Founders Advantage Capital Corp. Announces Executive Appointment

CALGARY, ALBERTA–(Marketwired – May 20, 2016) –

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation“) is pleased to announce that Darren Prins has been appointed Chief Financial Officer of the Corporation. Mr. Prins will join the Corporation upon fulfilling his obligations to his current employer and upon relocating from Vancouver to Calgary (anticipated to be early June, 2016).

Mr. Prins is a Chartered Professional Accountant with extensive experience in financial reporting, auditing, risk management, budgeting and forecasting, as well as international tax planning. Most recently, Mr. Prins served as Chief Financial Officer for Timmins Gold Corp, a gold mining company with operating and development assets in Mexico, listed on both the TSX and NYSE exchanges, where he had significant involvement with acquisitions and financing transactions. While completing his Chartered Accountant designation with Ernst & Young, Mr. Prins worked in a variety of industries, with a specialization in financial services. Mr. Prins graduated from Simon Fraser University with a Bachelor of Business Administration (Finance Major) in 2004.

Further, we are also pleased to report that Michael Matishak, the Corporation’s current Chief Financial Officer until May 31, 2016, will be continuing with the Corporation’s finance team as Senior Vice President, Special Projects. Stephen Reid, President and Chief Executive Officer commented: “We are fortunate to be able to attract and hire a CFO having Darren’s knowledge and public company experience and are equally fortunate to retain Mike as a valuable member of our finance team as we continue to grow our business.”

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a passive and permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing majority interest acquisitions of cash flow positive middle-market privately held entities. FA Capital seeks to win mandates by appealing to the segment of the market which is not aligned with traditional Private Equity control, royalty monetizations or related structures. The Corporation’s innovative platform offers disproportionate incentives (contractually) for growth in favour of our partner entrepreneurs. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to maintain operational control with a long-term and passive partner.

The Corporation’s common shares are listed on the TSX Venture Exchange under the symbol “FCF”.

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.

FCF Capital Inc. Announces Shareholder Meeting Results, Including Approval of Name Change and Share Consolidation

CALGARY, ALBERTA–(Marketwired – May 16, 2016) –

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

FCF Capital Inc. (TSX VENTURE:FCF) (the “Corporation“) is pleased to announce that at the annual and special meeting of its shareholders held today, each item of business placed before shareholders was approved by over 98.5% of shareholders present, including: (a) the election of each of Messrs. Stephen Reid, Kingsley Ward, Peter McRae, James Bell, Anthony Lacavera and Ron Gratton as directors of the Corporation; (b) the appointment of KPMG LLP as auditors of the Corporation; (c) the confirmation of the Corporation’s amended and restated by-laws; (d) the approval of the consolidation of the common shares of the Corporation on the basis of one (1) Common Share on a post-consolidation basis for every fifteen (15) Common Shares on a pre-consolidation basis; (e) the approval of the change of the Corporation’s name to “Founders Advantage Capital Corp.”; (f) the approval of the Corporation’s stock option plan; and (g) the approval of the acquisition by the Corporation of all or a portion of the outstanding securities and/or assets of a suitable business with an aggregate acquisition price to the Corporation of not less than $50 million and not to exceed $80 million on or before October 11, 2016.

The Corporation has filed today articles of amendment to effect the change of the Corporation’s name to “Founders Advantage Capital Corp.”

The Corporation intends to effect the consolidation of its shares prior to the commencement of the trading of the Corporation’s shares on the TSXV on a post-consolidation basis, which will be confirmed by TSXV bulletin. The Corporation currently expects that its shares will commence trading on a consolidated basis and with the Corporation’s new name on or about May 18, 2016, subject to TSXV review. The trading symbol for the Corporation’s shares will remain “FCF”.

About Founders Advantage Capital Corp.

FCF is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a passive and permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing majority interest acquisitions of cash flow positive middle-market privately held entities. FCF seeks to win mandates by appealing to the segment of the market which is not aligned with traditional Private Equity control, royalty monetizations or related structures. FCF’s innovative platform offers disproportionate incentives (contractually) for growth in favour of our partner entrepreneurs. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to maintain operational control with a long-term and passive partner.

The FCF Shares are listed on the TSX Venture Exchange under the symbol “FCF”.

The TSX Venture Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved of the contents of the news release.

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.

Caution concerning forward-looking information

This news release or documents referred to herein contain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws, including statements regarding the timing of the trading of the Corporation’s shares on a post-consolidation basis. These information and statements address future activities, events, plans, developments and projections. All statements, other than statements of historical fact, constitute forward-looking statements or forward-looking information. Such forward-looking information and statements are frequently identified by words such as “may”, “will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “estimate”, “intend” and similar terms, and reflect assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions, expectations of future developments and other factors which it believes to be reasonable and relevant. Forward-looking information and statements involve known and unknown risks and uncertainties that may cause actual results, performance and achievements to differ materially from those expressed or implied by the forward-looking information and statements and, accordingly, undue reliance should not be placed thereon. Risks and uncertainties that may cause actual results to vary include, the failure to obtain necessary regulatory approval and other third party approvals and consents, as well as other risks and uncertainties which are more fully described in our annual and quarterly Management’s Discussion and Analysis and in other filings made by us with Canadian securities regulatory authorities and available at www.sedar.com. The Corporation disclaims any obligation to update or revise any forward-looking information or statements except as may be required by applicable law.

FCF Capital Inc. Signs Purchase Agreement to Acquire a Majority Interest in Dominion Lending Centres

CALGARY, ALBERTA–(Marketwired – May 13, 2016) –

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

FCF Capital Inc. (TSX VENTURE:FCF) (the “Corporation” or “FCF“) is pleased to announce that it has entered into an arm’s length purchase agreement (the “Purchase Agreement“) pursuant to which it will acquire a 60% majority interest (the “Transaction“) in the Dominion Lending Centres group of companies (“DLC“). After completion of the Transaction, the current owners of DLC, comprised of Gary Mauris, Christopher Kayat and certain other minority shareholders (the “Founders“) will retain a 40% interest in DLC and will continue to manage the day-to-day business and operations of DLC. The Founders will benefit from FCF’s innovative ownership structure that incentivizes long-term free cash flow and earnings growth.

DLC is Canada’s fastest growing national mortgage brokerage and leasing company with more than 5,000 mortgage professionals spanning the country. Stephen Reid, Chief Executive Officer of FCF commented: “FCF is delighted that the acquisition of a majority interest in DLC could form FCF’s first investment under its new investment thesis. DLC represents excellence in the mortgage brokerage and leasing industry and our majority interest in DLC provides our shareholders with an opportunity to participate in this success story. We believe DLC’s highly committed and motivated management team will continue to grow the DLC brand.”

Transaction Highlights

The aggregate consideration payable by FCF under the Purchase Agreement is $73,987,788 and will be satisfied by the issuance of 71,428,572 class A common shares of the Corporation (the “FCF Shares“) at an ascribed price of $0.175 per FCF Share and a cash payment of $61,487,788. In the event that the Corporation’s proposed share consolidation (the “Consolidation“) of fifteen (15) FCF Shares on a pre-consolidation basis for every one FCF Share on a post-consolidation basis is approved at the Corporation’s annual and special meeting of shareholders to be held on May 16, 2016 and implemented prior to the closing of the Transaction, then an aggregate of 4,761,905 FCF Shares will be issued at closing. The cash portion of the purchase price will be funded by FCF’s cash on hand, the net proceeds from the Corporation’s recently completed offering of subscription receipts (the “Subscription Receipts“), and a $20 million demand loan facility (the “Loan Facility“) provided by Bridging Finance Inc. (“Bridging“).

In connection with entering into the Purchase Agreement, FCF has paid to DLC a deposit in the amount of $2.1 million, which will be credited to the cash portion of the purchase price at closing, and which may be released to DLC in the event the Transaction does not close by the outside date of July 29, 2016 due to a breach by FCF of its representations or covenants contained in the Purchase Agreement. In the event the approval of FCF shareholders to the Transaction is required to be obtained and is not obtained, FCF will forfeit to DLC $1 million of the deposit.

Immediately prior to the completion of the Transaction, each Subscription Receipt will be automatically exercised into one FCF Share, subject to adjustment, without any further action required on the part of the holder. In the event the Consolidation is approved and implemented prior to closing of the Transaction, then holders of Subscription Receipts will receive one FCF Share for every fifteen (15) Subscription Receipts held. The FCF Shares issuable on conversion of the Subscription Receipts will be subject to a hold period until August 15, 2016.

Following closing, the business of DLC will be overseen by a combined board of directors, consisting of Gary Mauris, Christopher Kayat and three nominees of FCF, initially Stephen Reid, Ron Gratton and James Bell.

Completion of the Transaction is subject to a number of conditions, including the approval of the TSX Venture Exchange. The Transaction is expected to close before June 30, 2016, subject to an outside date of July 29, 2016.

The FCF Shares issued as partial consideration for the Transaction will be subject to a four-month hold period in accordance with applicable securities laws.

Financial Highlights

The Transaction has been structured to provide FCF with 60% of the first $14.6 million of annual distributions (the “Annual Threshold“) paid by DLC to its securityholders, with the Founders receiving 40% of such Annual Threshold. The Annual Threshold was fixed based on the anticipated 2016 cash flow for DLC based on current information available to the parties, however, all cash distributions by DLC to its securityholders are subject to Board approval. To the extent that any distributions are paid in a year in excess of the Annual Threshold, Founders who remain active in the business will receive 70% of such excess distributions, with FCF receiving the remaining 30% of such excess distributions. In addition, with respect to any liquidity event, the net proceeds of disposition will be allocated amongst FCF and the Founders based upon their proportionate shares of distributions received as at the date of the liquidity event. As a result, the Transaction provides strong incentives for management to pursue continued free cash flow and earnings growth.

The following table provides a summary of certain selected historical consolidated financial data for DLC for the years ended December 31, 2015 and 2014. The information set forth below is only a summary and is not necessarily indicative of future results of operations of DLC.

Years Ended December 31(1)
2015 2014
(in thousands)
Statement of Earnings Items
Revenues $26,938 $22,130
Earnings from operations $9,227 $7,778
Net earnings(2) $6,835 $5,863
EBITDA(3) $9,514 $8,148
(1) Financial data is compiled from the audited combined consolidated financial statements of Dominion Lending Centres Inc. and Dominion Lending Centres National Ltd. as at and for the years ended December 31, 2015 and 2014, prepared using Accounting Standards for Private Enterprises (ASPE). Financial data as presented does not include financial data relating to two companies in which indirect 60% interests will be acquired by FCF, consisting of Dominion Lending Centres Commercial Inc. and NA Auto Pilot Media Inc., which are not material. Also does not include financial data relating to the business of Mortgage Architects, which was acquired by DLC effective December 31, 2015.
(2) DLC is having audited combined consolidated financial statements prepared for the years ended December 31, 2015 and 2014, prepared using International Financial Reporting Standards (IFRS). The treatment of certain items are different under IFRS than ASPE, and accordingly, the net earnings of DLC under IFRS may be different than under ASPE.
(3) EBITDA, or earnings before interest, income tax, depreciation and amortization, is a non-IFRS item as it does not have a standardized meaning under IFRS. Management of FCF uses EBITDA as a performance and valuation measure. EBITDA is not a substitute for, and should be used in conjunction with, IFRS financial measures. Other companies may calculate EBITDA differently and FCF cautions that EBITDA as calculated above may not be comparable to EBITDA as calculated by other issuers. EBITDA is reconciled to “Net earnings”, an IFRS measure, as follows:
Years Ended December 31
2015 2014
(in thousands)
Net earnings $6,835 $5,863
Plus: Interest on long-term debt 199 279
Plus: Income taxes 2,399 1,915
Plus: Amortization expense 81 91
EBITDA $9,514 $8,148

Loan Facility

In connection with the Transaction, FCF has secured from Bridging (an arm’s length party) the Loan Facility in an amount of up to $20 million. The Loan Facility has a term of one year, however, the Loan Facility may be repaid by FCF at any time on 105 days’ notice to Bridging. The Loan Facility bears an interest rate equal to Bank of Montreal prime rate plus 9.3% per year and is secured by a pledge of FCF’s interest in DLC as well as a general security agreement over FCF’s assets. Following closing of the Transaction, FCF anticipates replacing the Loan Facility with a longer term credit facility with a bank or similar lender.

About DLC

DLC group of companies is Canada’s leading and largest mortgage brokerage with $33 billion in funded mortgages in 2015. DLC group of companies operates through three main subsidiaries, Dominion Lending Centres, Mortgage Centre Canada and Mortgage Architects and has operations in all 13 provinces and territories. DLC group of companies’ extensive network includes over 5,000 agents, 325 franchises and 650 locations. Headquartered in British Columbia, DLC group of companies was founded in 2006 by Gary Mauris and Chris Kayat.

Gary Mauris is the co-founder and President & CEO of Dominion Lending Centres; CEO of Mortgage Centre Canada; and Chairman of Mortgage Architects. Together, these companies account for almost 35% of all consumer mortgages in Canada. Gary is a serial entrepreneur, having sold two prior companies to the public market. Gary has been recognized as a finalist for the Ernst & Young Entrepreneur of the Year in 2011 and earned the 2016 Tri-Cities Chamber of Commerce Business Leader of the Year. His companies have also won multiple industry awards and have been recognized by Profit Magazine as among Canada’s fastest growing companies. As a business leader, Gary is called upon to share his views with media throughout Canada; as part of the 2011 Pre-budget Consultation process with the Federal Minister of Finance at the time, Mr. Jim Flaherty; and selected to be part of CBC’s “Face the Nation” in 2016 and have an open and frank discussion with Prime Minister Justin Trudeau on a variety of economic topics. Gary has led multiple socially conscious initiatives as the co-founder and President of the I AM SOMEONE Ending Bullying Society and recently co-founded “Bikes for Kids”, a National program that collects new bicycles for underprivileged children across Canada.

Chris Kayat is the co-founder and Executive VP of Dominion Lending Centres and is also an owner and Director of Mortgage Centre Canada (MCC) and Mortgage Architects. Prior to DLC and MCC, Chris was the largest Royal LePage owner in Western Canada by market share and overall agent count. Chris and his wife Kristy Kayat purchased then-bankrupt Royal LePage franchises, and together successfully grew the businesses, and sold them to Royal LePage Corporate in 2014 to focus on DLC Group. Before acquiring his real estate companies in 1997, Chris was one of the most productive realtors in British Columbia. While owning his real estate business, Chris owned and operated a productive mortgage brokerage which became DLC’s first franchise. Chris has undertaken many community and social initiatives, such as co-founding “Bikes for Kids” and serving as the President of the North Coquitlam United Soccer Club.

About FCF Capital Inc.

FCF is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a passive and permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing majority interest acquisitions of cash flow positive middle-market privately held entities. FCF seeks to win mandates by appealing to the segment of the market which is not aligned with traditional Private Equity control, royalty monetizations or related structures. FCF’s innovative platform offers disproportionate incentives (contractually) for growth in favour of our partner entrepreneurs. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to maintain operational control with a long-term and passive partner.

The FCF Shares are listed on the TSX Venture Exchange under the symbol “FCF”.

For further information please refer to the Corporation’s website at www.fcfcapital.ca.

The TSX Venture Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved of the contents of the news release.

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.

Not an Offering under US Securities Laws

The FCF Shares that will be issued in connection with the Transaction have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Caution concerning forward-looking information

This news release or documents referred to herein contain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws, including statements regarding the timing of closing of the Transaction, the Annual Threshold amount being the anticipated cash flow for DLC for 2016, the intended replacement of the Loan Facility at a later date, the future performance of DLC and the anticipated effects of the Mortgage Architects acquisition on the historical financial results of DLC had such acquisition been included fully in DLC’s financial results for the year ended December 31, 2015. These information and statements address future activities, events, plans, developments and projections. All statements, other than statements of historical fact, constitute forward-looking statements or forward-looking information. Such forward-looking information and statements are frequently identified by words such as “may”, “will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “estimate”, “intend” and similar terms, and reflect assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions, expectations of future developments and other factors which it believes to be reasonable and relevant. Forward-looking information and statements involve known and unknown risks and uncertainties that may cause actual results, performance and achievements to differ materially from those expressed or implied by the forward-looking information and statements and, accordingly, undue reliance should not be placed thereon. Risks and uncertainties that may cause actual results to vary include, the failure to obtain necessary shareholder, regulatory and other third party approvals and consents, the satisfaction or waiver of all closing conditions in the Purchase Agreement by each of the parties thereto, general economic, market and business conditions, risks associated with the Canadian housing sector, fluctuations in interest rates, housing demand in the markets in which DLC and its franchisees operate, DLC’s ability to renew and expand upon its franchise arrangements, as well as other risks and uncertainties which are more fully described in our annual and quarterly Management’s Discussion and Analysis and in other filings made by us with Canadian securities regulatory authorities and available at www.sedar.com. FCF disclaims any obligation to update or revise any forward-looking information or statements except as may be required by applicable law.

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