Mogo announces Coinsquare to combine with WonderFi , CoinSmart

Mogo announced that Coinsquare, in which Mogo has a 34% ownership stake, WonderFi Technologies and CoinSmart Financial have entered into a business combination agreement to combine their respective businesses. Mogo is Coinsquare’s largest shareholder and is expected to be the largest shareholder of the publicly traded combined company following closing of the transaction with approximately 14% ownership. The combined company will have transacted over $17B since 2017 and have over $600M in assets under custody, with a registered user base in excess of 1.65M Canadians. The companies generated a total of approximately $37M in revenue for FY22 and are expected to have cash and investments of approximately $50M at close. It is anticipated that the shareholders meetings of each party to the business combination agreement will occur in the second quarter of 2023. Closing is expected to occur thereafter, subject to satisfaction of the closing conditions under the Business Combination Agreement. Following completion of the transaction, the shares of the combined company are expected to trade on the TSX, subject to approval or acceptance of each stock exchange in respect of the transaction. In connection with the entering of the business combination agreement by the parties thereto, Mogo has agreed to enter into an investor rights agreement with WonderFi, a voting and support agreement with Coinsquare, WonderFi and CoinSmart and a voting agreement with certain officers, directors and principals of Coinsquare, WonderFi and CoinSmart. Concurrently, certain directors, officers and significant shareholders of WonderFi, Coinsquare and CoinSmart have also entered into similar agreements to establish the size and composition of the board of directors of the combined company, expected to be comprised of nine members, as well as certain voting and governance matters related to the combined company. Pursuant to the IRA, which becomes effective on closing of the transaction, subject to certain conditions and until the later of 24 months following the effective date and the second annual general meeting of the combined company, the parties thereto have agreed that the new board shall consist of nine directors and that so long as Mogo owns, controls or directs, directly or indirectly, 5% or more of the then-outstanding shares of the combined company on a non-diluted basis, Mogo will be entitled to nominate one nominee to the new board. Pursuant to the VSA, subject to certain conditions, Mogo has agreed to vote its Coinsquare shares in favor of the transaction at any meeting of Coinsquare shareholders held to consider the transaction or any of the other transactions contemplated by the business combination agreement. Subject to certain conditions, the shares that are to be issued to Mogo on closing of the transaction, will be subject to escrow and will become freely tradeable over an 18-month period in three equal installments of 1/3rd The aforementioned escrow period may be shortened to a date that is not less than 12 months following the effective date, if on such date Mogo owns, controls or directs, directly or indirectly, less than 5% of the then-outstanding shares and Mogo does not have a representative on the new board.