Today's News

Vancouver, BC, October 19, 2023--(T-Net)--Roughly three years ago, on October 28, 2020, BBTV completed the largest TSX IPO (with a sole female founder and CEO), and one of the top ten tech IPO's on the TSX in it's history at that time.

The company conducted an initial public offering of subordinate voting shares at a price of C$16.00 per share for total gross proceeds to the Company of C$172.4 million.

The Offering was underwritten by a syndicate of underwriters led by Canaccord Genuity Corp. and Scotia Capital Inc., as joint active bookrunners, and also including CIBC Capital Markets, as bookrunner, BMO Capital Markets, Eight Capital, Stifel GMP, Cormark Securities Inc. and PI Financial Corp. (collectively, the "Underwriters").

BBTV Holdings concurrently completed the buyout of RTL's interest in BroadbandTV Corp. at that time, and acquired all of the remaining outstanding securities of BBTV, which operated the business of BroadbandTV headquartered in Vancouver, Canada.

The subordinate voting shares were listed on the Toronto Stock Exchange under the symbol "BBTV".

Initial BBTV IPO shareholders do not appear to have done well since that time, with shares declining approximately 97.8%, from an initial high of CAD $16 per share (and a share price as high as $14.49 in Jan 2021), to today's closing price of just $0.36 per share, and a massive decline in market capitalization to just under $8 million (according to Yahoo Finance statistics).

Share prices have declined approximately 33.6% in the past year according to Yahoo Finance statistics.

Which brings us to today's news, where the company announced yesterday that it is now going private, and the purchaser will be a numbered company owned by Shahrzad Rafati, the founder, Chief Executive Officer and a director of the Company, and Hamed Shahbazi, a director of the Company (and CEO of Well Health Technologies).

What follows is the long detailed official press release from the company on the transaction:

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BBTV HOLDINGS ANNOUNCES GOING PRIVATE TRANSACTION

BBTV Holdings Inc. (TSX: BBTV) (OTCQX: BBTVF), announced today in a news release that, based on a recommendation of an independent committee of the Company's board of directors, it has entered into an "arrangement agreement" with 15384150 Canada Inc., whereby the Company will effect a going private transaction by way of a statutory plan of arrangement under Section 192 of the Canada Business Corporations Act.

Pursuant to the Arrangement, the Purchaser, which is a corporation owned by Shahrzad Rafati ("SR"), the founder, Chief Executive Officer and a director of the Company, and Hamed Shahbazi ("HS"), a director of the Company (together, the "SPV Participants"), will acquire all of the issued and outstanding subordinate voting shares of the Company at a price of $0.375 per Subordinate Voting Share (the "SVS Consideration"), with the exception of Subordinate Voting Shares held by the SPV Participants and certain long-term shareholders who have or will agree with the Purchaser to retain their Subordinate Voting Shares in the Company (the "Rolling Shareholders").

In addition, and pursuant to the Arrangement, all stock options, restricted share units and performance share units of the Company outstanding (collectively, the "Incentive Securities"), will be cancelled and the holders of in-the-money Incentive Securities will be entitled to receive a cash payment equal to the SVS Consideration for each Incentive Security held, less an amount equal to any exercise price of the Incentive Security.

All unvested or out-of-the-money Incentive Securities will be cancelled for no consideration. Pursuant to the Arrangement, the Purchaser will also acquire all of the issued and outstanding publicly traded unsecured convertible debentures of the Company due June 15, 2026 (the "Debentures") that are listed on the Toronto Stock Exchange (the "TSX") at a price of $100 per $1,000 principal amount of debentures.

Following the acquisitions, the Company and the Purchaser will amalgamate to form an amalgamated company with the same name as BBTV.

Debt Facilities Commitment Letter and MEP Loan Amendment

In connection with the Transaction, one of Canada's leading alternative capital providers provided a commitment letter to the Purchaser for certain debt facilities to be made available to the Purchaser through one or more investment funds or accounts managed or advised by the Lender, in the aggregate principal amount of $40 million, including a term loan.

The SPV Participants will be providing a $5,000,000 personal guarantee of the debt facilities.

Pursuant to the Commitment Letter, a portion of the proceeds of the New Loan will be used by the Purchaser, together with existing funds of the Purchaser, to:

(i) purchase all of the Subordinate Voting Shares (other than held by SPV Participants, Rolling Shareholders and, if applicable, Shareholders who validly exercise their dissent rights;

(ii) purchase all issued and outstanding Debentures;

(iii) repay a discounted amount owed by the Company to UFA Film und Fernseh GmbH ("UFA") under a promissory note dated October 28, 2020 in full satisfaction and discharge of the note; and

(iv) repay US $6,000,000 (of which U.S. $600,000 has already been paid) due and payable by the Company to MEP Capital Holdings III, LP ("MEP") under the Company's US $16.1 million senior secured term loan dated February 14, 2023 (the "MEP Loan").

MEP

The Company has entered into an agreement with MEP amending the MEP Loan. Pursuant to the amendment, the Company will pay MEP US $6,000,000 on closing of the New Loan, of which US $600,000 has already been paid. From and after such closing, the principal amount remaining under the MEP Loan will continue to accrue at 16.8% per annum.

The MEP Loan will mature on July 1, 2024 and may be pre-paid at any time. A payment of U.S. $500,000 will be due on April 1, 2024. A 4% exit fee shall be applied on the remaining principal balance of the MEP Loan outstanding on payout of such loan. MEP's warrants will be amended to allow MEP to purchase up to 3%, instead of the 2% currently in place, of the amalgamated company's fully diluted Subordinate Voting Shares as of a certain specified date. The SPV Participants will be providing partial personal guarantees for the MEP Loan as well as for the debt facilities under the Commitment Letter.

Recommendation from the Special Committee and the Board of Directors

John Kim, Chair of the Special Committee, stated, "After a comprehensive process and careful deliberation supported by external professional advisors to the Special Committee, the Special Committee considers that the Transaction represents the best available path forward for the Company, its shareholders, debentureholders, employees, creators and other stakeholders. The benefits to BBTV of being a public company have diminished substantially and are currently unavailable, as both the Subordinate Voting Shares and Debentures listed on the TSX are very thinly traded with low volume. Therefore, this Transaction will provide immediate liquidity to holders of Subordinate Voting Shares and Debentures. Furthermore, the Transaction will eliminate the financial and administrative burden to the Company of continuing as a reporting issuer, providing the Company with flexibility to operate as a private business."

The Special Committee is led by John Kim and composed of two other independent directors of the Company, excluding the SPV Participants. After receiving the fairness opinion from its independent valuator, Evans & Evans, Inc. ("Evans & Evans"), with respect to the Subordinate Voting Shares and Debentures and a formal valuation of the Subordinate Voting Shares from Evans & Evans and after receiving independent legal and financial advice, the Special Committee has unanimously recommended that the board of directors of the Company (the "Board") approve the Arrangement Agreement and unanimously recommended that holders of Shares (the "Shareholders"), holders of Debentures ("Debentureholders") and holders of Incentive Securities ("Incentive Securityholders", and collectively with Shareholders and Debentureholders, the "Securityholders") entitled to vote at the special meeting of Securityholders called to approve the Arrangement (the "Arrangement Meeting") vote in favour of the special resolution to approve the Arrangement (the "Arrangement Resolution"). After receiving the fairness opinion and formal valuation from Evans & Evans, legal and financial advice, and the recommendation of the Special Committee, the Board unanimously (with the SPV Participants having recused themselves) determined that the Arrangement is in the best interests of the Company and is fair to the Company's Shareholders and Debentureholders and recommended that Securityholders vote in favour of the Arrangement Resolution.

In connection with the Arrangement, the directors and senior officers, who hold a total of 8,580,906 Subordinate Voting Shares and Multiple Voting Shares, representing a combined total of 39.6% of all Multiple Voting Shares and Subordinate Voting Shares outstanding and 83.5% of the total shareholder votes, have entered into voting agreements pursuant to which they have agreed, subject to the terms thereof, to vote in favour of the Arrangement Resolution and the Continuance Resolution (as defined below).

Continuance

As an initial step in the Transaction, and as a condition to completing the Arrangement, the Company is seeking Shareholder approval to continue out of the Business Corporations Act (British Columbia) (the "BCBCA") and into the CBCA. In connection with the foregoing, the Company will hold a special meeting of Shareholders (the "Continuance Meeting") to approve a special resolution to continue from the BCBCA to the CBCA (the "Continuance Resolution").

Fairness Opinion and Formal Valuation

The Special Committee retained Evans & Evans as independent valuator of the Subordinate Voting Shares and to provide a fairness opinion with respect to the Subordinate Voting Shares and Debentures in connection with the Arrangement. Evans & Evans provided an opinion that, based upon and subject to the assumptions, limitations and qualifications contained in Evans & Evans' written fairness opinion, the consideration to be received by the holders of Subordinate Voting Shares and Debentures, other than the SPV Participants and the Rolling Shareholders, in connection with the Arrangement is fair, from a financial point of view, to the holders of Subordinate Voting Shares and Debentures.

Evans & Evans also provided the Special Committee with a formal valuation of the Subordinate Voting Shares that was completed under the supervision of the Special Committee. The formal valuation determined that, based upon and subject to the assumptions, limitations and qualifications contained in Evans & Evans' written valuation report, the fair market value of the Subordinate Voting Shares ranged from $0.179 to $0.258 or a midpoint of $0.219 per Subordinate Voting Share. The fairness opinion and formal valuation will be included in the management information circular to be filed and mailed to Securityholders in connection with the Continuance Meeting and the Arrangement Meeting (the "Circular").

Transaction Details

• Holders of Subordinate Voting Shares (other than Subordinate Voting Shares held by Rolling Shareholders and SPV Participants and, if applicable, Dissenting Shareholders) will receive $0.375 per Subordinate Voting Share in cash, representing a 71% premium to the midpoint of Evans & Evans' written valuation report, a 60% premium to the closing price per Subordinate Voting Share on the TSX on October 17, 2023, and a 36% premium to the 20-day volume-weighted average trading price for the Subordinate Voting Shares on the TSX for the period ended October 17, 2023, the last trading day prior to the date of this announcement.
  
  
• Debentureholders will receive cash consideration of $100 for each $1,000 principal amount of Debentures held, representing a 67% premium to the closing price of the Debentures on the TSX on October 12, 2023, the last day the Debentures were traded prior to the date of this announcement, and a 110% premium to the 20-day volume-weighted average closing price for the Debentures on the TSX for the period ended October 17, 2023, the last trading day prior to the date of this announcement. Accrued and unpaid interest owing on the Debentures will be forgiven, settled and extinguished for no consideration.
  
  
• The Board, with the SPV Participants having recused themselves, acting on the unanimous recommendation of the Special Committee, unanimously approved the Arrangement and unanimously recommended that Securityholders entitled to vote at the Arrangement Meeting vote in favour of the Arrangement Resolution.

SR controls, directly or indirectly, 602,570 Subordinate Voting Shares and 6,408,505 multiple voting shares of the Company (the "Multiple Voting Shares"), representing 3.95% of the issued and outstanding Subordinate Voting Shares, 100% of the issued and outstanding Multiple Voting Shares, 32.4% of all of the issued and outstanding shares of the Company (the Subordinate Voting Shares and Multiple Voting Shares, together, the "Shares") and over 80% of the voting rights attached to all the issued and outstanding Shares.

HS controls, directly or indirectly, 1,287,053 of the issued and outstanding Subordinate Voting Shares, representing 8.45% of the issued and outstanding Subordinate Voting Shares and 1.62% of the voting rights attached to all of the issued and outstanding Shares. The Rolling Shareholders are expected to own 2,414,395 Subordinate Voting Shares representing 15.8% of the total issued and outstanding Subordinate Voting Shares. Each Multiple Voting Share entitles the holder to ten votes per share and each Subordinate Voting Share entitles the holder to one vote per share.

Prior to the Securityholders voting on the Arrangement Resolution at the Arrangement Meeting, shareholders will vote on the Continuance Resolution at the Continuance Meeting. The subsequent Arrangement Meeting and the Arrangement Resolution will be conditional on the Shareholders approving the Continuance Resolution at the Continuance Meeting, which is expected to take place on or about November 27, 2023. The Continuance Resolution must be approved by at least two thirds of the votes cast by Shareholders present in person or represented by proxy at the Continuance Meeting.

The Transaction will be implemented by way of the Arrangement and is subject to Court approval. The Arrangement Resolution must be approved by: (i) at least two-thirds (66?%) of the votes cast by Shareholders and Incentive Securityholders voting together as a class present in person or represented by proxy at the Arrangement Meeting and entitled to vote, and (ii) a majority (50% + 1) of the votes cast by the holders of Subordinate Voting Shares present in person or represented by proxy at the Arrangement Meeting and entitled to vote, other than the Subordinate Voting Shares held by SPV Participants and the Rolling Shareholders in accordance with Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions.

The Arrangement Resolution must also be approved by Debentureholders holding: (i) at least two-thirds (66?%) of the total value or principal amount of the Debentures present in person or represented by proxy at the Arrangement Meeting; and (ii) a majority (50% +1) of the total value or principal amount of the Debentures cast by Debentureholders present in person or represented by proxy at the Arrangement Meeting, other than the value or principal amount of Debentures held by SR, in accordance with section 3.12 of the Policy on arrangements - CBCA, section 192.

Further details regarding the applicable voting requirements will be contained in the Circular to be filed and mailed to Shareholders and debentureholders in connection with the Transaction.

The Arrangement Agreement provides for customary non-solicitation covenants on the part of the Company and it provides the Purchaser with a right to match any superior proposal. In addition, pursuant to the Arrangement Agreement, a termination fee equal to $350,000 is payable by the Company to the Purchaser in certain circumstances and a reverse termination fee of $500,000 is payable by the Purchaser to the Company in certain circumstances.

The Transaction is subject to customary closing conditions, and is cross-conditional with the advance of the New Loan and the refinancing of the MEP Loan and is expected to close on or about November 30, 2023.

The Company intends to mail the Circular to its Securityholders in the coming weeks and to hold the Continuance Meeting and Arrangement Meeting on or about November 27, 2023. Additional details regarding the terms and conditions of the Transaction as well as the rationale for the recommendations made by the Special Committee and the Board will be set out in the Circular which, together with the Arrangement Agreement, will be available under the Company's SEDAR+ profile at www.sedarplus.ca.

Advisors

Clark Wilson LLP is acting as counsel to the Company. Borden Ladner Gervais LLP is acting as Canadian independent legal counsel to the Special Committee. PI Financial Corp. has been retained as financial advisor to the Special Committee. Evans & Evans has been retained to provide a fairness opinion of the Subordinate Voting Shares and Debentures and retained as an independent valuator by the Special Committee to prepare a formal valuation of the Subordinate Voting Shares, in accordance with applicable securities laws. Owens Wright LLP is acting as counsel to the Purchaser.

Further to the requirements of National Instrument 62-103 - Early Warning System and Related Take-Over Bid and Insider Reporting Issuers, SR and an entity controlled by HS intend to file an early warning report with applicable Canadian securities regulatory authorities disclosing they intend to acquire, directly or indirectly, all of the issued and outstanding Subordinate Voting Shares (other than those owned by the SPV Participants and Rolling Shareholders) pursuant to the Arrangement. To obtain copies of the early warning report, please contact James Szumski at Owens Wright LLP at jszumski@owenswright.com. Upon closing of the Arrangement, the Purchaser and the Company intend to cause the Subordinate Voting Shares and Debentures to cease to be listed on the TSX, and intend to apply to the securities regulatory authorities to approve a request that the Company cease being a reporting issuer under applicable Canadian securities laws and to otherwise terminate the Company's public reporting requirements.

Currency

All currency in this news release is in Canadian dollars, unless otherwise indicated.

About BBTV

BBTV has been pioneering the $104 billion dollar creator economy since 2005, before 'content creators' were even a thing. Today, 1 in every 3 people watching YouTube are watching BBTV content, and our solutions are at the heart of a colossal shift in entertainment.

We are a driven, creative, collaborative and caring team that thrives on making meaningful content more valuable. We're proud to work with content creators, brands and media companies to engage new fan communities and find innovative new revenue opportunities.