GVIC Announces Sale of 45% interest in ERIS and STP Businesses - Seite 3

Selling the 45% interest in the Businesses and retaining the related cash flow for two years allows the Company to retain value in the Businesses and maintain a higher level of cash flow and greater overall operating scale.  The transaction structure also allows the Company to potentially buy back the interest sold in the Businesses after three years.  Given Madison's relationship with the Company and its familiarity with the Businesses, Madison was able to move quickly and was motivated to support the Company given its ownership of Glacier Media, the Company's largest shareholder.

The transaction is a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).  As such, the transaction would ordinarily be subject to valuation and minority approval requirements under MI 61-101.  However, GVIC relied on the “financial hardship” exemptions in sections 5.5(g) and 5.7(e) of MI 61-101 from the valuation and minority approval requirements, respectively.  The Special Committee and the Board of Directors of the Company, acting in good faith, determined that the Company was in serious financial difficulty, that the transaction was designed to improve the financial condition of the Company, and that the terms of the transaction were reasonable in the circumstances of the Company.

In the coming days, a material change report will be filed under the Company's profile at www.sedar.com in connection with the transaction.  In light of the Company's financial situation, closing occurred before the expiration of 21 days from the date of filing of the material change report, a delay contemplated in section 5.2(2) of MI 61-101. This shorter period was reasonable and necessary in the circumstances.

The $11 million of proceeds from the transaction will alleviate the current financial difficulties and help maintain debt at acceptable levels. 

While the pandemic has impacted the Company’s revenues and operations, and it is unclear how long the pandemic will last and the extent of its financial impact, the Company is starting to see increased activity in its core businesses.  Revenues recovered to some degree in May and June from April levels.  While print advertising revenues have declined the most, the Company’s data, information and digital media businesses have held up better, the Company believes that the underlying fundamentals and value of these products have not changed and performance is expected to improve further as the pandemic abates and market conditions improve.  As a result of the transaction, the Company is now in a stronger financial position with which to operate during the pandemic and continue to develop its core businesses.