IOU Financial announces private placement of up to $10 million of convertible unsecured subordinated debentures

/NOT FOR DISTRIBUTION IN THE UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

MONTREAL, Sept. 25, 2015 /CNW/ – IOU Financial Inc. (TSXV: IOU) ("IOU Financial" or the "Company"), a leading online lender to small businesses in the United States, announced today that it has entered into an engagement letter with Palos Management Inc., a registered dealer, in connection with a brokered private placement on a "best efforts" agency basis of up to $10 million in principal amount of convertible unsecured subordinated debentures of the Company (the "Convertible Debentures"). The Convertible Debentures will be offered at a price of $1,000 per Convertible Debenture on a prospectus-exempt basis in the provinces of British Columbia, Alberta, Ontario and Québec (the "Private Placement").

The Convertible Debentures will mature on December 31, 2020, will bear interest at a rate of 10% per annum, and will be convertible at their holders' option into common shares of IOU Financial ("Common Shares") at a price of $0.75 per Common Share, representing a conversion rate of 1,333.33 Common Shares per $1,000 principal amount of Convertible Debentures. The Company will have the right to force the conversion of the Convertible Debentures into Common Shares at any time after December 31, 2018 should the 20-day volume weighted average price of the Common Shares on the TSX Venture Exchange (the "TSX-V") exceed 125% of the conversion price.

To date, the Company has received committed subscriptions under the Private Placement in excess of $7 million.

The net proceeds of the Private Placement will be used primarily by IOU Financial to finance small business loans in the Company's target markets and for general corporate purposes. The Private Placement is subject to regulatory approval, including the approval of the TSX-V.

The Company expects to close the Private Placement on or about November 1, 2015.

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

About IOU Financial Inc.

IOU Financial provides small businesses throughout the U.S. access to the capital they need to seize growth opportunities quickly. Typical customers include medical and dental practices, grocery and retail stores, restaurant and hotel franchisees and e-commerce companies. In a unique approach to lending, IOU Financial's advanced, automated application and approval system accurately assesses applicants' financial realities, with an emphasis on day-to-day cash flow trends. It makes loans of up to US$150,000 to qualified applicants within a few business days, with affordable charges favorable to cash-flow management. IOU Financial's speed and transparency make it a trusted alternative to banks. To learn more visit: www.ioufinancial.com.

Forward Looking Statements

Certain information set forth in this news release may contain forward-looking statements. Forward-looking statements are statements, other than statements of historical fact, that address or discuss activities, events or developments that IOU Financial expects or anticipates may occur in the future. These forward looking statements can be identified by the use of words such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future economic conditions and courses of action, as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are subject to risks and uncertainties and no assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU Financial will derive from them. A number of factors could cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, risks related to the completion or not of the Private Placement, risks related to the Company's incapacity to execute on its business plan, risks inherent in growing a new business, dependence on third-party service providers, competition, regulatory risk, dependence on key personnel, risks related to rapid growth of IOU Financial, security and confidentiality risk, risk related to inability to attract borrowers and lenders, technological development risk, IT disruptions, maintenance of client relationships, litigation risk, volatility of stock price, and other factors that are beyond its control. Additional information concerning these and other factors can be found beginning on page 15 under the heading "Risks and Uncertainties" in IOU Financial's management's discussion and analysis dated August 25, 2015, which is available under IOU Financial's profile on SEDAR at www.sedar.com.

Neither 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.

 

SOURCE IOU FINANCIAL INC.

Shareholders: Philippe Marleau, President and Chief Executive Officer, [phone] ext. 225; Mayco Quiroz, Chief Financial Officer, [phone] ext. 298