Working Opportunity Fund Enters into Definitive Agreement and Announces Shareholder Meeting Date

Working Opportunity Fund Enters into Definitive Agreement and Announces Shareholder Meeting Date

News Highlights

VANCOUVER, British Columbia, April 07, 2021 (News) — Further to the December 21, 2020 announcement of the Working Opportunity Fund (EVCC) Ltd. (“WOF” or the “Fund”) that it had entered into a non-binding Letter of Intent, the Fund is pleased to announce that it has entered into a definitive arrangement agreement (the “Arrangement Agreement”) regarding the proposed acquisition of all of its issued and outstanding shares (the “Transaction”) by Pender Growth Fund Inc. (“PTF”). The Transaction is being done by way of a plan of arrangement and is referred to as the ‘Arrangement’.

The Fund has scheduled a special and annual general meeting (the “AGM”) for the approval of the Transaction and other annual business for May 18, 2021, with a record date of April 12, 2021. If completed, the Transaction will provide liquidity for all shareholders with a cash purchase price at a discount to net asset value (“NAV”). For Venture Series shareholders who wish to continue to participate in the performance of the underlying portfolio, they may elect to continue to hold their shares and maintain their pro rata position in the Venture Series portfolio instead of taking the cash option. Immediately prior to the completion of the Transaction, each series of WOF will distribute all available cash to shareholders, less a reserve to cover remaining commitments attributable to that series.

Throughout 2020, with the assistance of independent legal counsel and other advisors, a special committee of directors (the “Special Committee”) independent of the Fund’s manager continued its strategic review and analysis of the various options available to the Fund, seeking to reduce costs and enhance liquidity options for shareholders. Cindy Oliver, Chair of the Fund commented: “The Board is pleased to have successfully negotiated this transaction on behalf of shareholders. It has been our goal to provide liquidity to shareholders for some time and this transaction will do that for those who seek it. A unique feature of this transaction is that it provides an option for Venture Series shareholders to remain invested in the portfolio should they decide to do that.”

Long-term committed capital is one of the key requirements for building a great technology sector and since its first investment in 1993, WOF has been an active investor with over $600 million invested in more than 130 BC-based technology companies. PTF has been investing in and supporting companies in the British Columbia tech sector since 2003 and having PTF as a long-term supportive shareholder will enable WOF to continue to support the growth and development of its portfolio companies and capitalize on potential exits at the right time.

While some of the material terms of the Transaction have been disclosed in this press release, further details regarding the Transaction including the terms of the Arrangement will be included in a detailed information circular fully describing the Transaction and matters related to it. This will be sent to shareholders in April and available on WOF’s website and profile on SEDAR. Please review and submit your proxy and election form ahead of the AGM scheduled for May 18, 2021 and we encourage you to consult your financial, legal, tax and other professional advisors. Further information and updates will be provided on the Fund’s website at the link below, including a set of Questions & Answers. Shareholders are also encouraged to review the complete text of the Arrangement Agreement, a copy of which is filed on SEDAR under the Fund’s profile.

Working Opportunity Fund

Both the Fund and PTF are managed by the Manager. Given this actual and perceived conflict, the Special Committee engaged an independent qualified firm that has provided a fairness opinion that the Transaction is fair from a financial point of view to the Venture Series Shareholders and is fair from a financial point of view to the Commercialization Series Shareholders. The fairness opinion was delivered to the Special Committee prior to execution of the Arrangement Agreement and will be included in the shareholder meeting materials.

Venture Series

Under the Transaction, unless they elect otherwise, Venture Series shareholders will sell their shares for a cash payment equal to 43.5% of the NAV per Venture Series share as at the day prior to the date of the Arrangement Agreement (subject to a positive or negative 5% adjustment based upon the per share NAV of the Venture Series portfolio as at the day prior to the effective date of the Transaction). The cash payment will be paid 50% on or about the effective date of the Transaction and 50% six months after. These exiting Ventures Series shareholders have a limited and conditional right to an additional cash payment from PTF based on a percentage share of the net gains on carrying values at the effective date from divestment activity in the Venture Series portfolio before May 18, 2022, specifically, (a) if a divestment completes on or before November 18, 2021, exiting shareholders will receive their pro rata portion of 60% of the net gain; (b) if a divestment completes on or before February 18, 2022, exiting shareholders will receive their pro rata portion of 45% of the net gain; and (c) if a letter of intent, terms sheet or binding agreement for a divestment is entered into on or before February 18, 2022 and such divestment is subsequently completed by May 18, 2022, exiting shareholders will receive their pro rata entitlement of 20% of the net gain.

Alternatively, the Venture Series shareholders have the option to elect to continue to hold their shares and maintain their pro rata participating position in the Venture Series portfolio. These shareholders will receive their pro rata share of 95% of the net divestment proceeds from the Venture Series portfolio (net of all applicable deductions from the gross proceeds, including payment of a management fee to the Manager and including applicable taxes). An amount equal to 5% of the net divestment proceeds will be held in reserve to fund a limited annual redemption right for the redemption of shares for an amount equal to 40% of NAV per share at the time. PTF will also be entitled to direct redemption of the remaining shareholders at a price equal to 50% of NAV per share after 5 years or earlier if certain conditions are met. Under an amended and restated management agreement, a 2.5% of NAV “all-in” management fee will be accrued and paid only when there are proceeds available upon a divestment from the portfolio. Further, after the disbursement of an amount equal to NAV of the Ventures Series on the effective date of the Transaction, the Manager will receive 20% of net divestment proceeds.

In reaching its decision to enter into the Arrangement Agreement with respect to the Venture Series, the Board’s paramount consideration was the individual choice provided to the Venture Series shareholders to accept the cash payment at a discount to NAV or to elect to continue to maintain their pro rata participation in performance of the Venture Series portfolio. Other key factors include the lack of significant distributions to Venture Series shareholders since adopting the cash dividend distribution policy in 2014; an assessment of other options available to the Series; the ability of the shareholders to receive material liquidity by way of cash consideration as the default option (including the potential additional cash payment), without requiring individual shareholder action, and, for those electing to continue to participate in the legacy Venture Series portfolio, the pro rata distribution of divestment proceeds to eliminate the “last investor standing” concern typical of a fixed investment portfolio.

The Venture Series Balanced shares are represented by the following fund codes: WOF 141/142/888/890/892/894/895/896.

Important information for Venture Series shareholders – You have a choice. If the Transaction is approved, by default you will receive the cash purchase price. If you would like to continue to hold your shares you must make an election to do so and ensure that your account is eligible to continue to hold the shares.

Commercialization Series

Under the Transaction, PTF will acquire all Commercialization series shares in exchange for a cash payment to be paid on or about the effective date of the Transaction equal to the greater of 50% of the NAV per Commercialization Series share as at the day prior to the effective date of the Transaction and 75% of the subscription receipt financing price for the BuildDirect transaction, which was the subject of a recent news release, if that financing is completed by the effective date of the Transaction.

In reaching its decision to enter into the Transaction with respect to the Commercialization Series, the Board considered several key factors including: the significant dividends to Commercialization Series’ shareholders during the past year and certainty of value and liquidity given the increased concentration and liquidity risk with having a very small venture portfolio remaining in the portfolio and the risks associated with the BuildDirect transaction.

The Commercialization Series is represented by the following fund codes: WOF 104/105.

Pursuant to the terms of the Arrangement Agreement, the Transaction is subject to a number of conditions, including approval of the Supreme Court of British Columbia and shareholders. There can be no assurance that the Transaction will be completed on the basis proposed for the Arrangement or at all.

Forward Looking StatementsThis news release contains forward looking statements which primarily relate to the ability to complete the Transaction as described including the expected results of the Transaction including with respect to liquidity, and for Venture Series shareholders in particular the individual choice provided, the limited condition right to an additional cash payment and statements about participating in future performance of Venture Series’ portfolio and terms of an amended and restated management agreement for those shareholders who choose to continue to participate in the Venture Series legacy portfolio. All forward looking statements are based on the Board’s and/or the Manager’s current beliefs and assumptions on a range of factors including about the Fund and economic factors and assessments regarding the Transaction which are subject to numerous known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include the ability to finalize the conditions to competition of the Transaction including obtaining shareholder approvals and any required regulatory approvals, assessments of current and past considerations of strategic options for the Venture Series and the Commercialization Series including statements, and recent developments in the Fund’s operating climate, and possible future developments that may affect the Fund, and the Venture Series and the Commercialization Series portfolios and performance. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Fund does not assume any obligation to update any forward-looking statements made in this release. There can be no assurance that the Transaction will be completed on the basis proposed for the Arrangement or at all.

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