MFC Bancorp Ltd. Announces Shareholder Meeting To Approve Previously Announced Plan Of Arrangement

NEW YORK, June 9, 2017 /PRNewswire/ -- MFC Bancorp Ltd. ("MFC" or the "Company") (NYSE: MFCB) announced today that the Supreme Court of British Columbia (the "Court") has issued an interim order authorizing, among other things, a special meeting (the "Meeting") of the holders of all of the issued and outstanding common shares of the Company (the "MFC Shares") to seek approval for a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia), which was previously announced by the Company in its news release dated March 31, 2017. Pursuant to the Arrangement, among other things:

• Share Consolidation/Split.  The MFC Shares will be consolidated on a 100 for 1 basis, with any resulting fractional shares being eliminated and the registered holders (i.e. shareholders who hold their MFC Shares in registered form and not beneficially through a broker or other intermediary) of the same being paid therefor in cash based upon the weighted average price of the MFC Shares over the ten trading days immediately prior to the Arrangement becoming effective and, thereafter, such MFC Shares will be split on a 1 for 20 basis;
• Share Capital.  MFC's stated shareholders' capital will be reduced by an amount equal to its retained deficit; and
• Share Exchange.  Each MFC Share outstanding after the completion of the above consolidation and split, will be exchanged for: (i) a common share of US$0.001 par value (a "New MFC Share") in the capital of MFC 2017 Ltd., a new wholly-owned subsidiary of MFC that was formed under the laws of the Cayman Islands ("New MFC") for the purposes of the Arrangement; and (ii) US$0.0001 per share in cash.

Upon completion of the Arrangement, MFC shareholders will become shareholders of New MFC, which will be the public parent company of the MFC group. Upon or prior to the completion of the Arrangement, New MFC will be renamed "MFC Bancorp Ltd.". The Company expects that upon completion of the Arrangement, the New MFC Shares will be listed on the New York Stock Exchange ("NYSE") under the Company's existing symbol "MFCB" without interruption.

The Meeting is currently scheduled to be held on July 10, 2017 at 10:00 a.m. (Vancouver time) at 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, and the record date for determining registered shareholders entitled to receive notice of and attend and vote at the Meeting is May 17, 2017.

The Company believes that the benefits of the Arrangement are, among other things:

• Stable and Reputable Jurisdiction.  The board of directors of MFC chose the Cayman Islands as the jurisdiction for New MFC as it has enjoyed a long history of political and economic stability. The Cayman Islands is also recognized as a well-developed international business and financial center with a large number of public companies incorporated within such jurisdiction. The legal system of the Cayman Islands is generally based on the English common law system.
• More Flexible Corporate Structure.  The separation of the public parent company from its operating businesses will help facilitate any future strategic transactions, such as spin-offs and corporate reorganizations as well as provide additional options for future financing structures available to New MFC and MFC.
• Additional Fiscal Flexibility. By being located in an international financial center, New MFC will have enhanced flexibility with respect to fiscal and tax planning. By completing the Arrangement, New MFC will be able to take advantage of the favourable treatment accorded to non-resident exempted companies under Cayman Islands law. Currently, the Cayman Islands has no corporate income, dividends or capital gains taxes and no withholding taxes on distributions to shareholders.
• Reduced Compliance Expenses and Cash Proceeds for Odd Lot Interest Shareholders.  MFC believes that by completing the Arrangement, it can achieve a reduction in ongoing administrative costs and allow registered holders of less than 100 MFC Shares to receive cash for their MFC Shares without incurring brokerage commissions or expenses.
• Enhanced Global Exposure. MFC is a global company, with operations spanning internationally. The MFC Shares are not listed or traded on any Canadian markets and less than 1% of the MFC Shares are estimated to be held by Canadian shareholders. Accordingly, New MFC's jurisdiction of incorporation of the Cayman Islands, a recognized international financial center, is more reflective of the international nature of MFC's operations. Further, through the potential secondary listing of the New MFC Shares on an international stock exchange after completion of the Arrangement, New MFC may obtain additional global exposure and liquidity for the New MFC Shares.

Due to the administrative costs of issuing and mailing cash payments to registered MFC shareholders under the Arrangement, cash payments of less than US$10.00 under the Arrangement will not be made to such registered shareholders. 

The Arrangement is being carried out pursuant to an amended and restated arrangement agreement (the "Arrangement Agreement") dated June 7, 2017 among the Company, New MFC and MFC 2017 II Ltd., a wholly-owned subsidiary of New MFC, and is subject to customary conditions, including the receipt of requisite court and approval by at least 66²/₃% of the votes cast by shareholders present in person, or by proxy, and entitled to vote at the Meeting. If such conditions are satisfied, the Company currently anticipates that the Arrangement will be completed on or about July 14, 2017. If the Arrangement is approved by shareholders at the Meeting, the Company will attend a hearing before the Court, currently scheduled for July 12, 2017, to ask the Court to grant a final order in respect of the Arrangement.

Details regarding the terms of the Arrangement are set out in the Arrangement Agreement and management information circular to be sent to holders of MFC Shares in connection with the Meeting (the "Circular"), each of which will be available under the Company's profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Shareholders are urged to carefully review the Circular and accompanying materials as they contain important information regarding the Arrangement and its consequences for shareholders.

Shareholders are urged to consult their financial and tax advisors regarding the particular consequences of the Arrangement in their situation, including, without limitation, the specific implications of thereof and the applicability and effect of any federal, state, local and foreign tax laws.

About MFC

MFC is a merchant bank that provides financial services and facilitates structured trade for corporations and institutions. We specialize in markets that are not adequately addressed by traditional sources of supply and finance, with an emphasis on providing solutions for small and medium sized enterprises. We operate in multiple geographies and industries.

As a supplement to our operating business, we commit proprietary capital to assets and projects where intrinsic values are not properly reflected. These investments can take many forms, and our activities are generally not passive. The structure of each of these opportunities is tailored to each individual transaction.

Cautionary Statement and Forward-Looking Information

This press release includes forward-looking information and forward-looking statements (together, "forward-looking information") within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes statements: regarding the Company's beliefs and expectations regarding the completion and/or timing of the Arrangement; the expected benefits of the Arrangement; and the listing of the New MFC Shares on the NYSE. Users of forward-looking information are cautioned that actual results may vary from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include: the risk that the Company will be unable to obtain all necessary Court, shareholder, regulatory or other approvals, including NYSE approval, for the Arrangement; no market may develop for trading the New MFC Shares; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in the Company's 2016 Annual Report Form and other documents filed with Canadian securities regulators and the SEC.

Readers are cautioned that the assumptions used in the preparation of forward-looking information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking information. The material assumptions used to develop the forward-looking information include: that the Company will obtain all necessary consents and approvals, including any necessary Court, shareholder and/or regulatory approval for the Arrangement; that the Company will obtain NYSE approval for the listing of the New MFC Shares; and that other conditions under the Arrangement will be fulfilled or waived. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.

SOURCE MFC Bancorp Ltd.