Initiates CCAA Proceedings in Canada to Implement Sale to Senior Lender
While Operating as Usual
Liberty Tax and Community Tax Serving
Customers with Same Trusted Tax Advice and Service
US$25 Million
Financing Commitment to Support Ongoing Day-to-Day
Operations
Scott Terrell Named Chief Executive Officer to
Lead Enterprise into the Future
HURST,
Texas, July 25, 2023 /PRNewswire/ -- NextPoint
Financial Inc. ("NextPoint" or the "Company") (TSX: NPF.U) (TSX:
NPF.WT.U) (OTC PINK: NACQF) today announced that it has entered
into a restructuring support agreement ("RSA") with lenders BP
Commercial Funding Trust, Series SPL-X and BP Commercial Funding
Trust II, Series SPL-I (collectively, the "Senior Lender") and
Drake Enterprises LTD (together with the Senior Lender, the "Lender
Group") to substantially reduce the Company's consolidated debt and
best position its leading brands, Liberty Tax and Community Tax,
for long-term success. Under the RSA, the Senior Lender has
committed to purchase substantially all of NextPoint's assets for
up to US$281 million, primarily
consisting of a credit bid of at least US$100 million of secured debt, cash to be paid
at close, and obligations to be assumed ("Transaction").
Concurrent with today's announcement, NextPoint's board of
directors named Scott Terrell as
Chief Executive Officer, effective immediately. Mr. Terrell
previously served as Liberty Tax's Chief Information Officer from
2019 to 2022 and as Chief Operating Officer of NextPoint until his
appointment as interim CEO in May
2023.
To implement the Transaction most efficiently, NextPoint and its
subsidiaries sought and obtained an initial order from the Supreme
Court of British Columbia pursuant
to the Companies' Creditors Arrangement Act ("CCAA"). The
Company is seeking recognition of the CCAA proceedings in the U.S.
Bankruptcy Court for the District of Delaware under Chapter 15 of the U.S.
Bankruptcy Code. The Company's approximately 2,200 Liberty Tax
franchised locations are not included in the proceedings.
NextPoint will continue its day-to-day operations as usual,
including serving customers of its Liberty Tax and Community Tax
businesses with the same trusted tax advice and service. The
Company has secured a commitment for US$25
million in debtor-in-possession financing from the Lender
Group which will provide sufficient liquidity to fulfill ongoing
obligations to franchisees and customers, and pay employees and
vendors in the ordinary course.
"We are pleased to have achieved a comprehensive solution that
will reduce our debt burden and put our enterprise on stronger
financial footing for the future. With an improved capital
structure, we will be better positioned to build on the proud
legacies of our Liberty Tax and Community Tax brands," said Mr.
Terrell, NextPoint's CEO. "I am grateful to our teams who have
remained focused on growing our businesses by doubling down on our
core strengths in tax preparation and resolution services, and we
are making good progress. Today's action will further accelerate
these efforts and enhance our ability to empower underserved
consumers and small businesses who rely on our tax tools and
guidance."
Mr. Terrell concluded, "Our organization and our brands have
incredible resilience and a very bright future. We value our loyal
customers, dedicated franchise partners, and hardworking team
members and look forward to emerging from this process as a
financially stronger company."
Under the terms of the RSA, the Transaction will be implemented
through a court-approved sale and investment solicitation process
in which the Senior Lender's "stalking horse" bid will be subject
to higher or otherwise better offers from interested third
parties.
Additional Information
The Canadian court has
appointed FTI Consulting Canada Inc. to serve as the Monitor in the
CCAA proceedings. Court documents and other information will be
available on the Monitor's website:
http://cfcanada.fticonsulting.com/nextpoint. Court documents in the
U.S. Chapter 15 proceedings will be available at
https://cases.stretto.com/nextpoint.
DLA Piper (Canada) LLP and DLA
Piper LLP (US) are serving as legal counsel to the Company in
Canada and the U.S., respectively,
and Province is serving as its financial restructuring advisor. As
previously announced, Peter Kravitz
of Province is serving as NextPoint's Chief Restructuring
Officer.
About NextPoint Financial Inc.
NextPoint is an
all-inclusive marketplace for financial services empowering
hardworking and underserved consumers and small businesses.
NextPoint's primary business units are Liberty Tax, a leading
provider of tax preparation services, and Community Tax, an
effective advocate for tax debt resolution on behalf of
customers.
Forward-Looking Statements
This news release contains
statements that include "forward-looking information" (as defined
under applicable securities laws) ("forward-looking statements").
These forward-looking statements relate to future events or
future performance including with respect to the ability to
successfully consummate the transaction and timing thereof, the
Company's ability to continue operations in the ordinary course,
the Company's ability to pursue alternatives and emerge from the
CCAA proceedings in a strong financial position, the
debtor-in-possession financing providing sufficient liquidity for
the Company and the Company's ability to service to its
customers. Such forward-looking statements reflect management's
current beliefs and are based on information currently available to
management. In some cases, forward-looking statements can be
identified by terminology such as "may", "will", "should",
"expect", "plan", "anticipate", "believe", "estimate", "predict",
"potential", "continue", "target", "intend", "could" or the
negative of these terms or other comparable terminology. By their
very nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and many factors could
cause actual events or results to differ materially from the
results discussed in the forward-looking statements. In
evaluating forward-looking statements, readers should specifically
consider various factors that may cause actual results to differ
materially from any forward-looking statement. These factors
include, but are not limited to, the outcome of the CCAA
proceedings, and the risks and uncertainties discussed in the
section entitled "Risk Factors" in the Company's annual
information form dated January 15,
2023. Forward-looking statements contained in this news
release are not guarantees of future performance and, while
forward-looking statements are based on certain assumptions that
the Company considers reasonable, actual events and results could
differ materially from those expressed or implied by
forward-looking statements made by the Company. Except as may be
expressly required by applicable law, the Company does not
undertake any obligation to update publicly or revise any such
forward-looking statements, whether as a result of new
information, future events or otherwise.
Media Contact
Kekst CNC
Sherri L. Toub / Wendi Kopsick / Daniel
Hoadley
NextPoint@kekstcnc.com
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SOURCE NextPoint Financial Inc.