Mr. Matthew Proud reports

DYE & DURHAM ANNOUNCES ACTIONS TO IMPROVE BALANCE SHEET FLEXIBILITY AND REDUCES CONVERTIBLE DEBT

Dye & Durham Ltd. has taken a series of actions to improve its balance sheet flexibility and reduce its convertible debt.

"By refinancing a sizable portion of our convertible debt on favourable terms, we are taking a meaningful step to deleverage our balance sheet and improve our long-term capital structure," said Dye & Durham chief executive officer Matthew Proud. "The actions we are taking today will, upon completion, reduce the balance of our original convertible debentures by $95-million, decrease our overall convertible debt by $10-million and give us greater flexibility to refinance and strengthen our balance sheet going forward as we continue to grow Dye & Durham into a global legal technology leader."

The company also has confirmed its Q1 2024 financial performance is in line with expectations and will discuss further on its coming quarterly conference call.

Details of convertible debenture refinancing

Key terms are as follows:

• $95-million of 3.75 per cent 2026 unsecured convertible debentures retired at $750 per $1,000 aggregate principal amount (approximately 17-per-cent yield to maturity);
• $85-million of 6.50 per cent 2028 unsecured convertible debentures issued at $600 per $1,000 aggregate principal amount (approximately 19-per-cent yield to maturity);
• Results in $10-million reduction in convertible debt.

Dye & Durham's board of directors has approved the commencement of a substantial issuer bid, under which the company will offer to repurchase for cancellation up to $95-million of its issued and outstanding 3.75 per cent convertible senior unsecured debentures due March 1, 2026 (original debentures), in exchange for cash, subject to a maximum aggregate payment of $32.25-million ($750 cash for each $1,000 principal amount of original debentures) or 6.50 per cent unsecured convertible debentures due Nov. 1, 2028 (new debentures) ($1,250 principal amount of new debentures for each $1,000 principal amount of original debentures) or a combination thereof, pursuant to the election of the holders of the original debentures.

In addition, the company has entered into an agreement with Canaccord Genuity Corp. to issue, on a bought deal private placement basis, $20.4-million aggregate principal amount of new debentures. The company intends to use the proceeds of the bought deal to finance a portion of the cash payable by the company under the offer. The bought deal is scheduled to close on or about Nov. 1, 2023, and is subject to certain customary conditions, including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange for the listing of the common shares of the company underlying the new debentures. The company has also granted Canaccord the right to purchase up to $5-million in aggregate principal amount of new debentures to cover overallotments, in whole or in part, up to 48 hours prior to closing. In the event the offer does not close by Dec. 22, 2023, or is otherwise terminated, the new debentures issued pursuant to the bought deal will mature and the principal and accrued interest on the new debentures will be repaid in full.

The new debentures will bear interest at 6.50 per cent per annum, payable in equal semi-annual payments, and will be convertible at any time at the option of the holder into common shares at a price of $40 (subject to adjustment) per share. On or after Nov. 1, 2026, the new debentures will be redeemable by the company in the event that the common shares are trading at 130 per cent of the conversion price for cash or common shares.

The new debentures mature on the earlier of the date of take-up of the original debentures or a termination event (as defined as follows). If the take-up of the original debentures occurs prior to the occurrence of a termination event, the maturity date of the new debentures shall be automatically extended to Nov. 1, 2028. A termination event means the earliest to occur of any of: (i) 5 p.m. Toronto time on Dec. 22, 2023, unless extended in writing by the mutual agreement of the company and Canaccord; or (ii) the company delivering to the debenture trustee a notice, executed by the company, declaring that the company will not be proceeding with the offer.

In support of the offer, holders of an aggregate principal amount of $78.7-million of original debentures have agreed to tender such original debentures to the offer, with $43-million of such original debentures to be tendered in exchange for cash and the balance to be tendered in exchange for new debentures. If original debentures are tendered to the offer for cash such that the aggregate cash payment for such original debentures would be greater than $32.25-million, the company will acquire such original debentures, as applicable, on a pro rata basis according to the amount of original debentures deposited for cash; and, if original debentures are tendered to the offer for new debentures such that the aggregate consideration payable for such original debentures would be greater than $65-million of new debentures, the company will acquire such original debentures on a pro rata basis according to the amount of original debentures deposited for new debentures.

The offer and bought deal will reduce the company's aggregate indebtedness by approximately $10-million, consistent with the company's strategy to reduce total debt over time. The offer will not be conditional upon any minimum number of original debentures being tendered. The offer will, however, be subject to other conditions and the company will reserve the right, subject to applicable laws, to withdraw or amend the offer, if, at any time prior to the payment of deposited original debentures, certain events occur. The company expects to commence the offer by the week of Oct. 30, 2023.

The company has engaged Canaccord as dealer manager for the offer and Computershare Investor Services Inc. to act as the depositary for the offer. Computershare will also act as trustee under the indenture governing the new debentures.

The formal offer to purchase and issuer bid circular, letter of transmittal and notice of guaranteed delivery containing the terms and conditions of the offer and instructions for tendering original debentures will be filed with the applicable securities regulators and mailed to registered debentureholders. The offer documents will be available under the company's SEDAR+ profile.

The original debentures are not and the new debentures will not be listed or posted for trading on any stock exchange or marketplace. Infor Financial Inc. was engaged by the board of directors of the company as the independent valuator to prepare formal valuations of the original debentures and the new debentures in accordance with applicable Canadian securities laws. The formal valuations contains Infor Financial's opinion that, based on the scope of its review and subject to the assumptions, restrictions and limitations provided therein, as of Oct. 19, 2023, the fair market value of: (a) the original debentures falls within the range of $645 to $715 per $1,000 principal amount of original debenture; and (b) the new debentures falls within the range of $600 to $695 per $1,000 principal amount of new debentures. Copies of the formal valuations will be included with the offer documents. The formal valuations are not and should not be construed to be a recommendation to a debentureholder or to others to take any course of action.

Neither the company nor its board of directors makes any recommendation to debentureholders as to whether to tender or refrain from tendering any or all of their original debentures to the offer. This press release is neither an offer to purchase nor a solicitation of an offer to sell any original debentures. The solicitation and the offer to purchase original debentures by the company are being made only pursuant to the offer documents. Debentureholders of the company are urged to read the offer documents carefully and to consult with their own financial, tax and legal advisers prior to making any decision with respect to the offer.

Conference call notice

The company will hold a conference call to discuss the transaction on Friday, Oct. 20, 2023, at 3:30 p.m. ET, hosted by senior management. A question-and-answer session will follow the corporate update.

Date:  Friday, Oct. 20, 2023

Time:  3:30 p.m. ET

Traditional dial-in numbers:   416-764-8659 or 888-664-6392

Reference No.:  60730705

Taped replay:   416-764-8677 or 888-390-0541

Replay code:   730705 followed by the number sign

About Dye & Durham Ltd.

Dye & Durham provides premier practice management solutions empowering legal professionals every day, delivers vital data insights to support critical corporate transactions, and enables the essential payments infrastructure trusted by government and financial institutions. The company has operations in Canada, the United Kingdom, Ireland, Australia and South Africa.

We seek Safe Harbor.