Commercialization Series

May 31, 2021 – Working Opportunity Fund Announces Closing of Transaction

May 19, 2021 – Pender Growth Fund and Working Opportunity Fund Announce Shareholder Voting Results on the Potential Acquisition of the Working Opportunity Fund

May 12, 2021 – Working Opportunity Fund Updates Ahead of May 18, 2021 AGM

April 29, 2021 – Working Opportunity Fund Announces an Information Call Ahead of May 18 Shareholder Meeting

April 7, 2021 – Working Opportunity Fund Enters into Definitive Agreement and Announces Shareholder Meeting Date

December 21, 2020 – Working Opportunity Fund Announces Letter of Intent

December 18, 2020 – Working Opportunity Fund Provides Update on Commercialization Series and Update on Scheduling of Annual General Meeting

Here are the Presentation Materials from the Information Session held on May 5, 2021.

What are the options for WOF Commercialization Shareholders?

There is one portfolio company remaining, and under the terms of the Transaction, receiving cash is the only option for WOF Commercialization Shareholders.

The cash amount you receive will be the greater of:

• 50% of the NAV per WOF 05 Commercialization Share as at the day prior to the Effective Date; and
• 75% of the subscription receipt financing price for the BuildDirect transaction, which was the subject of a recent news release, if that BuildDirect Subscription Receipt Financing is completed by the Effective Date.

For example: NAV at the effective date is $1.20 per share and BuildDirect completes the subscription receipt financing a week prior valued at $1.40 per share. In this example you would receive 75% of the $1.40, or $1.05 per share.

For further information see “Reasons for the Arrangement – Commercialization Series”, “Risk Factors” and “Certain Canadian Tax Considerations Regarding the Transaction” in the Information Circular.

Why is WOF proposing the Transaction and what are the benefits to WOF Commercialization Shareholders?

The Fund was successful during the past year in completing divestments from three companies, which enabled the payment of an aggregate $5.5 million in dividends (a total of $5.49 per share) to WOF Commercialization Shareholders. Following the payment of these dividends the NAV of the WOF 05 Commercialization Shares at the end of the 2020 was $1.4 million. The Board believes the Transaction is the best option for WOF Commercialization Shareholders at this time and provides the following benefits:

• Certainty of liquidity and value
• Elimination of concentration risk (only one portfolio company remaining)
• Shareholder buyout protects against erosion of value with continued operations

Immediately prior to the completion of the Transaction, WOF 05 Commercialization Shares will distribute all available cash to shareholders, less a reserve to cover the remaining commitments attributable to WOF 05 Commercialization Shares.

For further information see “Reasons for the Arrangement – Commercialization Series”, “Recommendation of the Board”, “Risk Factors” in the Information Circular.

How do I cash out my WOF 05 Commercialization Shares and how do I get my cash after its paid into my account?

WOF Commercialization Shareholders will receive cash at a discount to net asset value. The cash payments will be paid into the same account where you hold your shares.

If you hold your WOF 05 Commercialization Shares in a RRSP held with WOF (and not with your dealer) , you must take steps to transfer that cash out to another RRSP account or your account will ultimately be deregistered. If deregistered, your cash will be subject to withholding tax and income tax.

For further information see “Shareholder Account Matters”, “Risk Factors” and “Certain Canadian Tax Considerations Regarding the Transaction” in the Information Circular.

Is this deal fair from a financial point of view for WOF Commercialization Shareholders?

Yes. The Special Committee engaged an independent, qualified firm that has provided the Fairness Opinion that the Transaction is fair, from a financial point of view, to the WOF Commercialization Shareholders. In reaching its recommendation regarding approval of the Transaction, the Special Committee received and considered the Fairness Opinion.  

The full text of the Fairness Opinion, setting out the assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Fairness Opinion, is attached as Schedule C to this Circular. WOF Shareholders are encouraged to read the Fairness Opinion carefully in its entirety regarding a fairness opinion. 

For further information see “Reasons for the Arrangement – Commercialization Series”, “Fairness Opinion”, “Recommendation of the Board” in the Information Circular.

What are the options for WOF Commercialization Shareholders if they do not approve the Transaction?

If the Transaction is not approved by WOF Commercialization Shareholders, the Transaction may still proceed for the WOF Venture Shareholders. If this occurs, we expect WOF Commercialization Shares to continue to have significant concentration and liquidity risks with a portfolio limited to one investment and fixed costs eroding value quickly given the size of the portfolio. The Board does not believe there is a better option available at this time for WOF Commercialization Shareholders.

See “Reasons for the Arrangement” in the Information Circular.

Who is the Acquiror?

Pender Growth Fund (“PTF”) is the acquiror. PTF is also managed by our manager. 

Given this actual and perceived conflict, the Special Committee engaged an independent qualified firm that has provided the fairness opinion described above.

For further information see “Interest of Certain Persons in the Arrangement – The Manager” in the Information Circular.

Supplemental Q&A

How can investors be assured the Transaction is fair for Commercialization Series shareholders?

The Fund engaged an independent, qualified firm that has provided the Fairness Opinion that the Transaction is fair, from a financial point of view, to the WOF Commercialization Shareholders. The full text of the Fairness Opinion, setting out the assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Fairness Opinion, is attached as Schedule “C” to the Management Information Circular. WOF Shareholders are encouraged to read the Fairness Opinion carefully in its entirety.

In addition, under the arrangement agreement the Fund engaged a financial advisor to perform a limited review of NAV and NAV per share that confirmed each NAV per Share calculated by the Manager was reasonable as of the day prior to signing the arrangement agreement.  This NAV confirmation will also be obtained as of the day prior to the Effective Date. As part of this review, the financial advisor reviewed the valuation of the Fund’s investments.  The Fund also negotiated the potential for an additional cash payment for those WOF Commercialization Series shareholders who are bought out if there is divestment activity for up to one year following the AGM. While there is no assurance that there will be any additional cash payments –  if there is, this will decrease the discount to NAV on the purchase price.

The Board and the Special Committee considered a number of factors during their deliberations including the Fairness Opinion, the NAV confirmation, the steps taken to mitigate the conflict of the Manager, the views of the Manager of limited potential liquidity events for the portfolio in the next 12 months and the risks of proceeding and not proceeding with the Transaction. At this time, the Board believes that the Transaction is in the best interests of each of the WOF Commercialization Series for the reasons set out in the Circular.

What steps were taken to address the conflict of the manager?

The Manager is the manager of WOF and of PTF, the acquiror under the Transaction, which gives rise to conflicts.

A number of  years ago, the Board formed a special committee of the  to review strategic options for the Fund. This committee is independent of the Manager.

The unanimous recommendation by the Board with respect to the Transaction is the result of a thorough process conducted by the Special Committee and the Board in consultation with independent legal advisors and financial advisors that included careful consideration of various factors including other strategic options and the actual and perceived conflict of the Manager.  Key steps to address the conflict include:

• Engaging an independent, qualified firm that has provided the Fairness Opinion that the Transaction is fair, from a financial point of view, to WOF Shareholders.
• Obtaining a NAV confirmation from a financial advisor independent from the Manager, prior the execution of the definitive agreement and also obtaining a NAV confirmation prior the Effective Date of the Transaction. The NAV confirmation includes a limited review of the valuations of the Fund’s investments and that the NAV per shares calculated by the Manager are reasonable.
• Negotiating terms under the Transaction aimed at a fair allocation of risk by allocating that risk to the party or parties that has the clear ability to control or mitigate that risk and that includes an express acknowledgement and recognition of the powers and duties of the Manager as the manager of WOF and of the relationship among PTF and the Manager;
• negotiating the ‘greater of’ terms of the cash consideration if BuildDirect completes its financing before the Effective Date of the Transaction, we negotiated a potentially greater cash amount for WOF Commercialization Shareholders

How do we know the current value is accurate considering the Fund and the acquiror have the same manager?

The Fund’s valuation rules are set out in its EVCC Plan and reflect the International Private Equity and Venture Capital Valuation (IPEV) Guidelines adopted by the Canadian Venture Capital & Private Equity Association.

Under the arrangement agreement the Fund engaged a financial advisor to perform a limited review of NAV and NAV per share that confirmed each NAV per Share calculated by the Manager was reasonable as of the day prior to signing the arrangement agreement.  This NAV confirmation will also be obtained as of the day prior to the Effective Date. As part of this limited review, the financial advisor reviewed the valuation of the Fund’s investments. 

What costs have been borne by the shareholders to facilitate this transaction?

WOF and PTF will generally pay their own costs in connection with the Transaction, including legal and other advisory costs, subject to certain expenses and amounts that PTF has agreed to reimburse WOF for. In this regard, WOF negotiated with PTF to reimburse WOF for $75,000 of fees and expenses incurred in connection with the Transaction.

What if I haven’t received a proxy or shredded it and would now like to vote my shares?

A package of materials, which included your proxy, was mailed by Computershare on April 26, 2021. Shareholders who have not received a package or require assistance in voting their proxy, can call the Computershare enquiry line (1-800-564-6253). After answering some security questions you will be provided a control pin number that you can use to submit your proxy online at www.investorvote.com

How long do I have to transfer my cash out of my account before it is deregistered?

If you hold your WOF Commercialization Shares in a RRSP held with WOF (and not with your dealer), you must take steps to transfer that cash out to another RRSP account or your account will ultimately be deregistered. If deregistered, your cash will be subject to withholding tax and income tax.

Shareholders will be given at least 60 days’ notice of the resignation of Concentra Trust, the RRSP trust agent, and such resignation will not take effect until the final cash payment has been paid to you. The cash payments will be paid into the same account where you hold your shares.

The deregistration of your cash will only happen after the last payment has been paid to you.

Can we have more information on the acquiror?

Pender Growth Fund (“PTF”) is the acquirer and is also managed by the Fund’s manager.

PTF is an investment company that trades on the TSX Venture Exchange with the objective of achieving long-term capital appreciation for its investors. PTF utilizes its small capital base and long-term horizon to invest in unique situations, primarily small cap, special situations, and illiquid public and private companies.

The WOF Shareholder Meeting has taken place.

WOF’s shareholders approved the Arrangement at the meeting, held on May 18, 2021.

The Arrangement was approved by both WOF Venture Series and WOF Commercialization Series, which together comprise the Fund.

Please read the press release.

If you have questions about your investment in WOF, please contact your investment advisor or please contact Prometa Fund Support Services by phone (888-787-9561), fax (888-747-0984) or email (workingopportunityfund@prometa.ca).

What is the transaction that was completed effective May 28, 2021?

At a shareholder holding on May 18, 2021, WOF shareholders approved a transaction for the sale of all of the outstanding shares of the Fund. On May 31, 2021 WOF announced that it had completed the transaction. The May 31, 2021 news release describing the transaction is available on the Fund’s website at the following link:

https://media.penderfund.com/media/2021/05/WOF-News-Release-Closing-of-Transaction-Final.pdf

How do I know what shares I hold?

To help you identify the series that you hold, please see the applicable fund codes in the table below.

How much will I receive for my Commercialization Series shares?

 For WOF Commercialization Series (series 2) shares, the purchase price was $0.5068 per share paid on closing of the Transaction. Prior to the Transaction, WOF distributed all available cash to shareholders by way of a dividend. For WOF Commercialization Series (series 2) shares this was a dividend of $0.6286 per share.

How do I get my cash after its paid into my account?

The cash payments will be paid into the same account where you hold your shares.

If you hold your WOF Venture Shares in a RRSP held with WOF (and not with your dealer), you must take steps to transfer that cash out to another RRSP account or your account will ultimately be deregistered. If deregistered, your cash will be subject to withholding tax and income tax.

For further information see “Shareholder Account Matters”, “Risk Factors” and “Certain Canadian Tax Considerations Regarding the Transaction” in the Information Circular and the “Important Notes for Venture Series” insert in the meeting materials.

If I hold my shares in a RRSP held with WOF, how long do I have to transfer my cash out of my account before it is deregistered?

Concentra Trust currently acts as the trustee for client name RRSP accounts. In connection with the Transaction Concentra Trust is to resign as trustee following the Transaction. As a result, the resignation of Concentra Trust will mean that for those shareholders who do not take any action, the Cash received in the client name RRSP accounts will ultimately be deregistered. Shareholders will be given at least 60 days’ notice of the resignation of Concentra Trust.