Mosaic Capital Corporation Announces $25 Million Common Share Subscription Privilege Offering

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CALGARY,  Jan. 30, 2017 /CNW/ - Mosaic Capital Corporation ("Mosaic") (TSX-V Symbols: M, M.PR.A, M.PR.B, M.DB and M.DB.A) is pleased to announce that following the close of trading on January 27, 2017, it filed, and received receipt for, a preliminary short form prospectus (the "Preliminary Prospectus") with securities regulatory authorities in all provinces of Canada, except Québec, in connection with the offering of 2,551,020 subscription privileges (the "Subscription Privileges"), which entitle the holder thereof to subscribe for an aggregate of 2,551,020 common shares of Mosaic at a price of $9.80 per share (the "Subscription Price") for aggregate gross proceeds of up to $25 million (the "Offering"). The Offering is being made to: (i) holders of Mosaic's 10% unsecured subordinated perpetual preferred securities (the "10% Preferred Securities") of record as of the close of business (Calgary time) on February 9, 2017 (the "Record Date"); and (ii) holders of Mosaic's series 1 private yield securities (the "Private Yield Securities") of record as of the close of business (Calgary time) on the Record Date.

As a result of the previously announced redemption and retraction of the 10% Preferred Securities and Private Yield Securities to occur on February 10, 2017, Mosaic has received a significant amount of interest from many long term holders of the 10% Preferred Securities and Private Yield Securities to remain as securityholders of Mosaic. The Offering provides an efficient means by which such persons can re-invest in Mosaic following the redemption and retraction of the 10% Preferred Securities and Private Yield Securities, respectively.

Under the Offering, Mosaic will issue: (i) 0.1943 Subscription Privileges for each 10% Preferred Security outstanding; and (ii) 19.43 Subscription Privileges for each Private Yield Security outstanding. Each whole Subscription Privilege will entitle the holder thereof to acquire one common share of Mosaic at the Subscription Price. The Subscription Privileges under the Offering will be eligible for exercise from February 10, 2017 until 5:00 p.m. (Calgary time) on March 2, 2017 (the "Expiry Date"). A holder of Subscription Privileges who exercises all such Subscription Privileges by subscribing for the maximum number of common shares of Mosaic to which such holder is entitled to subscribe, may subscribe at the Subscription Price pro rata for additional whole common shares of Mosaic, if any, not otherwise purchased by other holders of Subscription Privileges. No fractional common shares will be issued. Where the exercise of the Subscription Privileges would otherwise entitle a holder to receive a fractional common share of Mosaic, the holder's entitlement will be reduced to the next lowest whole number of common shares.

As soon as practicable following the Expiry Date, Mosaic will pay a fee of $0.25 per Subscription Privilege exercised to the securities broker or dealer, bank or trust company or other CDS participant whose client exercised the Subscription Privilege. No managing or soliciting dealer has been engaged in connection with the Offering.

John Mackay, Executive Chairman of Mosaic said "We appreciate the long term support and interest of our 10% Preferred Security holders and Private Yield Security holders in continuing to be a part of Mosaic and to finance some of the future growth of Mosaic.  This offering allows those securityholders the opportunity to re-invest part of the proceeds of the redemption into common shares in a meaningful way".

Since August 2016, Mosaic has announced:

• The acquisition of an 80% interest in Mackow Industries in Winnipeg Manitoba. Mackow is a manufacturer of precision fabricated metal components. Mackow's primary market is North American manufacturers of transit buses and highway motor coaches.
• Closing of a public offering of $15,626,000 aggregate principal amount of 7% convertible unsecured senior subordinated debentures.
• The acquisition of a 70% interest in Bassi Construction and Bascon Group. Bassi is a 50-year-old multidiscipline commercial and industrial renovation/tenant refit and construction company with over 120 employees, headquartered in Ottawa, Ontario.
• Closing of the tuck-in acquisitions of Tundra Mechanical and Millwrighting Ltd. and Associated Asbestos Abatement Ltd. by two of Mosaic's subsidiaries.
• Investment by Fairfax Financial Holdings Limited, through certain of its subsidiaries, of $150 million.
• The execution of a new credit agreement with ATB Corporate Financial Services, which provides for a $35 million credit facility to Mosaic.

The net proceeds of the Offering will be used for future acquisitions that fit Mosaic's acquisition criteria and for general corporate purposes, which may include paying down existing credit facilities and payment of expenses in connection with Mosaic's day-to-day operations. Unallocated funds will be added to working capital.

Mosaic has not received any standby commitments in respect of the Offering. Pursuant to applicable regulatory requirements, completion of the Offering is not subject to raising a minimum amount of proceeds.

Mosaic has not applied to list or quote the Subscription Privileges, and does not intend to apply to list or quote the Subscription Privileges on the TSX Venture Exchange (the "Exchange"), a U.S. marketplace, or a marketplace outside Canada and the United States. Mosaic has applied to list the common shares issuable upon exercise of the Subscription Privileges on the Exchange. Listing of such common shares of Mosaic will be subject to Mosaic fulfilling all of the requirements of the Exchange.

The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the acceptance of the Exchange.

The Subscription Privileges and the common shares of Mosaic issuable pursuant to the exercise of the Subscription Privileges have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale or the solicitation of an offer to buy securities in the United States or in any jurisdiction in which such offer, solicitation or sale would be unlawful.

ABOUT MOSAIC CAPITAL CORPORATION

Mosaic is a Canadian investment company that owns a portfolio of established businesses which span a diverse range of industries and geographies. Mosaic's strategy is to create long-term value for its shareholders through accretive acquisitions, long-term portfolio ownership, sustained cash flows and organic portfolio growth.  Mosaic achieves its objectives by maintaining financial discipline, acquiring businesses at attractive valuations, performing extensive acquisition due diligence, utilizing creative transaction structuring and working closely with subsidiary businesses after acquisition.

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 INFORMATION

This news release contains forward-looking information and statements within the meaning of applicable Canadian securities laws (herein referred to as "forward-looking statements") that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  All information and statements in this news release which are not statements of historical fact may be forward-looking statements. The words "believe", "expect", "intend", "estimate", "anticipate", "project", "scheduled", and similar expressions, as well as future or conditional verbs such as "will", "should", "would", and "could" often identify forward-looking statements. In particular, forward-looking statements in this news release include, but are not limited to: statements with respect to the anticipated use of net proceeds of the Offering; the pricing, size and timing of completion of the Offering; and the receipt of regulatory approvals in connection with the Offering. Such statements or information are only predictions and reflect the current beliefs of management with respect to future events and are based on information currently available to management.  Actual results and events may differ materially from those contemplated by these forward-looking statements due to these statements being subject to a number of risks and uncertainties.

Undue reliance should not be placed on these forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature forward-looking statements involve assumptions and known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions and other forward-looking statements will not occur. Some of the assumptions made by Mosaic, upon which such forward-looking statements are based include, but are not limited to: the ability of Mosaic to obtain all required regulatory approvals in connection with the Offering; future market conditions will not be materially different than anticipated by Mosaic; there will be no material changes to government and environmental regulations affecting Mosaic or its operations; and the business operations of the operating businesses of Mosaic will continue on a basis consistent with prior years.

A number of factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements, including, but not limited to: unexpected changes in the financial markets (including in the trading price of the securities of Mosaic) prior to filing the final short form prospectus or closing of the Offering; unexpected regulatory issues; prevailing economic conditions; and changes in the general economic and business conditions of one or more of Mosaic and its subsidiaries.  Should any of the risks or uncertainties facing Mosaic and its subsidiaries materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, activities or achievements could vary materially from those expressed or implied by any forward-looking statements contained in this news release. Readers are cautioned that the foregoing list of risks is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Mosaic and its subsidiaries are included in Mosaic's preliminary short form prospectus dated January 27, 2017 and annual information form for the year ended December 31, 2015, a copy of each of which is available under Mosaic's profile on SEDAR (www.sedar.com).

Although Mosaic believes that the expectations represented by any forward-looking-statements contained herein are reasonable based on the information available to it on the date of this news release, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. Any forward-looking statements herein contained are made as of the date of this news release and Mosaic does not assume any obligation to update or revise them to reflect new information, events or circumstances, except as required by law.

SOURCE MOSAIC CAPITAL CORPORATION

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Mosaic Capital Corporation, 400, 2424 - 4th Street SW, Calgary, AB T2S 2T4; Attention: Allan Fowler, Chief Financial Officer, T: [phone], E: [email protected]; Attention: Mark Gardhouse, Chief Executive Officer, T: [phone], E: [email protected]; Attention: Steve Marshall, T: [phone], E: [email protected]