Dealnet Announces $12 million Private Placement of 6 % Secured Non-Convertible Debentures

Institutional Investor commits to Purchase $7 million as Lead Investment

TORONTO, Dec. 18, 2017 /CNW/ - Dealnet Capital Corp. ("Dealnet" or the "Company") (DLS:TSXV) announced today that the Company plans to offer up to 12,000 of non-convertible senior secured debentures with a face value of $1,000 (the "Debentures") under a non-brokered private placement.

Stornoway Portfolio Management Inc. ("Stornoway"), a Toronto-based asset management firm has agreed, on behalf of funds it manages, to purchase $7 million (face value) as Lead Investor in the offering. Directors, managers and employees of the Company have committed to purchase approximately $3.2 million of the offering's face value. Paradigm Capital acted as an advisor to the Company in connection with the offering.

"I am very pleased that this offering has been endorsed by Stornoway as Lead Investor and has also attracted significant support amongst Dealnet's directors, managers and employees. I believe that together, these independent and insider investments attest to the long-term value and growth potential that is embedded in this Company," said Dr. Steven Small, Executive Chairman.

"Having expanded Dealnet's funding capacity and doing so at a lower cost, along with reduced operating expenses and a focus on quality originations, this offering provides the Company with a clear path to the execution of our 2018 growth strategy," added Brent Houlden, Dealnet's Interim CEO.

"Stornoway is delighted to partner with the Dealnet team and to support their objective to create significant and sustainable long-term value for all stakeholders going forward" said Scott Reid, President and Chief Investment Officer of Stornoway.

The Debentures, which will be secured against certain assets of the Company and its subsidiaries, will be sold at a price of $900 for each $1,000, will have a term of 24 months, bear interest at the rate of 6 percent per annum and are redeemable at any time on 30 days advance written notice. The term may be accelerated on certain prescribed events and conditions. In addition, holders of the Debentures will receive 4,000 non-transferrable share purchase warrants for every $1,000 Debenture purchased. 

Each warrant will entitle the holder to purchase one common share of the Company at a price of $0.12 per share for a period of 24 months provided that the expiry date of the warrants shall be accelerated if the 10 day VWAP of the Company's common shares exceeds $0.20 at any time after the resale restrictions on the warrants expire. The expiry date of the warrants will also be accelerated in accordance with the policies of the TSX Venture Exchange if the Debentures are redeemed prior to the first anniversary of their issuance.

Proceeds from the offering will be used to fund the Company's 2018 growth oriented business plan, repayment of the Company's $2.5 million convertible debenture owing to Chesswood Group due in February 2018 and for general corporate and working capital purposes.

The participation of directors and officers of the Company in the offering will constitute a related party transaction pursuant to Multilateral Instrument 61-101 ("MI 61-101"). This participation is exempt from the valuation and minority shareholder approval requirements of MI 61-101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration for the securities of the Company to be issued to insiders does not exceed 25% of its market capitalization.

The offering is subject to the approval of the TSX Venture Exchange as well as finalization and execution of definitive documentation and customary closing conditions. The Company expects the offering to close on or before December 29, 2017.

About Dealnet Capital Corp.

Dealnet is a specialty finance company servicing the $20 billion home improvement finance market through both dealer-based and direct homeowner-based originations of secured finance assets (equipment leases and loans). The company earns net finance income over the term of these assets and from fee income derived from the transaction support services that it provides to its dealer network. The Company also uses its engagement platform to provide customer support services on a contract basis to third-party institutions.

For additional information please visit www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Statements

This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.

SOURCE Dealnet Capital Corp.

Contact Information: Brent Houlden, Chief Executive Officer, [phone] ext.1145, [email protected]; John Sadler, Senior Director - Corporate Communications, [phone] ext. 1348, [email protected]