherwise remain unchanged.
The Purchaser and EXFO have also entered into support and voting agreements (the “Support Agreements”) with Westerly Capital Management LLC (“Westerly Capital”), Mr. Chris Galvin and EHP Funds Inc., shareholders of the Corporation who beneficially own or have control or direction over 3,161,487 subordinate voting shares in the aggregate which can be voted at the special meeting of shareholders of EXFO to be held on August 13, 2021, or at any adjournment or postponement thereof (the “Meeting”), or approximately 14.75% of all the issued and outstanding subordinate voting shares of EXFO, other than the subordinate voting shares held directly or indirectly by Germain Lamonde and Philippe Morin. Under the terms of the Support Agreements, Westerly Capital, Mr. Chris Galvin and EHP Funds Inc. have agreed to support and vote the 3,161,487 subordinate voting shares of EXFO that they control in favour of the Purchaser’s acquisition of EXFO.
“We have been long term supportive shareholders of EXFO and we support Mr. Lamonde’s revised offer to take EXFO private. We believe that the transaction represents a fair outcome for EXFO’s minority shareholders as it provides actionable, attractive and immediate liquidity,” said Chris Galvin, Managing Partner at Westerly Capital.
“I am very pleased that, in line with the positive recommendation from ISS – Institutional Shareholder Services Inc, the leading third party proxy advisory firm, we have received strong endorsements from several of our largest minority shareholders for the proposed transaction, including Westerly Capital and Mr. Chris Galvin, as well as EHP Funds Inc., both amongst the largest minority shareholder of EXFO,” said Germain Lamonde, founder and controlling shareholder of the Corporation.
To proactively deal with the unprecedented public health impact of COVID-19, the Meeting will be held in a virtual only format, which will be conducted via live audio webcast online at https://web.lumiagm.com/436109447 at 10:00 a.m. (Québec City time) on August 13, 2021.
If you have already voted your subordinate voting shares and wish to change your vote, you can submit your new vote in accordance with the instructions in the section of the proxy solicitation circular entitled “Voting Information – Appointment and Revocation of Proxies”, prior to the deadline of 10:00 a.m. (Québec City time) on Wednesday, August 11, 2021, and your new vote will supersede and replace any previously submitted vote.
Shareholder Questions and Assistance
Shareholders who have questions regarding the Arrangement or require assistance with voting may contact D.F. King (Canada), EXFO’s proxy solicitation agent, by telephone at 1-866-822-1242 (toll-free in North America) or 416-682-3825 (collect outside North America), or by email at inquiries@dfking.com.
Additional details regarding the terms and conditions of the proposed transaction as well as the rationale for the recommendations made by the Special Committee and the Board of Directors is set out in the management proxy circular filed and mailed to shareholders, which, together with the Arrangement Agreement, is available under EXFO’s profile at www.sedar.com.
In connection with the transaction, the Corporation has prepared and mailed a Schedule 13E-3 Transaction Statement (the “Schedule 13E-3”). The Schedule 13E-3 has been filed with the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE SCHEDULE 13E-3 AND OTHER MATERIALS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE CORPORATION, THE TRANSACTION, AND RELATED MATTERS. In addition to receiving the Schedule 13E-3 by mail, shareholders will also be able to obtain these documents, as well as other filings containing information about the Corporation, the transaction, and related matters, without charge from the SEC’s website (http://www.sec.gov).
Required Early Warning Report Information
Germain Lamonde and his affiliates and associates control, directly or indirectly, the Excluded Shares and 31,643,000 Multiple Voting Shares, representing 14.22% of the issued and outstanding Subordinate Voting Shares and 100% of the issued and outstanding Multiple Voting Shares, respectively, representing collectively 61.46% of the issued and outstanding Shares and 93.53% of the voting rights attached to all of the issued and outstanding Shares on an undiluted basis.
Upon closing of the Arrangement, Germain Lamonde intends to cause the Shares to cease to be listed on the Toronto Stock Exchange and the NASDAQ, to cause EXFO to submit an application to cease to be a reporting issuer under applicable Canadian securities laws, to cause EXFO to file a certification and notice on Form 15 with the SEC to suspend its reporting obligations under U.S. securities laws, and to otherwise terminate EXFO’s public reporting requirements.
An updated early warning report will be filed by Germain Lamonde with applicable Canadian securities regulatory authorities. To obtain copies of the early warning report, please contact Mr. Germain Lamonde at 1-800-663-3936.
About EXFO
EXFO develops smarter test, monitoring and analytics solutions for fixed and mobile network operators, webscale companies and equipment manufacturers in the global communications industry. Our customers count on us to deliver superior network performance, service reliability and subscriber insights. They count on our unique blend of equipment, software and services to accelerate digital transformations related to fiber, 4G/LTE and 5G deployments. They count on our expertise with automation, real-time troubleshooting and big data analytics, which are critical to their business performance. We’ve spent over 30 years earning this trust, and today 1,900 EXFO employees in over 25 countries work side by side with our customers in the lab, field, data center and beyond.
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No Offer or Solicitation
This announcement is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell shares of EXFO.
SOURCE EXFO Inc.