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Founders Advantage Capital Corp. Provides Update and Increases 2017 Guidance

CALGARY, ALBERTA–(Marketwired – May 18, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FAC”) is pleased to report the following key performance indicators for its investee entities for the three months ended March 31, 2017. The Corporation anticipates its quarterly financial statements and related management’s discussion and analysis will be filed on May 29, 2017:

Dominion Lending Centres Limited Partnership (“DLC”)

  • Total revenues for the three months ended March 31, 2017 were $7.3 million, up 17.8% from the same quarter in the prior year (March 31, 2016 – $6.2 million);
  • Total funded mortgage volumes were $6.77 billion, up 11.2% from the same quarter in 2016 (March 31, 2016 – $6.1 billion);
  • Total number of brokers as at March 31, 2017 was 5,300, compared to 5,001 as at March 31, 2016 (an increase of 6.0%); and
  • Total number of franchisees as at March 31, 2017 was 469, compared to 424 as at March 31, 2016 (an increase of 10.6%).

Club16 Limited Partnership (“Club16”)

  • Total revenues for the three months ended March 31, 2017 were $5.47 million, up 9.2% from the same quarter in the prior year (March 31, 2016 – $5.0 million); and
  • Total number of members as at March 31, 2017 was 80,296, compared to 76,554 as at March 31, 2016 (an increase of 4.9%).

Impact Radio Accessories (“Impact”)

  • The acquisition of a 52% interest in Impact closed on March 1, 2017, part-way through the quarter ending March 31, 2017 (only 31 days of Impact results will be included in the Corporation’s quarterly financial statements); and
  • Total revenues for the three months ended March 31, 2017 were $2.4 million, consistent with the total revenues from the same quarter in the prior year.

Increase to 2017 Guidance

The Corporation is increasing its 2017 guidance relating to its proportionate interest of anticipated investee annual adjusted EBITDA to a range of $19.5 million – $20.7 million (being an increase of $2.5 million from the guidance of $17.0 million – $18.0 million released on January 24, 2017). The above guidance assumes FAC ownership for a full financial year and is prior to FAC’s corporate expenses, including G&A. Further, the above guidance does not reflect any additional acquisitions that FAC intends on completing in 2017.

As at the date hereof, the Corporation has an aggregate of 38.1 million class A common shares issued and outstanding.

Non-IFRS measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before non-cash items such as share-based payments and losses recognized on the sale of investments, and any unusual non-operating one-time items such as corporate start-up costs. Readers are cautioned that EBITDA and adjusted EBITDA should not be construed as a substitute or an alternative to applicable generally accepted accounting principle measures as determined in accordance with IFRS.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive middle-market privately held entities. The Corporation 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 investees. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to continue managing the business while partnering with a long-term partner.

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

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

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.

Cautionary Statement Regarding Forward-Looking Financial Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • The Corporation’s interest of anticipated investee annual EBITDA for 2017; and
  • That the Corporation expects to complete additional acquisitions in 2017.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • The Corporation being able to source and negotiate transactions on acceptable terms and in a timely manner;
  • That the Board of Directors for each of the investee entities resolves to distribute cash as expected; and
  • That the business of DLC, Club16 and Impact will not suffer any material adverse changes.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • The adequacy of the Corporation’s existing resources to complete additional potential transactions;
  • The return for any acquisition not being as expected by the Corporation post-closing; and
  • Incremental risks associated with any additional investee company, as well as the risks associated with the industries in which additional investees operate.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Announces Fiscal 2016 Results; Provides Update on Investees

CALGARY, ALBERTA–(Marketwired – May 1, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to report its financial results for the fifteen months ended December 31, 2016 (“fiscal 2016”). The comparative period is the year ended September 30, 2015 (“fiscal 2015”). Note that during fiscal 2016, the Corporation changed its year end from September 30 to December 31. As a result, the Corporation is reporting a one-time, fifteen-month transition year, covering the period of October 1, 2015 to December 31, 2016. All results are presented in Canadian dollars. Readers should refer to the audited annual consolidated financial statements and management discussion and analysis (“MD&A”) for the fifteen months ended December 31, 2016, which are available on SEDAR at www.sedar.com and on the Corporation’s website at www.advantagecapital.ca.

“2016 was an exciting inaugural year for the corporation,” stated Stephen Reid, President and Chief Executive Officer of the Corporation. “In less than ten months, we raised over $100 million in capital and closed two investments in defensive industries that are generating strong free cash flow. Our momentum continued into Q1 2017 with a third acquisition closing post year-end which further diversified our investment portfolio. We are excited about the growth opportunities for each of our investee partners and are confident 2017 will be another strong year. 2016 was a year dedicated to laying a strong foundation for continued success in executing our business plan. During 2017, we intend on continuing to diversify our investment portfolio and execute our long-term business strategy to partner with exceptional founders operating in growing and defensive industries with high free cash flow.”

With recent turbulence in the Canadian mortgage industry, the Corporation is pleased to report that we do not anticipate that Dominion Lending Centres Limited Partnership (“DLC”) will be adversely affected from such events. DLC has over 200 lending partners with the ability to shift volumes when and if necessary. Further, DLC’s primary business is the franchising of mortgage brokerage services (it is not a lender) and therefore does not bear any direct underwriting nor credit risk. Origination volumes are diversified across the country in every province and territory with over 5,000 brokers and 700 locations. DLC continues to exceed our expectations as Canadians continue to rely on mortgage brokers to place their mortgages with financial institutions.

Please see the Overview and Outlook of Investees section for performance details on each of our investees and Outlook for 2017.

Fiscal 2016 Highlights

  • February 3: The Corporation announced the agreement to acquire Advantage Investments (Alberta) Ltd. (“Advantage Investments”), which resulted in the Corporation changing its business strategy and the adoption of a new acquisition-oriented investment model; transaction closed on February 23. This change in business plan has resulted in significantly different financial results compared to fiscal 2015.
  • April 14: Completed brokered and non-brokered private placement of subscription receipts for gross proceeds of $28.8 million.
  • May 13: Announced the agreement to acquire a 60% interest in DLC for $61.4 million cash consideration and 4,761,902 common shares; transaction closed on June 3.
  • July 6: Completed brokered bought deal and non-brokered private placement of common shares for gross proceeds of $33.3 million.
  • July 19: Entered into a commitment letter with ATB for a Senior Credit Facility of $22.0 million, which facility was subsequently renegotiated in December 2016 and March 2017.
  • November 2: Announced the agreement to acquire a 60% interest in Club16 Limited Partnership (“Trevor Linden Club16” or “Club16”) for $22.0 million; transaction closed on December 20.
  • November 4: Announced the implementation of a dividend policy for 2017, whereby the Corporation intends to pay an annual dividend of $0.05 per common share (payable quarterly). The first quarterly dividend ($0.0125 per common share) was declared on March 15, 2017 to shareholders of record as at March 31, 2017.
  • December 14: DLC acquired a 70% interest in Newton Connectivity Systems Inc. (“Newton”, formerly Marlborough Stirling Canada Limited) for an aggregate purchase price of $5.5 million.
  • December 22: Announced the agreement to acquire a 52% interest in Impact Radio Accessories (“Impact”) for $12.0 million; transaction closed on March 1, 2017.

Highlights Subsequent to Year End

  • March 1, 2017: Completed the previously announced acquisition of a 52% interest in Impact. This acquisition further diversifies the Corporation’s investment portfolio of companies operating in defensive, recession-resistant industries.
  • March 1, 2017: Concurrent with the acquisition of Impact, the Corporation entered into an amended credit facility with ATB to increase its revolving credit facility from $17.0 million to $28.0 million and to cancel its previously existing non-revolving $5.0 million credit facility. As such, the Corporation increased its available borrowings from $22.0 million to $28.0 million. The Corporation used its available borrowings to fund the acquisition of Impact.
Selected Consolidated Financial Highlights
(in thousands of Canadian dollars, except per share amounts)
Three months ended December 31, Fiscal(1)
2016 2015 (2) 2016 2015
Revenue $ 9,277 $ $ 22,938 $
Loss from operations $ (1,606 ) $ (658 ) $ (6,337 ) $ (3,282 )
Adjusted EBITDA(3) $ 998 $ (574 ) $ 3,233 $ (1,222 )
Cash generated by operating activities $ (253 ) $ 28 $ (3,440 ) $ (3,443 )
Net (loss) income attributable to shareholders $ (2,410 ) $ (1,116 ) $ (9,794 ) $ 35,709
Basic (loss) income per share $ (0.07 ) $ (0.11 ) $ (0.42 ) $ 3.61
Diluted (loss) income per share $ (0.07 ) $ (0.11 ) $ (0.42 ) $ 3.41
Dividends declared (4) $ $ $ $
Notes:
1. As a result of the change in the Corporation’s business plan, effective February 23, 2016, and the change in year-end from September 30 to December 31, the comparative period is not a direct indication of comparable results.
2. As a result of the change in year-end from September 30 to December 31, the fifteen months ended December 31, 2016 does not have a directly comparable prior year fiscal quarter. To facilitate calendar year over year comparison, the three months ended December 31, 2015 is shown as the comparable period.
3. See “Non-IFRS measures” below for the definition of adjusted EBITDA and cautions related thereto.
4. The Corporation announced a dividend policy in November 2016, with the first quarterly dividend being declared on March 15, 2017 to shareholders of record as at March 31, 2017.

Review of Fiscal 2016 Selected Consolidated Financial Results

Consolidated revenues were $22.9 million, compared to $nil during fiscal 2015, as a result of the acquisitions made during fiscal 2016. Specifically, as the acquisition of DLC closed on June 3, 2016, a total of 212 days of DLC’s financial information was consolidated into the Corporation’s financial statements. Further, as the acquisition of Trevor Linden Club16 closed on December 20, 2016, a total of 12 days of Trevor Linden Club16’s financial information was consolidated into the Corporation’s financial statements. Please see “Overview and Outlook of Investees” section below for additional details on investee performance.

Consolidated adjusted EBITDA was $3.2 million, compared to negative adjusted EBITDA of $1.2 million during fiscal 2015. This increase over the prior year is significantly due to the acquisitions made during fiscal 2016, which are generating gross profit of $18.3 million. This additional gross profit was partially offset by higher general and administrative expenses of $12.6 million, compared to $2.0 million during fiscal 2015. This increase is a direct result of consolidating the financial results of our investees into the Corporation’s financial statements, as well as higher salaries, professional fees and travel costs associated with the change in business plan.

Consolidated net loss attributable to shareholders was $9.8 million, compared to net income of $35.7 million during fiscal 2015. This variance is primarily driven by the receipt of $39.6 million during the prior year period related to an arbitration settlement regarding certain historic mining concessions that related to the Corporation’s previous business plan. This variance over the prior year is further described by the inclusion of DLC’s financial results during fiscal 2016, partially offset by higher corporate office costs related to a number of items including, salaries, acquisition costs, amortization of intangible assets, finance expense on loans and borrowings and the issuance of share options that were incurred as a result of the change in the Corporation’s business plan.

Working Capital

As at December 31, 2016, the Corporation had a consolidated cash position of $7.8 million and a net working capital deficiency of $19.4 million, primarily resulting from $25.1 million in demand credit facilities being classified as current liabilities as required by International Financial Reporting Standards (“IFRS”). Management plans to renegotiate current credit facilities or obtain additional financing to provide the Corporation with sufficient capital to meet its obligations as they become due, and is forecasting positive cash flows from operating activities during the 2017 fiscal year, which will provide the required resources to fund ongoing operations.

Overview and Outlook of Investees

In addition to the information provided in the fiscal 2016 audited consolidated financial statements and associated MD&A, we would like to note the following additional information regarding our investees.

DLC

The Corporation acquired its 60% interest in DLC on June 3, 2016. At the time of acquisition, DLC’s adjusted trailing twelve month EBITDA was $14.6 million. The adjusted EBITDA for the twelve months ended December 31, 2016 was $16.4 million, representing 12.3% adjusted EBITDA growth since completion of the acquisition.

Overall, we are pleased with DLC’s results for fiscal 2016. In addition to the financial information in the audited consolidated financial statements and associated MD&A, we note DLC’s funded mortgage volumes increased on a quarterly and annual basis, which highlights the defensive nature of DLC’s business. Funded mortgage volumes for Q1 2016, Q2 2016, Q3 2016 and Q4 2016 each grew by 13.3%, 13.0%, 12.2% and 10.5% over their respective 2015 comparable quarter. Based on these historic growth trends, we expect DLC’s funded mortgage volumes to continue growing during 2017.

DLC’s business tracks the seasonality of home purchases in Canada. Based on the seasonality of DLC’s operations, readers are cautioned not to weight quarterly financial data equally for all quarters. More specifically, the following table outlines the historic ranges of funded mortgage volumes on a quarterly basis:

Q1 14.2% – 18.8%
Q2 24.2% – 28.1%
Q3 29.6% – 32.4%
Q4 24.0% – 27.7%

Some of DLC’s expenses are also subject to seasonality. More specifically, certain advertising campaigns and promotional events occur at varying times throughout the fiscal year, which impact adjusted EBITDA disproportionately compared to seasonal revenue fluctuations.

In December 2016, DLC acquired a 70% interest in Newton, which is one of two approved connectivity platforms between Canadian lenders and mortgage brokers. In consideration for the Newton services, Canadian lenders pay Newton fees based on the funded volume of mortgages. DLC anticipates it can increase Newton’s market share by having more DLC mortgage brokers use the Newton platform. It is expected that the financial results of Newton will further grow DLC’s revenues and adjusted EBITDA.

DLC expects to continue to expand its network of mortgage brokers and franchisees by focusing on their recruiting initiatives, as evidenced by DLC’s continued quarter over quarter growth in funded mortgage volumes. As a result of these growth initiatives, we anticipate DLC having steady growth in its funded mortgage volumes in 2017, resulting in steady growth in revenues and adjusted EBITDA.

The Corporation is receiving $540,000 per month in after-tax cash distributions from DLC.

Trevor Linden Club16

The Corporation acquired its 60% interest in Trevor Linden Club16 on December 20, 2016, which had adjusted trailing twelve month EBITDA of approximately $6.1 million at that time.

We are excited by the growth in Trevor Linden Club16’s business during 2016 as it continued to increase the average number of members on a quarterly basis. The average number of members for Q1 2016, Q2 2016, Q3 2016 and Q4 2016 each grew by 16.7%, 19.2%, 14.9% and 9.2% over their respective 2015 comparable quarter. Club16 started 2016 with approximately 71,000 members and ended the year with approximately 78,000 members. Based on these historic growth trends, we expect Club16’s membership base to continue growing during 2017. Subsequent to December 31, 2016, Club16’s total membership exceeds 80,000 members, a new milestone for the company. Additionally, Club16 anticipates continued growth in its personal training services, which are a relatively new product offering. These services are expected to add to Trevor Linden Club16’s revenues and adjusted EBITDA.

Trevor Linden Club16 expects to continue adding new members by increasing total square footage of gym space via opening a new location and expanding one of the current locations during 2017. It is anticipated that these initiatives will have a positive impact on 2017 fitness club membership revenues and adjusted EBITDA.

The Corporation is receiving $270,000 per month in pre-tax cash distributions from Trevor Linden Club16. The Corporation offsets this income with its corporate general and administrative expenses to reduce the income taxes payable to nil.

Impact

The Corporation acquired its 52% interest in Impact on March 1, 2017, which had adjusted trailing twelve month EBITDA of approximately $3.6 million at that time.

Impact expects to increase sales by adding distributors and anticipates that its products will gain additional exposure as the distributors expand their own businesses (via organic and acquisition growth) which will result in more distributor representatives selling the Impact products. It is anticipated that these initiatives will have a positive impact on 2017 revenues and adjusted EBITDA.

The Corporation anticipates receiving $104,000 per month in after-tax cash distributions from Impact, commencing May 2017.

Corporate Outlook

Our team continues to market our investment strategy across North America and receives numerous inbound proposals from founders and their advisors each week. We have a robust pipeline of potential transactions across Canada and the U.S. that we continue to review and assess. Our 2017 key financial priorities include:

  • Continue to focus on partnering with premium founder-run businesses operating in defensive industries with stable historical adjusted EBITDA, significant free cash flows, and attractive growth prospects;
  • Maximizing shareholder value through on-going monitoring of our operating subsidiaries and identifying opportunities for growth and improved efficiencies; and
  • Identifying various sources of capital to finance future acquisition opportunities.

The implementation of the business plan during fiscal 2016 and the achievements since then have created a platform for growth and acquisition opportunities during 2017. As a result of the acquisitions during fiscal 2016 and Impact in March 2017, the Corporation expects its proportionate share of 2017 pro forma anticipated investee adjusted EBITDA to be $17.0 – $18.2 million.

Executive Appointment
The Corporation is pleased to announce that Michelle Chambers has been appointed Senior Vice-President, Finance. Ms. Chambers previously served as Corporate Controller of the Corporation. Ms. Chambers is a Chartered Professional Accountant with several years’ experience in financial accounting and reporting for multi-jurisdictional entities, auditing and management reporting. Prior to joining FA Capital, Ms. Chambers worked in a number of financial accounting lead roles, including most recently with Talisman Energy and Total E&P Canada Ltd.

Non-IFRS measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before non-cash items such as share-based payments and losses recognized on the sale of investments, and any unusual non-operating one-time items such as corporate start-up costs. Readers are cautioned that EBITDA and adjusted EBITDA should not be construed as a substitute or an alternative to applicable generally accepted accounting principle measures as determined in accordance with IFRS.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a permanent investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive middle-market privately held entities. The Corporation 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 investees. This unique platform is designed to appeal to entrepreneurs who believe in the growth of their businesses and who want the added ability to continue managing the business while partnering with a long-term 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.

Cautionary Statement Regarding Forward-Looking Financial Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “intend”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • the Corporation’s investee entities having another strong year during 2017;
  • the Corporation expects to complete additional acquisitions in 2017;
  • the Corporation plans to obtain additional financing either through debt or equity;
  • the Corporation is forecasting positive cash flows from operating activities;
  • the Corporation expects DLC’s funded mortgage volumes will continue growing;
  • DLC anticipates it can increase Newton’s market share;
  • DLC expects to continue to expand its network of mortgage brokers and franchisees;
  • the Corporation expects Trevor Linden Club16’s membership base to continue growing;
  • Trevor Linden Club16 anticipates continued growth in its personal training services;
  • Trevor Linden Club16 expects to continue adding new members;
  • Impact expects to increase sales by adding distributors;
  • Impact expects its products will gain additional exposure;
  • Impact will distribute cash to the Corporation as expected or at all;
  • The 2017 pro forma anticipated investee adjusted EBITDA; and
  • The Corporation’s ability to win potential acquisitions over competing sources of investment, including, but not limited to, private equity, royalty funds or related structures.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • The Corporation being able to source and negotiate transactions on acceptable terms and in a timely manner;
  • The Corporation being able to source additional financing on acceptable terms and in a timely manner;
  • That the Board of Directors for each of the investee entities resolves to continue distributing cash as expected; and
  • That the business of DLC, Trevor Linden Club16 and Impact will not suffer any material adverse changes.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • The adequacy of the Corporation’s existing resources to complete additional potential transactions;
  • The return for any acquisition not being as expected by the Corporation post-closing; and
  • Incremental risks associated with any additional investee company, as well as the risks associated with the industries in which additional investees operate.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Declares Quarterly Dividend

CALGARY, ALBERTA–(Marketwired – March 15, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to announce that its Board of Directors has declared a quarterly cash dividend on its common shares of $0.0125 per common share. The dividend will be payable on April 12, 2017 to shareholders of record as at March 31, 2017. The shares will commence trading on an ex-dividend basis on March 29, 2017.

The Corporation advises that the dividend to be paid on the common shares is designated as an “eligible dividend” for Canadian income tax purposes.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Founders Advantage Capital Corp. Completes Acquisition of a Majority Interest in IMPACT Radio Accessories; Announces Increase to ATB Credit Facility

CALGARY, ALBERTA–(Marketwired – March 1, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to announce that it has completed its previously announced acquisition of a 52% majority interest (the “Transaction”) in Cape Communications International Inc. (which operates as IMPACT Radio Accessories and is referred to herein as “IMPACT”) for a total cash purchase price of $12.0 million (the “Purchase Price”), subject to post-closing adjustments. The Transaction was completed between the Corporation, Keith Kostek, IMPACT’s President and founder, and Mr. Kostek’s related entities (collectively referred to herein as the “IMPACT Founders”).

IMPACT designs, manufactures, distributes and retails two-way radio accessories in the land mobile radio industry under the tradename IMPACT Radio Accessories and indirectly through its wholly-owned subsidiary, Threat4 Ltd. IMPACT sells through over 1,000 dealers throughout North America, with its products being used in the field by some of the most recognized names in public safety, military, security, retail, and hospitality (including the RCMP, NYPD, GAP, the Bellagio, Wynn Resorts, Yahoo and Google). More information about IMPACT can be found at www.impactcomms.com.

The Transaction provides the Corporation with 52% of after-tax annual cash distributions up to $2.96 million (the “Annual Threshold”) paid by IMPACT to its securityholders, with the IMPACT Founders receiving 48% of annual distributions up to such Annual Threshold. All cash distributions by IMPACT to its securityholders will be subject to Board approval and may be adjusted from time to time to pursue expansion or capital initiatives or other corporate purposes. To the extent that any cash distributions paid in a year are in excess of the Annual Threshold, the IMPACT Founders will receive 65% of such excess distributions, with the Corporation receiving 35% of such excess distributions.

At Closing, it is anticipated that IMPACT will have excess working capital of approximately $1.47 million (above the normal working capital for the business of approximately $3.1 million). The Corporation has agreed to pay the IMPACT Founders an additional $735,000 as a working capital adjustment within 6 months from the closing date.

As part of the Transaction, the Corporation has granted the IMPACT Founders the right to sell the Corporation an additional 22% of IMPACT for a fixed price of $5.1 million (the “Put Option”). The IMPACT Founders may elect to exercise the Put Option at any time between September 30, 2017 and March 31, 2018, provided the TTM EBITDA for IMPACT at the Put Option exercise date exceeds $4.0 million. The Corporation has 90 days to complete such acquisition if the Put Option is exercised. In the event the Put Option is exercised, the Corporation would hold a 74% interest in IMPACT and the IMPACT Founders would hold a 26% interest. Further, in the event the Put Option is exercised, the Corporation would be entitled to 74% of annual cash distributions up to the Annual Threshold and 65% of annual distributions above the Annual Threshold (with the IMPACT Founders entitled to 26% of annual distributions up to the Annual Threshold and 35% of annual distributions above the Annual Threshold).

On closing of the Transaction, the IMPACT board of directors was comprised of Keith Kostek, Stephen Reid and James Bell. For further information on the Transaction please refer to the Corporation’s press release dated December 22, 2016.

Keith Kostek, President and founder of Impact, commented: “As a founder and entrepreneur, the FA Capital model was a perfect fit for me as it allowed me to add a sophisticated partner, enjoy a partial liquidity event and receive a disproportionate share of IMPACT’s future growth. The IMPACT team is proud to have the Corporation as our majority shareholder and we look forward to building value for FA Capital’s shareholders.”

Stephen Reid, Chief Executive Officer of the Corporation, commented: “IMPACT is an excellent addition to our portfolio as it has a talented management team, a history of impressive revenue growth and strong free cash flow. IMPACT has earned its extensive customer list through quality products and industry leading service. We believe that IMPACT is well positioned to take advantage of the current geopolitical environment and the increased focus on public safety, military and security. It is my pleasure to welcome Keith and his team to the FA Capital family.”

Further, the Corporation is pleased to announce that it has entered into an amended credit facility with Alberta Treasury Branches to increase its revolving credit facility from $17.0 million to $28.0 million and to cancel its non-revolving $5.0 million credit facility. As such, the Corporation has increased its available borrowings from $22.0 million to $28.0 million. The Corporation used its available borrowings to fund the Transaction.

Toronto-based WCM Capital acted as exclusive corporate finance advisor to IMPACT, arranging the Transaction with the Corporation (for more information visit www.wcmcapital.ca). Toronto-based Wildeboer Dellelce LLP acted as legal advisor to IMPACT (for more information visit www.wildlaw.ca). Bennett Jones LLP, a national law firm, acted as legal advisor to Founders Advantage Capital Corp. (for more information visit www.bennettjones.com).

About IMPACT Radio Accessories

IMPACT, which was formed in 2002, is a world leader in the design and manufacture of unique radio communication products for mission critical public safety, military, security, retail and hospitality applications. Headquartered in British Columbia, with a distribution center in North Carolina, IMPACT has grown to be one of the largest aftermarket brands of two-way radio accessories in North America.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Founders Advantage Capital Corp. Reports on Transition Year; Outlines 2017 Investee Guidance; Provides Investee Updates; and Details on Analyst Coverage

CALGARY, ALBERTA–(Marketwired – Jan. 24, 2017) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FAC”) is pleased to provide the following corporate update following its first financial year with its new investment model and management team. The last twelve months have been transformational for the Corporation as it accomplished the following key milestones:

  • Adopted a new investment model and secured a new management team led by Stephen Reid;
  • Completed two (2) acquisitions and announced a third pending acquisition for aggregate consideration of $120 million;
  • Completed two (2) equity offerings for gross proceeds of $60 million;
  • Obtained a credit facility for $22 million with Alberta Treasury Branches;
  • Implemented a dividend policy commencing March, 2017; and
  • Research coverage initiated by three (3) investment dealers.

The Corporation’s President and Chief Executive Officer, Stephen Reid, commented: “In our first year of operations, our team accomplished many of our initial corporate objectives but we remain highly motivated to continue to execute on our business plan by completing additional accretive acquisitions.”

2017 Investee EBITDA Guidance

As previously announced, the Corporation has acquired a 60% interest in both Dominion Lending Centres (“DLC”) and Club16 Limited Partnership (“Club16”) and has announced its intention to acquire a 52% interest in Impact Communications (“Impact”) in March, 2017. The following table summarizes the 2017 anticipated annual EBITDA for the Corporation’s investees (all amounts set out below are considered forward-looking financial information and are subject to the cautionary statement included in this press release):

Investee FAC Interest Anticipated Investee EBITDA for 2017 FAC’s Interest of Anticipated Investee Annual EBITDA(1)
DLC 60% $18.0 million – $19.0 million $10.8 million – $11.4 million
Club16 60% $7.0 million – $7.5 million $4.2 million – $4.5 million
Impact 52% $4.0 million – $4.4 million $2.0 million – $2.3 million
Total $17.0 million – $18.2 million(2)
Note:
(1) The amounts shown reflect FAC’s ownership percentage multiplied by the investee’s anticipated annual EBITDA for 2017.
(2) Prior to FAC’s corporate expenses, including interest and G&A. Assumes FAC ownership for a full financial year.

In addition to focusing on investees with stable historical EBITDA and significant free cash flow generation, the Corporation intends on building a portfolio of investments in entities with expected annual organic growth exceeding 15%.

As DLC, Club16 and Impact have strong free cash flow generation, the Corporation intends on optimizing distributable cash from such investee entities in 2017.

Investee Update

On June 3, 2016, the Corporation acquired a 60% interest in DLC, the largest mortgage brokerage franchisor in Canada. For 2017, DLC intends on continuing to expand its network of mortgage brokers and franchisees as well as integrating Marlborough Stirling Canada (which it acquired a 70% interest in December, 2016) into its operations. DLC anticipates that its funded mortgage volumes will continue to increase in 2017 and expects its 2017 EBITDA to be approximately $18.0 million to $19.0 million.

On December 20, 2016, the Corporation acquired a 60% interest in Club16 which owns thirteen (13) fitness clubs in the Greater Vancouver area. For 2017, Club16 intends on transitioning one of its clubs to a larger location and also plans on expanding one of its clubs. Both of these initiatives are expected to have a positive impact on the number of Club16 memberships. Club16 anticipates that its membership revenues will continue to increase in 2017 and expects its 2017 EBITDA to be approximately $7.0 million to $7.5 million.

On December 22, 2016, the Corporation announced its intention to acquire a 52% interest in Impact, a manufacturer and distributor of two-way radios and accessories, which is expected to close in March, 2017. In the event the Impact transaction is completed, Impact is expected to have an annual EBITDA of approximately $4.0 million to $4.4 million.

The Corporation anticipates completing additional acquisitions in 2017. For additional information, please refer to the Investor Presentation available on the Corporation’s website at www.advantagecapital.ca.

Analyst Coverage

The Corporation is pleased to report that research coverage on FAC has been initiated by three institutions to date, including Desjardins Capital Markets (initiated coverage on November 28, 2016), Clarus Securities Inc. (initiated coverage on December 6, 2016) and Canaccord Genuity (initiated coverage on January 17, 2017). Copies of the reports can be obtained directly from the analysts and their contact details can be found on our website at www.advantagecapital.ca. Any opinions, estimates, or forecasts regarding the Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts, or predictions of FAC. The Corporation does not, by its reference herein, imply its endorsement of, or concurrence with, such information, conclusions, or recommendations.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a 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. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Non-IFRS Measures

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 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 the Corporation cautions that EBITDA as calculated above may not be comparable to EBITDA as calculated by other issuers.

Non-IFRS measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with IFRS, or other measures of financial performance calculated in accordance with IFRS. The Non-IFRS measures are unlikely to be comparable to similar measures presented by other issuers.

Cautionary Statement Regarding Forward-Looking Financial Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • The anticipated 2017 EBITDA for DLC, Club16 and Impact;
  • That the Corporation’s investee entities will have annual organic growth exceeding 15%;
  • That the Corporation expects to complete additional acquisitions in 2017;
  • That the acquisition of Impact will be completed as disclosed;
  • The Corporation’s ability to win potential acquisitions over competing sources of investment, including, but not limited to, private equity; and
  • That DLC, Club 16 and Impact will distribute cash to the Corporation as expected or at all.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • The Corporation being able to source and negotiate transactions on acceptable terms and in a timely manner;
  • That the Impact transaction closes as disclosed;
  • That the Board of Directors for each of the investee entities resolves to distribute cash as expected; and
  • That the business of DLC, Club16 and Impact will not suffer any material adverse changes.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • The Corporation not being able to complete the Impact transaction on acceptable commercial terms as contemplated;
  • The adequacy of the Corporation’s existing resources to complete additional potential transactions;
  • The return for any acquisition not being as expected by the Corporation post-closing; and
  • Incremental risks associated with any additional investee company, as well as the risks associated with the industries in which additional investees operate.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Announces Third Acquisition – Signs Letter of Intent to Acquire a 52% Interest in IMPACT Communications

CALGARY, ALBERTA–(Marketwired – Dec. 22, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FA Capital”) is pleased to announce that it has entered into a letter of intent to acquire a 52% majority interest (the “Transaction”) in IMPACT Communications (“IMPACT”) for a cash purchase price of $12.0 million, subject to closing adjustments. After completion of the Transaction, the current owner of IMPACT, Keith Kostek and certain of his affiliated entities (the “IMPACT Founders”), will retain a 48% interest in IMPACT and will continue to manage the day-to-day operations. Completion of the Transaction is subject to a number of conditions and is expected to close by March 31, 2017.

IMPACT, based in Kelowna, British Columbia, manufactures and distributes two-way radio accessories in the land mobile radio industry under the tradename IMPACT Radio Accessories and indirectly through its wholly-owned subsidiary, Threat4 Ltd. IMPACT sells through over 1,000 dealers throughout North America, with its products being used in the field by some of the most recognized names in public safety, military, security, retail, and hospitality. Management anticipates IMPACT will have unaudited trailing twelve month EBITDA (“TTM EBITDA”) of approximately $4.0 million on the closing date (see Non-IFRS Measures caution herein). More information about IMPACT can be found at www.impactcomms.com.

Stephen Reid, Chief Executive Officer of the Corporation, commented: “After reviewing over 200 potential investee entities across North America in 2016, we are delighted to find our third acquisition in Kelowna, BC. Keith and his team have built an excellent business based on product dependability and customer service. Given IMPACT’s potential for growth through additional customers and exciting new products, along with their diverse and extensive customer list, we feel IMPACT is a perfect fit for our investment model.”

Keith Kostek, founder of IMPACT, commented: “I am delighted to be partnering with FA Capital, and look forward to working together in the next stage of IMPACT’s growth. The FA team truly understands the unique aspects of an owner operated business, and their structure aligns well with my goals as a founder, and the changing needs of the business.”

The Transaction has been structured to provide the Corporation with 52% of after-tax annual cash distributions up to approximately $2.96 million (the “Annual Threshold”) paid by IMPACT to its securityholders, with the IMPACT Founders receiving 48% of annual distributions up to such Annual Threshold. The final Annual Threshold will be determined based on the TTM EBITDA for IMPACT less anticipated annual income tax payments. All cash distributions by IMPACT to its securityholders will be subject to Board approval and may be adjusted from time to time to pursue expansion or capital initiatives or other corporate purposes. To the extent that any cash distributions paid in a year are in excess of the Annual Threshold, the IMPACT Founders will receive 65% of such excess distributions, with the Corporation receiving 35% of such excess distributions. In addition, with respect to any liquidity event, the net proceeds of disposition will be allocated amongst the Corporation and the IMPACT Founders based upon their security holdings and adjusted for certain growth in cash distributions received as at the date of the liquidity event.

Following closing of the Transaction, IMPACT will have a combined board of directors consisting of Keith Kostek and two nominees of the Corporation. The Transaction will not be a “significant acquisition” for the Corporation as defined by applicable securities laws.

The Corporation intends to fund the Transaction primarily through available borrowings under its existing credit facility, subject to lender approval, and expects to apply for an increase to such facilities to fund any additional amount required.

As part of the Transaction, the Corporation has granted the IMPACT Founders the right to sell the Corporation an additional 22% of IMPACT for $5.1 million (the “Put Option”). The IMPACT Founders may elect to exercise the Put Option at any time between September 30, 2017 and March 31, 2018, provided the TTM EBITDA for IMPACT at the Put Option exercise date exceeds the TTM EBITDA for IMPACT as at the closing date for the initial Transaction. The Corporation has 90 days to complete such acquisition if the Put Option is exercised. In the event the Put Option is exercised, the Corporation would hold a 74% interest in IMPACT and the IMPACT Founders would hold a 26% interest. Further, in the event the Put Option is exercised, the Corporation would be entitled to 74% of annual cash distributions up to the Annual Threshold and 65% of annual distributions above the Annual Threshold (with the IMPACT Founders entitled to 26% of annual distributions up to the Annual Threshold and 35% of annual distributions above the Annual Threshold).

Toronto-based WCM Capital acted as exclusive corporate finance advisor to IMPACT, arranging the Transaction with the Corporation (for more information visit www.wcmcapital.ca ).

About IMPACT Communications

IMPACT is a world leader in the design and manufacture of unique radio communication products for mission critical public safety, military, security, retail and hospitality applications. Headquartered in the city of Kelowna, in the Okanagan Valley of British Columbia, with a distribution center in Wilmington, North Carolina, Impact has grown to be one of the largest aftermarket brands in North America.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Non-IFRS Measures

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 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 the Corporation cautions that EBITDA as calculated above may not be comparable to EBITDA as calculated by other issuers.

Non-IFRS measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with IFRS, or other measures of financial performance calculated in accordance with IFRS. The Non-IFRS measures are unlikely to be comparable to similar measures presented by other issuers.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • completion of the Transaction on the terms set out herein;
  • timing of closing of the Transaction;
  • the anticipated TTM EBITDA for IMPACT;
  • the Annual Threshold amount at the closing date;
  • the Corporation funding the Transaction with available borrowings;
  • the Corporation making application to increase its existing credit facility; and
  • the return on investment for the Corporation in the event the Annual Threshold is achieved.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • that the future performance of IMPACT will be consistent with past performance;
  • that all closing conditions will be satisfied or waived;
  • that the Corporation’s lender will approve the Transaction; and
  • that the parties will be able to successfully negotiate the definite agreements.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • the failure to obtain necessary approvals and consents to complete the Transaction;
  • the satisfaction or waiver of all closing conditions;
  • the Transaction will not yield the anticipated benefits to the Corporation; and
  • the risks and uncertainties applicable to the operation of IMPACT’s business generally.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Completes Acquisition of a Majority Interest in CLUB16 Trevor Linden Fitness and She’s FIT! Health Clubs

CALGARY, ALBERTA–(Marketwired – Dec. 20, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to announce that it has completed its previously announced acquisition of a 60% majority interest (the “Transaction”) in a limited partnership (“CLUB16 LP”) holding eight (8) Club16 Trevor Linden Fitness Clubs (“CLUB16”) and five (5) She’s FIT! Health Clubs (“She’s FIT!”) in the Vancouver and Lower Mainland area for a total cash purchase price of $20.5 million (the “Purchase Price”). The thirteen (13) fitness locations are collectively referred to herein as the “Fitness Clubs”. The Purchase Price is subject to adjustment within 90 days post-closing to adjust for any increase in the trailing twelve month normalized EBITDA for the Fitness Clubs as at the closing date above an agreed upon base amount.

Having a ten (10) year history, the thirteen (13) Fitness Clubs have over 78,800 memberships and appeal to a large segment of the fitness centre market with value pricing, high quality experience, and both ladies only and co-ed facilities. The management calculated unaudited trailing twelve month EBITDA for the Fitness Clubs as at October 31, 2016 was approximately $6.1 million, when normalized to add back various non-recurring items (see Non-IFRS Measures caution herein). More information about CLUB16 can be found at www.trevorlindenfitness.com.

After completion of the Transaction, the current owners of the Fitness Clubs, comprised of Trevor Linden, Chuck Lawson, Carl Ulmer and certain other minority shareholders (the “CLUB16 Founders”) will retain a 40% interest in CLUB16 LP and will continue to manage the day-to-day operations and continued growth. Following closing of the Transaction, the business of CLUB16 LP will be overseen by a corporate general partner having a combined Board consisting of Chuck Lawson, Carl Ulmer and three nominees of the Corporation (being Stephen Reid, Gary Mauris and James Bell).

The Transaction has been structured to provide the Corporation with 60% of the first $5.85 million of annual distributions (the “Annual Threshold”) paid by CLUB16 LP to its securityholders, with the CLUB16 Founders receiving 40% of such Annual Threshold. All cash distributions by CLUB16 LP to its securityholders will be subject to Board approval of the general partner and may be adjusted from time to time to pursue expansion or capital initiatives or other corporate purposes. To the extent that any distributions are paid in a year in excess of the Annual Threshold, the CLUB16 Founders will receive 70% of such excess distributions, with the Corporation receiving 30% of such excess distributions.

For further information on the Transaction please refer to the Corporation’s press release dated November 2, 2016.

Trevor Linden, former professional hockey player and co-founder of CLUB16, commented: “We are excited about the partnership with FA Capital to further grow the CLUB16 membership base and brand.” Chuck Lawson, co-founder of CLUB16 and founder of She’s FIT! added: “We are very pleased to complete this transaction as we believe FA Capital’s management’s depth, reputation and track record will help accelerate the future growth and success of Club16. We look forward to further expanding our brand across the province with our new partner.”

Stephen Reid, Chief Executive Officer of the Corporation commented: “The completion of our second acquisition further proves out our unique model. The partnership with Club16 is a significant step in advancing our business plan of partnering with premium mature defensive companies with historical strong growth and free cash flow generation.”

About CLUB16 Trevor Linden Fitness

CLUB16 and She’s FIT! believes its business model is unique and revolutionary in the fitness industry and one of the many reasons for CLUB16’s growth. In management’s view, the biggest barrier to joining a health club used to be high membership fees, fixed contracts and the perception that you must be fit to go to a health club. Removing these barriers with “no contract memberships”, “affordable start up fees” and “value priced dues” as well as monitoring health clubs for negative issues that make the average person uncomfortable in the fitness/health club environment, allows the Fitness Clubs to be more accessible and affordable to everyone. In pursuing their business model, management feels CLUB16 and She’s FIT! can play a large part in helping more people improve their health and their lives.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Non-IFRS Measures

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 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 the Corporation cautions that EBITDA as calculated above may not be comparable to EBITDA as calculated by other issuers.

Non-IFRS measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with IFRS, or other measures of financial performance calculated in accordance with IFRS. The Non-IFRS measures are unlikely to be comparable to similar measures presented by other issuers.

DLC Enters Letter of Intent to Acquire Marlborough Stirling Canada Limited

CALGARY, ALBERTA–(Marketwired – Dec. 14, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FA Capital”) is pleased to announce that its subsidiary Dominion Lending Centres (“DLC”) has entered into a letter of intent to acquire all of the securities of Marlborough Stirling Canada Limited (“MSC”) for an aggregate purchase price of $5.5 million. The acquisition is expected to close on or about December 15, 2016. It is currently contemplated that the securities of MSC will be acquired by a new corporation (“Acquireco”) which is 70% owned by DLC and 30% owned by a third-party. Funding to complete the acquisition will be provided by DLC and the third-party partner proportionate to their shareholdings in Acquireco. FA Capital owns a 60% interest in DLC.

MSC provides software and services to the Canadian mortgage lending industry under the following three product lines: MorWEB; Omiga; and Optimus. MorWEB offers web-based mortgage origination functionality designed specifically for mortgage brokers. Omiga is a multi-channel data capture software that allows for the processing of mortgage applications (including underwriting, risk assessment, offer production and funds disbursement). Optimus is a post-completion software service offering payment processing, reporting and arrears management, property tax management and securitization.

MSC is one of two providers that have been approved to provide a connectivity platform between Canadian lenders and mortgage brokers. In consideration for the MSC services, Canadian lenders pay MSC fees based on the funded volume of mortgages. To date, a single MSC competitor has dominated the lender connectivity marketplace and MSC has a small percentage of the marketplace. DLC anticipates it can increase MSC’s market share by having more DLC mortgage brokers use the MSC platform.

Gary Mauris, President of DLC commented: “We believe this transaction is a significant step forward for the DLC group of companies. It provides us an additional origination delivery platform and allows us to have material influence on user experience, data management, and will easily allow us to add additional revenue streams under a central platform.”

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.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • completion of the transaction on the terms set out herein;
  • timing of closing of the transaction; and
  • that MSC can increase its market share by having more DLC mortgage brokers use the MSC platform.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • that all closing conditions will be satisfied or waived; and
  • that the parties will be able to successfully negotiate the definite agreements.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • the failure to obtain necessary approvals and consents to complete the transaction;
  • the satisfaction or waiver of all closing conditions;
  • the transaction will not yield the anticipated benefits to DLC or the Corporation; and
  • the risks and uncertainties applicable to DLC’s operations.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Announces Extension of ATB Credit Facilities

CALGARY, ALBERTA–(Marketwired – Dec. 7, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to announce the extension of its $17 million revolving credit facility and $5 million non-revolving credit facility with ATB Financial from December 31, 2016 to June 30, 2017. As at the date hereof, the Corporation has $5 million drawn on the non-revolving credit facility and $Nil drawn on the revolving credit facility.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Founders Advantage Capital Corp. Announces Quarterly Results

CALGARY, ALBERTA–(Marketwired – Nov. 10, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to report its financial results for the quarter ended September 30, 2016 (“Q4 2016”). The comparative period is the quarter ended September 30, 2015 (“Q4 2015”). Note that during Q4 2016, the Corporation changed its year end from September 30 to December 31. As a result, the Corporation has a one-time, fifteen-month transition year, covering the months of October 2015 to December 2016. All results are presented in Canadian dollars. Readers should refer to the three and twelve months ended September 30, 2016 management discussion and analysis and condensed interim consolidated financial statements for complete information, which are available on SEDAR at www.sedar.com and on the Corporation’s website at www.advantagecapital.ca.

Selected highlights

Three months ended September 30, Twelve months ended September 30,
2016 2015 2016 2015
Revenue $ 10,642,963 $ $ 13,660,734 $
Earnings (loss) from operations $ 699,024 $ (847,901) $ (4,733,540) $ (3,281,749)
EBITDA (1) $ 1,868,756 $ (638,330) $ (4,491,716) $ 35,225,336
Normalized EBITDA(1) $ 5,899,559 $ (242,734) $ 4,972,975 $ (1,238,573)
Net (loss) income attributable to shareholders $ (2,842,354) $ (149,886) $ (7,383,992) $ 35,709,351

Notes:

  1. See “Non-IFRS measures” below for the definition of EBITDA and Normalized EBITDA and cautions related thereto.

Three months ended September 30, 2016 Financial Highlights

  • The Corporation completed a $33.3 million common share offering and finalized a $22.0 million senior debt facility in July 2016. The senior debt facility was used to repay the $20 million bridge facility which the Corporation used to fund a portion of the purchase price in acquiring a 60% ownership interest in Dominion Lender Centers (“DLC”).
  • Revenues were $10.6 million, compared to nil during Q4 2015, as a result of the acquisition of DLC on June 3, 2016.
  • Earnings from operations were $0.7 million, compared to a loss from operations of $0.8 million during Q4 2015. This increase over the prior year is significantly due to the acquisition of DLC, which is generating revenues from operations. This increase was partially offset by higher general and administrative expenses of $3.5 million, compared to $0.5 million during Q4 2015, the result of higher salaries, professional fees and travel costs. Further, share-based payments increased to $3.2 million, compared to $0.4 million during Q4 2015, due to the Corporation having granted additional share options during the current quarter, compared to the prior year quarter.
  • Net loss was $1.2 million, compared to a net loss of $0.2 million during Q4 2015. The current quarter net loss is the result of the recognition of a full quarter of DLC’s financial results, offset by higher head office costs related to a number of items including, salaries, acquisition costs, amortization of intangible assets, finance expense on loans and borrowings and the issuance of share options.

DLC Highlights

For the three months ended September 30, 2016, the Corporation would like to highlight the following financial highlights relating to DLC:

  • DLC’s revenue increased by 34% to $10.6 million when compared to the same prior year period ($7.9 million).
  • DLC’s expenses increased by 55% to $2.6 million when compared to the same prior year period ($1.7 million), primarily as a result of the growth in the business due to DLC’s acquisition of MA Mortgage Architects Inc. effective December 31, 2015.
  • DLC’s EBITDA increased by 56% to $6.7 million when compared to the same prior year period ($4.4 million). See “Non-IFRS measures” below for the definition of EBITDA and cautions related thereto.
  • DLC’s business tracks the seasonality of home purchases in Canada. Based on the seasonality of DLC’s operations, readers are cautioned not to weight quarterly financial data equally for all quarters. In addition, we note that DLC earns mortgage volume bonuses from lenders in the latter quarters of each year as mortgage volume targets are achieved.

Non-IFRS measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Normalized EBITDA is defined as EBITDA before non-cash items such as share-based payments and losses recognized on the sale of investments, and any unusual non-operating one-time items such as corporate start-up costs and acquisition and due diligence costs. Readers are cautioned that EBITDA and Normalized EBITDA should not be construed as a substitute or an alternative to applicable generally accepted accounting principle measures as determined in accordance with IFRS.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a 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. The Corporation 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 continue managing the business while partnering with a long-term partner.

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

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

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.

Founders Advantage Capital Corp. Announces Dividend Policy

CALGARY, ALBERTA–(Marketwired – Nov. 4, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FA Capital”) is pleased to announce that as part of the Corporation’s long-term strategy to maximize shareholder value, the Board of Directors has approved the implementation of a new dividend policy:

  • In 2017, the Company will pay an annual dividend of $0.05 per common share (payable quarterly); and
  • In subsequent years, the quarterly dividend will be linked to distributable free cash received from investee entities, whereby the Company intends to pay up to 80% of the free cash flow it receives.

The first quarterly dividend ($0.0125 per common share) is expected to be declared in mid-March, 2017 to shareholders of record as at March 31, 2017.

Stephen Reid, President and CEO of FA Capital, commented: “With the announcement of our second intended acquisition this week, we believe that implementing a dividend policy is an important progression of our business. Although we consider ourselves a growth company, providing a dividend to our shareholders has always been one of our fundamental objectives. While we intend on reinvesting most of our distributable free cash into new acquisitions in 2017, we also want to commence providing some yield to shareholders.”

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • the dividend amount per share to be declared quarterly in 2017;
  • the dividend amount per share to be declared quarterly subsequent to 2017;
  • the percentage of distributable free cash flow to be paid to shareholders;
  • the first quarterly dividend will be declared in March, 2017; and
  • the intended reinvestment of distributable free cash into new acquisitions in 2017.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • that the Corporation will have sufficient cash available to pay a dividend in 2017 or in subsequent years as contemplated herein;
  • that the Corporation will receive distributable free cash flow from its investee entities;
  • that the Corporation will not need to change its dividend policy to fund other corporate initiatives;
  • that the Corporation will complete additional acquisitions in 2017.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • the failure of the Corporation to generate distributable free cash from its investee entities;
  • the ability of the Corporation to execute on its business plan as previously disclosed;
  • the risks and uncertainties applicable to the operations of the Corporation and its investee entities.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Founders Advantage Capital Corp. Announces Letter of Intent to Acquire a 60% Interest in CLUB16 Trevor Linden Fitness and She’s FIT! Health Clubs

CALGARY, ALBERTA–(Marketwired – Nov. 2, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation” or “FA Capital”) is pleased to announce that it has entered into a letter of intent to acquire a 60% majority interest (the “Transaction”) in a limited partnership (“CLUB16 LP”) holding eight (8) Club 16 Trevor Linden Fitness Clubs (“CLUB16”) and five (5) She’s FIT! Health Clubs (“She’s FIT!”) in the Vancouver and Lower Mainland area for a total cash purchase price of $20 million (subject to certain closing adjustments) which, after adjusting for debt, represents a multiple of 6.5x EBITDA for the year ended June 30, 2016. The thirteen (13) fitness locations are collectively referred to herein as the “Fitness Clubs”. After completion of the Transaction, the current owners of the Fitness Clubs, comprised of Trevor Linden, Chuck Lawson and Carl Ulmer and certain other minority shareholders (the “Founders”) will retain a 40% interest in CLUB16 LP and will continue to manage the day-to-day operations. Completion of the Transaction is subject to a number of conditions and is expected to close prior to or concurrent with the Corporation’s year end (December 31, 2016). The $20 million purchase price for the Transaction will be funded by the Corporation with available cash and available borrowings under existing credit facilities.

The thirteen (13) Fitness Clubs have over 78,800 memberships and appeal to a large segment of the Vancouver fitness centre market with value pricing, high quality experience, and both ladies only and co-ed facilities.

The Transaction has been structured to provide the Corporation with 60% of annual distributions up to approximately $5.6 million (the “Annual Threshold”) paid by CLUB16 LP to its securityholders, with the Founders receiving 40% of annual distributions up to such Annual Threshold (the Annual Threshold being subject to adjustment on closing). The final Annual Threshold will be determined based on 95% of the trailing twelve (12) month EBITDA for the Fitness Clubs based on current information available to the parties. All cash distributions by CLUB16 LP to its securityholders will be subject to Board approval of the general partner and may be adjusted from time to time to pursue expansion or capital initiatives or other corporate purposes. To the extent that any distributions are paid in a year in excess of the Annual Threshold, the Founders will receive 70% of such excess distributions, with the Corporation 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 the Corporation and the Founders based upon their security holdings and adjusted for certain growth in cash distributions received as at the date of the liquidity event.

Prior to completion of the Transaction, the Fitness Clubs will be rolled into CLUB16 LP, whereby the income from CLUB16 LP will be distributed and subsequently taxed at the limited partnership unitholder level. The Corporation anticipates deducting its corporate expenses against the income received from CLUB16 LP in determining its annual tax liability (if any).

Following closing of the Transaction, the business of CLUB16 LP will be overseen by a corporate general partner having a combined Board consisting of Chuck Lawson and two nominees of the Corporation, initially Stephen Reid and Gary Mauris. The Transaction will not be a “significant acquisition” for the Corporation as defined by applicable securities laws.

In the event the Transaction is completed, the Corporation will have two (2) investee entities in its investment portfolio, Dominion Lending Centres (“DLC”) and CLUB16 LP. As previously reported, the board of directors of the general partner of DLC resolved to make monthly cash distributions to unitholders of $900,000 in the aggregate (of which 60% or $540,000 per month is anticipated to be paid to the Corporation). The Corporation anticipates receiving additional monthly or quarterly cash distributions from CLUB16 LP and does not anticipate any material increase in general and administrative expenses associated with the investment in CLUB16 LP.

Stephen Reid, Chief Executive Officer of the Corporation, commented: “We are excited to join the CLUB16 & She’s FIT! team in offering quality fitness centres at affordable prices and promoting health and wellness in the Vancouver area. The Trevor Linden brand represents trust, loyalty, quality and integrity; characteristics which are also fundamental to the Corporation’s brand. We believe in the ability of the Founders to grow CLUB16 LP through both increased memberships at existing Fitness Clubs and through adding new locations.”

Chuck Lawson, co-founder of CLUB16 and founder of She’s FIT!, commented: “We are pleased to be partnering with FA Capital. CLUB16’s brand has a proven track record of delivering high quality facilities at an affordable price to a large segment of the population. We have a significant opportunity to expand our presence in British Columbia and partnering with FA Capital will help drive this expansion plan forward. This transaction will allow us to offer our value-priced clubs to more consumers and create new opportunities for our employees.”

Trevor Linden, former NHL hockey player and co-founder of CLUB16, commented: “I am excited about the opportunity to take the CLUB16 Trevor Linden Fitness brand to the next level. Partnering with FA Capital will allow us to take our personal fitness offering to an even larger segment of the BC population.”

The Corporation is pleased to report that its unique investment strategy to acquire controlling interests in premium privately-owned companies with positive cash flow, and sharing a disproportionate share of growth with the founders, continues to be well received by both founders and their advisors. The Corporation’s management team continues to market the Corporation’s investment strategy across North America and receives numerous inbound proposals from founders and their advisors each week. The Corporation continues to have a robust pipeline of potential transactions that it continues to review and assess.

KPMG Corporate Finance is acting as lead financial advisor to the CLUB16 shareholders.

About CLUB16 Trevor Linden Fitness

CLUB16 and She’s FIT! believes it is revolutionary in the fitness industry. The biggest barrier to joining a health club used to be high membership fees, fixed contracts and the perception that you must be fit to go to a health club. Removing these barriers with “no contract memberships”, “affordable start up fees” and “value priced dues” as well as monitoring our health clubs for negative issues that make the average person uncomfortable in the fitness/health club environment, allows our health clubs to be more accessible and affordable to everyone. In pursuing our business model, management feels CLUB16 and She’s FIT! can play a large part in helping more people improve their health and their lives.

Chuck Lawson is the founder of She’s FIT! and the co-founder and President & CEO of CLUB16. Chuck has over 30 years of experience operating health clubs in the fitness industry and has been instrumental in bringing a high-quality fitness product at a more affordable price. Chuck is also the Area Representative and President & CEO of the Orangetheory Fitness Centres in the Greater Vancouver & Fraser Valley Area of British Columbia.

Trevor Linden, OBC, CM, is the co-founder of CLUB16. A professional hockey player from Medicine Hat, Alberta, Trevor Linden is one of Canada’s most respected athletes. He was drafted by the Vancouver Canucks in 1988 who, in recognition of his leadership, named him as captain in 1990. During his playing career, Trevor was the Canucks team representative to the National Hockey League Players’ Association (NHLPA) and was elected President of the NHLPA in 1998. The Canucks retired the number 16 jersey in 2008 following Trevor’s retirement after 20 years in the NHL. Trevor has since returned to hockey as the Vancouver Canucks’ President of Hockey Operations & Alternate Governor, NHL.

Carl Ulmer currently serves as Managing Partner for the Fitness Clubs and will be continuing in this role with CLUB16 LP. Carl has been an integral member of CLUB16’s operational team having worked at various levels of the organization over the last six years.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a long-term investment approach. The Corporation has developed an investment approach to create long-term value for its shareholders and partner entrepreneurs (investees) by pursuing controlling interest acquisitions of cash flow positive, premium middle-market privately-held entities. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • completion of the Transaction on the terms set out herein;
  • timing of closing of the Transaction;
  • reorganization of the Fitness Clubs into a limited partnership;
  • the anticipated EBITDA for Club 16 LP;
  • the deduction of corporate expenses by the Corporation against the income received from Club 16 LP;
  • the return on investment for the Corporation in the event the Annual Threshold is achieved; and
  • the receipt of monthly cash distributions of $540,000 from DLC and the receipt of additional monthly or quarterly distributions from Club 16 LP subsequent to the closing of the Transaction.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • that the future performance of the Fitness Clubs will be consistent with past performance;
  • that all closing conditions will be satisfied or waived; and
  • that the parties will be able to successfully negotiate the definite agreements.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • the failure to obtain necessary approvals and consents to complete the Transaction;
  • the satisfaction or waiver of all closing conditions;
  • the Transaction will not yield the anticipated benefits to the Corporation;
  • the risks and uncertainties applicable to the operation of fitness centres generally; and
  • the risks and uncertainties applicable to DLC’s operations.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

DLC President Gary Mauris Inducted into the Canadian Mortgage Hall of Fame

CALGARY, ALBERTA–(Marketwired – Oct. 21, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is proud to report that Gary Mauris, President of Dominion Lending Centres and director of the Corporation, is being inducted into the Canadian Mortgage Hall of Fame in Vancouver on November 28, 2016. The Canadian Mortgage Hall of Fame was created by Mortgage Professionals Canada (formerly CAAMP) to recognize and honour mortgage industry leaders whose achievements and service have contributed to the success of the Canadian mortgage industry. Inductees to the Mortgage Hall of Fame have provided leadership, vision and inspiration in their profession and strive to make a difference to enhance industry standards. Mortgage Professionals Canada is Canada’s national mortgage broker industry association.

Stephen Reid, President and CEO of the Corporation commented: “We extend our congratulations to Gary on this significant achievement. In working closely with Gary, we have the pleasure of experiencing his professionalism and talent first-hand but it is delightful to see Gary’s contributions recognized by his peers. We are fortunate to have Gary as our partner.”

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a 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. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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.

DLC Comments on New Mortgage Rules; Announces Increased Credit Facility to Fund Growth Initiatives

CALGARY, ALBERTA–(Marketwired – Oct. 13, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) owns a 60% interest in Dominion Lending Centres (“DLC”). With the recent changes to the mortgage rules by the Federal Government, we have asked DLC to comment on the new rules and the anticipated effect on DLC. DLC is not a lender and does not itself offer mortgages but does offer mortgage brokerage services, whereby it assists consumers in obtaining and negotiating new mortgages and mortgage renewals.

“The new mortgage rules announced by the Federal Government on October 3, 2016 caught the entire industry by surprise and we continue to assess the potential impacts of these changes”, said Gary Mauris, President of Dominion Lending Centres. “Our current view is that the new rules will make it more difficult and more costly for many Canadians to obtain a mortgage. In turn, this should result in more Canadians using a mortgage broker as we have access to hundreds of lenders who can provide the right mortgage product at the best rate.”

DLC published a three-page guide to the new rules entitled, “Change of Space: The New Mortgage Rules”. This guide serves to educate clients on the policy revisions and most of all, how DLC can assist in navigating these ongoing changes. A copy of this guide can be found on the Corporation’s website.

“In short, we do not believe the new rules will have a significant long-term effect on DLC’s revenue”, Mr. Mauris continued. “Historically, DLC has proven to maintain its revenue in tougher economic times and has used such periods to add franchisees and mortgage brokers. For example, with the recent economic challenges in Alberta, we compared the revenue for all active franchisees in Alberta through the current recession and concluded revenues for such franchisees was flat, notwithstanding a significant decline in total home sales. We will continue to assess the impact of the new mortgage rules but do not believe this will materially impact our business. Further, after speaking with senior officials in the Federal Government, we anticipate they may still amend many of the new rules in response to industry and consumer feedback.”

The Corporation is pleased to announce that DLC has been approved for an additional $4.0 million revolving credit facility to fund the onboarding or acquisition of additional mortgage brokerage firms and mortgage brokers. In more challenging economic times, DLC has historically been able to onboard additional brokers as individuals are more inclined to join a larger more established organization. DLC has onboarded more mortgage brokers in the current year than it has in any other comparable period of its history. The increased credit facility bears interest at a rate equal to the Bank of Canada prime rate plus 1.5%. The additional credit facility will allow DLC to fund its acquisitions without negatively impacting its cash flow.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a 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. The Corporation 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 continue to manage the business with a long-term partner.

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

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

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 potential impact of the new mortgage rules on DLC’s operations, the increased use of mortgage brokers in more difficult economic times, the anticipated amendments to the new mortgage rules and the ability of DLC to acquire additional mortgage brokers. 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 new mortgage rules adversely impacting DLC’s operations in ways not yet contemplated, increased competition for mortgage brokers by large firms, as well as other risks and uncertainties which are more fully described in our Annual Information Form 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.

DLC Adopts Monthly Cash Distribution Policy

CALGARY, ALBERTA–(Marketwired – Sept. 26, 2016) – Founders Advantage Capital Corp. (TSX VENTURE:FCF) (the “Corporation”) is pleased to announce that the Board of Directors of Dominion Lending Centre Group of Companies (“DLC”) has resolved to distribute $900,000 of monthly cash distributions to its securityholders commencing in October, 2016. As the Corporation holds a 60% interest in DLC, the Corporation anticipates receiving after-tax cash distributions of $540,000 per month ($6.5 million annually) from DLC. As the DLC entities are taxed at the operating entity level, no additional tax amounts are payable by the Corporation on the cash distributions received from DLC.

As previously disclosed, the Corporation is entitled to 60% of all annual cash distributions from DLC up to $14.6 million (the “Annual Distribution Threshold”) and the Corporation is entitled to 30% of annual cash distributions exceeding $14.6 million. It was initially anticipated that the Corporation would receive annual taxable cash distributions of $8.8 million from DLC in the event the Annual Distribution Threshold was met (or approximately $6.4 annually after-tax). However, the transaction was ultimately structured such that the tax liability is at the DLC operating entity level, whereby the cash distributions to securityholders are received on an after-tax basis. As such, the Corporation now anticipates receiving $6.5 million per annum without any additional tax amounts owed on such distributions. Accordingly, the cash distributions from DLC are consistent with the Corporation’s initial expectations.

Stephen Reid, President and Chief Executive Officer of the Corporation noted, “We are delighted that the DLC Board of Directors has adopted a sustainable cash distribution policy and that we are now receiving monthly cash distributions from our first investment.”

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. The Corporation 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”.

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

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.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “will”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

  • The Corporation’s monthly cash distributions from DLC; and
  • The Corporation’s annual cash distributions from DLC.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

  • That DLC free cash flow will remain constant for the foreseeable future;
  • That DLC will not need to decrease cash distributions to fund capital expenditures;
  • That the DLC cash distribution policy will continue to be acceptable to DLC’s lenders;
  • The DLC Board will not alter the DLC cash distribution policy for the following 12 months; and
  • Applicable tax rates remain unchanged.

Although the Corporation believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as the Corporation can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

  • Changes in inflation, interest rates, employment levels, availability and cost of financing for home buyers, competitive and market demand dynamics in key markets, the supply of available new or existing homes for sale, and overall housing prices may put downward pressure on the Canadian real estate market. This may adversely impact the number of mortgage brokers which could negatively impact the DLC franchisees and their ability to pay franchise fees to DLC.
  • Changes in general economic variables including, among others, short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets, levels of unemployment, consumer confidence and the general condition of the Canadian, North American and World economies. Lack of available credit or lack of confidence in the financial sector could materially and adversely affect DLC’s business.
  • Lenders applying more stringent mortgage underwriting standards could adversely affect the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes which would adversely impact the DLC business.
  • Changes in federal, provincial, and municipal laws or regulations governing the ownership, leasing, development and taxation of real property could affect the market demand dynamics and the supply of available new or existing homes for sale, which may adversely impact the DLC business.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “Risk Factors” in the Corporation’s current annual information form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, the Corporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

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