SEB Announces the Completion of $20 Million Strategic Financing and $10 Million New Credit Facility

 Smart Employee Benefits Inc. a leader in benefits processing solutions and services, announced the issuance by SEB of a $20,000,000 convertible debenture (the “Debenture”) by way of a non-brokered private placement (the “Financing”). The Financing solidifies SEB’s balance sheet and provides the capital to focus on numerous growth opportunities.

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The Financing is being provided by Co-operators Financial Services Limited (“The Co-operators”). The proceeds of the Financing were used to repay term indebtedness of the Company and will also be used for general working capital purposes.

States John McKimm, President, CEO, CIO of Smart Employee Benefits Inc.: “To take advantage of its many business opportunities, SEB initiated the process to find a strategic investment partner in mid-2019. Scotia Capital was engaged to review strategic alternatives. The process has culminated with a financing from The Co-operators who brings both capital and strategic partnership value. The Co-operators appreciates the strategic fit between SEB’s Technology Division and Benefits Division and the competitive advantage this gives SEB in creating value for its clients and winning new business. The management and Board of SEB believe The Co-operators represents the optimal value for SEB shareholders near term and long term; as SEB continues its product innovation, adding powerful new features that enhance our value proposition to customers and partners.

The Co-operators Group Ltd., through its subsidiaries, is one of the leading Canadian owned multi-line insurers, offering auto, home, life, health, group benefits, farm, travel, and business insurance as well as investments. It is owned by 45 member organizations including co-ops, credit unions and representatives from farm organizations. Its asset base is over $51.0 billion with operations across Canada. Its 45 member organizations serve over 5.8 million individual members. SEB group benefit clients already include one of The Co-operators Group Ltd.’s member organizations.”

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The Debenture has an interest rate of 10% per annum, paid semi-annually with the first interest payment due on February 28, 2021, and the principal payment due at the maturity date (the “Maturity Date”), being 60 months after the closing (the “Closing Date”). The interest rate may be reduced to a floor of 7% depending on the success of select business initiatives.

The principal amount of the Debenture is convertible into common shares of the Company (“Shares”) at a conversion price of $0.25 per Share, subject to adjustment (the “Conversion Price”). The Debenture is convertible at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the Maturity Date. If the volume weighted average trading price of the Shares on the TSX Venture Exchange (the “Exchange”) is equal to at least 175% of the Conversion Price for a period of 30 trading consecutive days, then the Debenture will be convertible at the option of the Company.

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