AUSTIN, Texas, July 27, 2020 (GLOBE NEWSWIRE) -- ESW Capital, LLC announces that it intends to make a tender offer to acquire subordinate voting shares of Optiva Inc. (TSX:OPT)  at a price of CAD$60.00 in cash per Share. While ESW is willing to acquire any and all Shares that are tendered, certain approvals will be required from applicable securities regulators, including the Ontario Securities Commission, prior to the launch of the Offer.

The Offer values Optiva's equity at approximately CAD$379 million on a fully diluted basis which ESW believes is a more than full valuation representing a significant premium to Optiva stock’s trading history, and is:

• a 122% premium to the 20 day VWAP ending on July 24, 2020, being the last trading day immediately preceding the day on which ESW announced its intention to make the Offer;
• a 92% premium to the 52-week high of the Shares; and
• above any closing price for the Shares since February 16, 2017.

Background to the Offer

Maple Rock Capital Partners (“Maple Rock”) and EdgePoint Investment Group Inc. (together with Maple Rock, the “Activists”) launched a “proxy fight” via Maple Rock’s open letter and requisition this past January. Subsequently in June, in order to disqualify ESW’s director nominees, Optiva declared that ESW, through one or more of its affiliates, competes with Optiva - an assertion with which ESW strenuously disagrees. These actions have predictably resulted in a state of disarray as Optiva and ESW work to unwind an operating model put in place with full transparency and shareholder approval and which had, until Optiva's declaration, formed the basis of a successful relationship between the parties. As Optiva’s largest shareholder, ESW fears that the situation is likely to continue to deteriorate. As one of many examples, Optiva recently issued debentures (over 85% issued to the Activists) that are, in ESW’s analysis, markedly worse for shareholders than the preferred shares they redeemed.

ESW’s Offer will have a simple goal: to allow any and all shareholders who wish to walk away from this infighting to sell their Shares at a premium value of CAD$60/share.

ESW first made a proposal to Optiva’s board of directors to acquire the Shares on June 26, 2020. Per applicable securities laws, Optiva was required to convene a special committee and supervise the preparation of a formal valuation (the "Required Valuation") by an independent valuator so that ESW could make its bid public. ESW had requested that the valuator be engaged no later than July 2, 2020. It is now July 27, 2020 – more than three weeks later – and Optiva is only now proposing the engagement of a valuator but only on commercially unreasonable terms. As a result of what seems to us to be Optiva's unwillingness to engage with ESW in good faith, we have determined to announce our intention to make the Offer through this press release.

Following completion of the Required Valuation and subject to receipt of the Exemption (defined below), ESW will deliver its formal take-over bid circular to the shareholders of Optiva and make all filings with the appropriate securities regulatory authorities necessary to commence the Offer.

Exemptive Relief Application

ESW will not impose a minimum tender condition in the Offer – it is willing to acquire the Shares of any shareholder that wishes to participate for CAD $60/share. However, applicable securities law requires that at least 50% of the outstanding Shares (calculated on a fully diluted basis excluding the Shares held by ESW), be validly deposited under the Offer (the “Majority of the Minority Requirement”).

ESW believes that, consistent with prior public disclosure, the Activists will not tender their Shares to the Offer, preventing the Offer from meeting the Majority of the Minority Requirement and as result will stymie the Offer. Accordingly, prior to formally launching the Offer, ESW will make an application to the OSC for a hearing to approve an amendment to the Majority of the Minority Requirements so that any and all shareholders wishing to participate in the Offer will be permitted to sell their Shares (the "Exemption"). In connection with the Exemption, ESW will seek to have the Majority of the Minority Requirements amended, such that Shares tendered to the Offer will be permitted to be taken up on the tendering of a majority of the Shares, determined without reference to those Shares held by ESW, the Activists or any of their respective affiliates or joint actors that have not tendered their Shares. ESW believes the Exemption is in the best interest of all shareholders, and shall be seeking a hearing on its application for Exemption on an expedited basis. The launch of the Offer is conditional upon ESW successfully obtaining the Exemption; shareholders are cautioned that there can be no guarantee that ESW will be successful in obtaining the Exemption.

ESW believes that selling shareholders should receive the highest possible price for their Shares, and will equally support an application for an exemption from the Majority of the Minority requirement made by any other party, including the Activists, to acquire any and all tendered shares for a price higher than that contained in the Offer.

Conditions to the Take Up of Shares Tendered under the Offer

The formal Offer will be subject to customary take-up conditions, and will include (but not be limited to) a requirement that Optiva has no change to its equity capitalization prior to or as a result of the Offer. Such a condition is entirely within the control of Optiva’s board of directors, and the taking of any action that triggers equity dilution during or as a result of the Offer would inhibit shareholder choice and block willing shareholders from being able to sell their Shares at CAD$60/share (or higher).

The Offer, which may be made by an affiliate of ESW, will not be subject to any financing condition and will be financed through ESW’s existing cash reserves. Further details concerning the Offer will be included in the take-over bid circular to be sent to Optiva’s shareholders.

Early Warning Matters

This press release is issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which requires a report to be filed under Optiva’s profile on SEDAR (www.sedar.com) containing additional information with respect to the foregoing matters. A copy of such report may be obtained by contacting ESW at info@eswcapital.com.

ESW currently holds an aggregate of 1,194,725 Shares representing approximately 27.7% of the outstanding Shares on an undiluted basis. ESW also holds warrants exercisable for up to 975,712 Shares, which, upon exercise would increase ESW’s position to approximately 38.9% on a partially diluted basis. As noted above, as ESW is an “insider” of Optiva for purposes of applicable securities laws, ESW has requested that the board of directors of Optiva establish a special committee of independent directors to supervise the preparation of a formal valuation of the Shares by an independent valuator.

About ESW Capital, LLC

ESW Capital, LLC is based in Austin, Texas and is focused on buying, strengthening, and growing mature business software companies. By taking advantage of its unique operating platform, ESW revitalizes its acquisitions for sustainable success while making customer satisfaction a top priority. ESW and its affiliated companies have been in the enterprise software space since 1988, and the group includes notable brands such as Aurea, Ignite Technologies, Trilogy and Versata.