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Mogo is Coinsquare's largest shareholder and is expected to be the largest shareholder of the Combined Company on closing
The Combined Company will have a user base in excess of 1.65 million Canadians
Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO) ("Mogo" or the "Company"), one of Canada's leading financial technology companies, today announced that Coinsquare Ltd. ("Coinsquare"), in which Mogo has a 34% ownership stake, WonderFi Technologies Inc. (TSX:WNDR, OTCQB:WONDF, WKN: A3C166))))) ("WonderFi") and CoinSmart Financial Inc. (NEO:SMRT) (FSE:IR) ("CoinSmart") have entered into a business combination agreement (the "Business Combination Agreement") to combine their respective businesses (the "Transaction"). Mogo is Coinsquare's largest shareholder and is expected to be the largest shareholder of the publicly traded combined company (the "Combined Company") following closing of the Transaction with approximately 14% ownership.
"This is a milestone transaction for the crypto industry, creating a unique investment opportunity with the leading crypto exchange in Canada. We believe the scale and diversification of this combination leaves them well positioned to build long-term value for shareholders and we congratulate the companies on this transaction," said Greg Feller, President and CFO. "This also provides Mogo shareholders with meaningful ownership in a new public company with the only fully regulated crypto exchange in this dynamic and growing industry."
The Combined Company will offer one of the largest registered crypto asset trading companies in the world, which will provide Canadians a wide range of diversified products and services including both retail and institutional crypto trading, staking products, B2B crypto payment processing and digital asset custody, and will also soon include sports betting and gaming. The Combined Company will have transacted over $17 billion since 2017 and have over $600 million in assets under custody, with a registered user base in excess of 1.65 million Canadians. The companies generated a total of approximately $37 million in revenue for fiscal year 2022 and are expected to have cash and investments of approximately $50 million at close.
"We are excited to add Mogo, one of Canada's leading FinTechs, as a significant investor in WonderFi and having their representative as a future member of our board of directors," said WonderFi President and Interim CEO, Dean Skurka. "We're confident having Mogo as part of our team, bringing their extensive experience in the Canadian market, will benefit our company and its shareholders in a meaningful way."
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.
For more information on the Transaction, please refer to the joint press release issued by the parties to the Business Combination Agreement.
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 (the "IRA"), a voting and support agreement with Coinsquare, WonderFi and CoinSmart (the "VSA") and a voting agreement with certain officers, directors and principals of Coinsquare, WonderFi and CoinSmart (the "Voting Agreement"). 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 (the "New Board"), expected to be comprised of nine members (including one Mogo nominee), 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 (the "Effective Date"), 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 (the "Shares") 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 favour 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.
