D+H announces $175 million bought deal offering of common shares

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO, Nov. 12, 2014 /CNW/ - DH Corporation (TSX: DH) ("D+H" or "Company") today announced that it has entered into a "bought deal" financing agreement with a syndicate of underwriters, led by CIBC and TD Securities Inc., under which the underwriters have agreed to purchase from the Company and sell to the public 4,830,000 common shares of the Company ("Common Shares"), at a purchase price of $36.25 per Common Share (the "Offering Price"), for gross proceeds of $175,087,500 (the "Offering"). The Company has also granted the underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to a further 724,500 Common Shares at the Offering Price, solely to cover their over-allocation position, if any. The Over-Allotment Option will be exercisable in whole or in part, at the sole discretion of the underwriters, at any time until and including 30 days following the closing of the Offering. 

The net proceeds from the Offering will be approximately $168 million ($193 million if the Over-Allotment Option is exercised in full) determined after deducting the underwriters' commission but prior to taking into account the expenses of the Offering.  D+H intends to use the net proceeds of the Offering to repay a portion of its credit facility.  Any amounts received by D+H pursuant to the underwriters' exercise of the Over-Allotment Option will also be used for debt repayment.

"Our decision to complete this offering now means D+H is able to return more quickly to using our full set of growth strategies to create value for our shareholders," said Karen H. Weaver, Chief Financial Officer. "Rather than choosing to incrementally reduce debt from our strong cash flows, this proactive move immediately strengthens our balance sheet, improves liquidity and positions us to more quickly deliver on our plans to advance our leadership in the FinTech industry".

The Offering is consistent with the Company's previously stated objectives of reducing its Debt/EBITDA ratio following acquisitions while investing in organic and acquisition growth opportunities.  

At September 30, 2014, D+H had reduced its Total Funded Debt/EBITDA ratio¹ to 2.79. After removing the impacts of foreign exchange fluctuations, this ratio was 2.64.²  Pro forma the Offering, Total Funded Debt/EBITDA ratio at September 30, 2014 was 2.31 or 2.15 after removing the impacts of foreign exchange fluctuations.  As a result of the Offering, the Company expects to achieve its current goal of reducing Total Funded Debt/EBITDA to 2.5 times in 2014, a year ahead of the previously stated target date.

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1}This ratio is defined in the "Contractual Obligations" section of D+H's Management's Discussion & Analysis of financial condition and results of operations for the year-ended December 31, 2013 ("Annual MD&A"). EBITDA is a non-IFRS measure which does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to EBITDA as presented by other companies. For further details on the manner in which D+H calculates EBITDA and for a reconciliation to the closest IFRS measure, please refer to the Annual MD&A, a copy of which is available on SEDAR at www.sedar.com.

² See the "Covenants" section of the Company's Management's Discussion & Analysis of financial condition and results of operations for the three and nine months ended September 30, 2014 for further discussions. A copy is available on SEDAR at www.sedar.com.

The Offering is scheduled to close on or about December 2, 2014 and is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange. On October 27, 2014, the Company's Board of Directors declared a quarterly dividend of $0.32 per Common Share payable on December 31, 2014 to shareholders of record at the close of business on November 28, 2014.  Since the closing date is expected to be December 2, 2014, purchasers under the Offering will not be entitled to receive such dividend on December 31, 2014.

Pursuant to the Offering, the Common Shares will be offered in each of the provinces and territories of Canada by way of a short form prospectus, and by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A under the United States Securities Act of 1933, as amended (the "1933 Act").

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the 1933 Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons (as defined in Regulation S under the 1933 Act) absent such registration or an applicable exemption from such registration requirements.

About D+H

D+H is a leading provider of secure and reliable technology solutions to domestic and global financial institutions with a reputation for being a trusted partner that helps clients build deeper, more profitable relationships with their customers based on rich industry and market insight, and consumer knowledge. Today, approximately 7,000 financial institutions including major banks, community banks, credit unions and specialty lenders rely on D+H to deliver solutions across three broad service areas: Banking Technology Solutions, Lending Processing Solutions and Payments Solutions. Our integrated, compliant technology solutions enable clients to grow, compete and optimize their operations, while our forward looking approach helps them stay ahead of the market and anticipate changing consumer needs. D+H is one of the world's top FinTech companies as measured on IDC Financial Insights FinTech Rankings.

DH Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found at www.dhltd.com and in the disclosure documents filed by DH Corporation with the securities regulatory authorities at www.sedar.com.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning D+H's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements.  The words "believe", "expect", "anticipate", "estimate", "intend", "may", "pro forma", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements.  While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause D+H's actual results, performance or achievements, or developments in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.

Risks related to forward-looking statements include, among other things, D+H's ability to successfully complete the Offering within the timeframe contemplated above or at all; increased pricing pressures and competition which could lead to loss of contracts or reduced margins; the Company's ability to comply with regulations; the Company's ability to deliver products and services in line with the changes in the United States of America banking and financial services industry; the Company's ability to avoid inherent risks in the technology industry related to cyber-security threats and breaches; the Company's dependence on a limited number of large financial institution customers in Canada and dependence on their acceptance of new programs; declines in the use of personal and business cheques; strategic initiatives being undertaken to grow our business and increase profitability; stability and growth in the real estate, mortgage and lending markets; the Company's ability to generate cash to invest in the business and at the same time be able to pay dividends and debt repayments; as well as general market conditions, including economic, foreign exchange and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.

All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.

SOURCE: DH Corporation

Karen H. Weaver, Executive Vice President and Chief Financial Officer, D+H; [phone], [email protected] or visit our website at www.dhltd.com.