“The rights issuance provides an attractive opportunity for shareholders to acquire MCAN stock at a 15 per cent discount, while at the same time providing MCAN with a low cost of capital to further grow our corporate assets and core earnings,” says William Jandrisits, MCAN's president and chief executive officer. “We expect a significant level of participation from our existing shareholders which includes both current and former directors, officers and staff.”
MCAN Mortgage Corporation recently filed a circular in respect of a rights offering to raise maximum proceeds of $15,326,315.60, after receiving final approval from the Ontario Securities Commission.
MCAN's directors and officers held directly or indirectly 5,063,625 Common Shares as of May 20. Certain of the directors and officers have indicated that they intend, subject to market conditions, to exercise directly or indirectly some or all of the Rights they receive under the Offering.
The completion of the Rights Offering is not conditional upon MCAN receiving any minimum amount of subscriptions from shareholders.
The intention of the Rights Offering is to raise capital to fund further growth of the MCAN's mortgage lending businesses in the normal course, consistent with the company's stated business and objectives. The net proceeds raised through the Rights Offering will provide the company with capital that qualifies as both regulatory and mortgage investment capital.
Accordingly, this capital will enable the MCAN to issue additional term deposits which, together with the net proceeds raised through the Rights Offering, will be used to fund further business opportunities through the origination of mortgages.
Jandrisits anticipates that the majority of the net proceeds raised through the Rights Offering will be used to fund mortgage origination opportunities in its single family residential lending business.
MCAN may also use net proceeds raised through the Rights Offering to originate mortgages in its other (that is, non-single family residential) mortgage lending businesses.
A move by one company to raise capital through a rights offering is a signal that further growth is expected.