Zaio to begin issuer bid for 10% convertibles after court ruling

Company had received holder approval to automatically convert notes

By Susanna Moon

Chicago, Aug. 31 – Zaio Corp. is planning an issuer bid for its 10% secured redeemable convertible debentures after a court ruling set aside earlier plans for the automatic conversion of the debentures.

The Court of Queen’s Bench of Alberta set aside the results of the meeting of convertibles held May 25 after the application by a group of holders, according to a company announcement.

The court has ruled that the convertibles will not be automatically converted as previously announced.

The company said that, during this process, it has preserved the rights of the debenture holders.

“The intent of the original offer was to help strengthen the company’s balance sheet and to give a fair and lucrative offer to the debenture holders,” Shane Copeland, chief executive officer of Zaio, said in the press release.

“In light of the outcome of the court case, Zaio will make an issuer bid to allow those who voted in favour of the original offer to participate.”

The company also said it arranged a $5 million standby facility to pay out any outstanding convertible debentures at maturity on May 9, 2017. The standby facility is by way of either direct funding by Stableview Asset Management or co-investment.

As announced May 25, holders had approved the automatic conversion of the debentures into only common shares of the company instead of units of shares and warrants.

Each debentureholder would have been issued 8,333 shares upon conversion at C$0.12 per share and 2,500 shares in consideration for the amendments for a total of 10,833 shares for each C$1,000 debenture.

Calgary, Alta.-based Zaio provides customers in the property valuation, underwriting and lending industries with real-time access to certified appraisal reports from its database.

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