Establishes the People Corporation Group of Companies as a Market Leader in Alberta and Enhances Platform for Further Growth in Western Canada
WINNIPEG, Manitoba, Aug. 01, 2018 (GLOBE NEWSWIRE) — People Corporation (TSX-V: PEO) (the “Company”) announced today the completion of the acquisition of Silverberg & Associates Inc. (“Silverberg Group” or “Silverberg”), one of the largest independent privately-owned employee group benefits consulting firms in Western Canada (the “Transaction”). Combined with the Company’s existing operations in Alberta, the Transaction establishes People Corporation as a market leader in this large and highly attractive market.
Silverberg Group was established in 1996 and operates throughout Alberta, offering specialized employee benefits consulting to companies of all sizes from a variety of industries. With offices in Calgary, Edmonton and Lethbridge, Silverberg’s client base includes over 800 businesses throughout the province. With an approach of providing superior value to its clients by addressing their varying needs through sophisticated advice on plan design and access to a broad product portfolio, Silverberg Group has developed a highly-trusted brand, and has grown significantly over the years. Silverberg’s principals, Doug Silverberg, Scott Silverberg and Paul Ingram, will continue to run the operations as part of the People Corporation group of companies, and their highly-talented and dedicated team of Consultants, Managers and staff will continue to provide industry-leading service to its clients.
“The addition of Silverberg Group to the People Corporation family is strategically important in our ongoing quest to build the premier independent national provider of group benefits, group retirement and human resources consulting services,” commented Mr. Laurie Goldberg, Chairman and CEO of People Corporation. Mr. Goldberg continued, “By adding a business with the scale and capabilities of Silverberg Group, we have solidified our position as the preeminent group benefits and group retirement solution provider in Alberta, and have positioned ourselves for additional growth in Western Canada.”
Mr. Goldberg added, “The excellent reputation, deep capability and innovative, client-focused approach to doing business that exists among Silverberg’s management and staff, partnered with a national company with scale such as ours, provide the combined organizations with significant competitive advantages. We are very proud to be associated with such a highly respected and successful organization and are very excited to welcome Doug, Scott, Paul and the rest of the Silverberg team into the People Corporation family.”
“At Silverberg Group, we are very proud of our ability to offer superior value to our clients for each employee benefits dollar they spend, by offering a broad portfolio of products and many services our competitors cannot,” said Doug Silverberg. “In partnering with People Corporation, our clients will continue to benefit from this approach, and will have access to an even broader suite of products and services from a partner with national scale.” Scott Silverberg added, “Our thirst for enhanced innovation and cost effectiveness for our clients was at the forefront of our decision. People Corporation shares our commitment to providing exceptional advice, products and services to clients. With its reputation, technology and exceptional leadership, we are excited to be part of People Corporation and to continue to grow our business and serve our clients in an evolving group benefits sector.”
The payment of $29.0 million in cash on closing, subject to post-closing adjustment for working capital, represents the purchase price for an initial 75% economic interest in Silverberg. The Company has also entered into an agreement with the principals of Silverberg whereby they will retain a 25% economic interest in the business through the ownership of special shares of Silverberg. These shares may, in the future, be acquired by People Corporation, or sold by the holders to People Corporation, subject to certain terms and conditions. The Transaction is structured such that People Corporation will own 100% of the voting shares.
The cash payment at closing was funded by the Company from $29.0 million drawn on the Acquisition Revolver component of the Company’s credit facilities with its senior lenders. In conjunction with this Transaction, the Company exercised the Accordion Feature on its credit facilities, thereby increasing the overall size of its credit facilities from $82.8 million to $97.8 million, of which $63.8 million is represented by the Acquisition Revolver component.
Mr. Goldberg concluded, “This Transaction once again demonstrates our focus on firms that have a client-first philosophy, and our ability to work together to complete transactions that result in all parties’ objectives being achieved. Finally, the funding for the Transaction is evidence of the strong support, which we very much appreciate, from our senior lenders and the capital markets. With ongoing access to capital and ambitious growth plans, we look forward to continuing to execute on our strategic plan to create the leading employee group benefits, group retirement and HR consulting services company in Canada.”
Bought Deal Private Placement Common Share Offering
In connection with the Transaction, People Corporation has entered into an agreement with a syndicate of underwriters led by Cormark Securities Inc. (collectively the “Underwriters”) pursuant to which the Underwriters have agreed to purchase on a bought deal private placement basis, 4,546,000 common shares (the “Shares”) at a price of $7.70 per Share (the “Issue Price”), for gross proceeds to the Company of approximately $35.0 million (the “Offering”). The Underwriters have also been granted an option, exercisable in whole or in part at any time prior to the closing date of the Offering, to purchase for resale up to an additional 15% of the Shares sold pursuant to the Offering at the Issue Price, which would result in additional gross proceeds of approximately $5.25 million.
The Offering is scheduled to close on or about August 21, 2018. The Company intends to use the net proceeds of the Offering to pay down the Company’s Acquisition Revolver, which was drawn down to fund the Transaction, and for growth initiatives. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange and any applicable securities regulatory authorities. The Underwriters have agreed to endeavour to arrange for substituted purchasers for the Shares.
This press release does not constitute an offer to sell or solicitation of an offer to buy the securities in any jurisdiction. The common shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for account or benefit of, U.S. persons, absent registration or applicable exemption from the registration requirements. Any public offering of securities in the United States must be by means of a prospectus containing detailed information about the Company and management as well as financial statements.
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