NEW YORK , May 13, 2020 /CNW/ - Fine Capital Partners L.P. (" Fine L.P. ") and Fine Capital Management LLC (" Fine Capital ") announced today that Fine LP, in its capacity as an investment manager on behalf of certain of the funds it manages (the " Fine Funds "), has entered into a binding term sheet with WildBrain Ltd. (" WildBrain " or the " Issuer ") (TSX:WILD.TO) (the " Term Sheet ") for the purchase by the Fine Funds of up to $25 million in exchangeable secured debentures (the " Exchangeable Debentures ") to be issued by a newly-formed subsidiary of WildBrain (" Subco "). Unless otherwise indicated, all dollar references in this press release are to Canadian Dollars.

The Fine Funds have agreed to purchase $16.5 million of Exchangeable Debentures at the initial closing of the financing (the " Initial Debentures ") with the remainder (the " Subsequent Debentures ") to be drawn at the Issuer's discretion prior to maturity three years from the date of the initial closing (" Maturity "). The Exchangeable Debentures will bear interest at 7.5% per annum payable at Maturity and will be secured by a first ranking security interest in all of the assets of Subco.

Concurrent with the issuance of the Initial Debentures, the Fine Funds will be issued warrants (the " Warrants ") to purchase 5,000,000 Variable Voting Shares (the " Shares ") of WildBrain at an exercise price of $1.45 per Share, which will expire five years from the date of the initial closing.

Subject to the limits described below, the Exchangeable Debentures will be exchangeable for Shares at an initial price of $1.45 per Share (subject to shareholder approval in the case of the Subsequent Debentures), which represents a conversion premium of 66.7% to the 20-day volume weighted average price (the " VWAP ") of the Shares on the TSX calculated from May 12 , 2020.  If WildBrain shareholders do not approve the $1.45 exchange price for the Subsequent Debentures, the exchange price of each Subsequent Debenture will instead be the greater of (i) $1.45 and (ii) the market price of the Shares at the time such Subsequent Debentures are issued less the maximum discount permitted by the Toronto Stock Exchange (the " TSX ").

Commencing 18 months after the date of the initial closing, the Issuer will have the right to redeem the Exchangeable Debentures at a price equal to the outstanding principal amount plus accrued and unpaid interest at any time provided that the 20-day VWAP of the Shares on the TSX ending on the fifth trading day prior to the sending of a notice of redemption is at least 135% of the exchange price of the Exchangeable Debentures.

Subject to certain conditions, including the receipt of all necessary regulatory approvals, the Issuer will have the right to satisfy its obligation to pay principal and interest in respect of the Exchangeable Debentures by delivering Shares (valued at 95% of the 20-day VWAP of the Shares on the TSX at the time the payment obligation arises) in lieu of cash.

In accordance with TSX requirements, the maximum number of Shares issuable to the Fine Funds upon any exchange, redemption or maturity of the Exchangeable Debentures, in satisfaction of accrued and unpaid interest thereon and the exercise of the Warrants will initially be capped at 17 million (the " Exchange Cap "). At WildBrain's 2020 annual shareholder meeting (the " AGM "), the Issuer will seek shareholder approval (" Shareholder Approval ") to remove the Exchange Cap and for a $1.45 exchange price in respect of the Subsequent Debentures. If shareholders approve the removal of the Exchange Cap, there will be no limit on the amount of Shares issuable to the Fine Funds upon any exchange, redemption or maturity of the Exchangeable Debentures, in satisfaction of accrued and unpaid interest thereon and the exercise of the Warrants (other than regulatory limitations on ownership pursuant to the Competition Act ( Canada ) and the Broadcasting Act ( Canada )).

The maximum aggregate commitment of the Fine Funds for the Exchangeable Debentures is $25 million . Assuming an exercise price of $1.45 and receipt of Shareholder Approval, the maximum number of Shares issuable to the Fine Funds on exercise of the Warrants and exchange, redemption or maturity of the full amount of the Exchangeable Debentures (including interest thereon) is 26,120,689 Shares.

Fine L.P., in its capacity of fund manager, has control and direction over the Shares held by certain of the funds it manages, and may be considered to be acting jointly and in concert with Fine Capital. Prior to entering into the Term Sheet, Fine L.P. and Fine Capital collectively held or had control and direction over an aggregate of 57,472,888 Shares representing approximately 33.62% of the aggregate outstanding common shares of the Issuer (comprised of Variable Voting Shares and Common Voting Shares, the " Common Shares "). If the Fine Funds acquire the maximum number of Shares issuable on exercise of the Warrants and exchange, redemption or maturity of the full amount of the Exchangeable Debentures (including interest thereon), Fine L.P. and Fine Capital will have control and direction over an aggregate of 83,593,578 Shares, which will represent approximately 42.42% of the outstanding Common Shares. The foregoing securityholding percentages are based upon a total of 170,946,815 Common Shares issued and outstanding, as at December 31, 2019 as reported in the Issuer's management discussion and analysis dated February 13, 2020 , for the three and six months ended December 31, 2019 and December 31 , 2018. 

The Shares that the Fine Funds acquires will be for investment purposes. Depending on market conditions and other factors, Fine L.P. and persons acting jointly with it may, from time to time, acquire additional voting shares or other securities of WildBrain or dispose of some or all of the voting shares or other securities of WildBrain that they own at such time.

Fine L.P. is a limited partnership and Fine Capital is a limited liability company, in each case, organized under the laws of Delaware , with their principal businesses being investment activities and their head offices located at:

Fine Capital Partners L.P./Fine Capital Management LLC
1350 Avenue of Americas 
Suite 1610
New York, New York
10019

The head office of WildBrain is:

WildBrain Ltd.
1478 Queen Street
Halifax, Nova Scotia
B3J 2H7

An early warning report will be electronically filed with the applicable securities commission in each jurisdiction where WildBrain is reporting and will be available on SEDAR at www.sedar.com . 

SOURCE Fine Capital Partners L.P.

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