Converge Technology Solutions Corp. Announces the Closing of Portage CyberTech Non Brokered Private Placement

Rhea-AI Summary

Converge Technology Solutions Corp. (CTSDF) announced a significant milestone with the closing of a $35 million non-brokered private placement for its cybersecurity-focused SaaS entity, Portage CyberTech Inc. This offering involved 43.75 million shares priced at $0.80 each, resulting in Converge owning approximately 53% of Portage. This initiative aims to enhance shareholder value and capitalize on growth in the cybersecurity sector. The funds will support corporate purposes and acquisitions as Portage CyberTech prepares for a potential public listing.

Positive

• Successfully closed a $35 million private placement for Portage CyberTech.
• Converge owns approximately 53% of Portage CyberTech post-placement.
• Portage CyberTech is positioned to address high growth markets in cybersecurity.
• Funds raised will be utilized for acquisitions and corporate purposes.

Negative

• None.

GATINEAU, Québec and TORONTO, Oct. 14, 2021 (GLOBE NEWSWIRE) -- Converge Technology Solutions Corp. (“Converge” or the “Company”) (TSX: CTS) (FSE: 0ZB) (OTCQX: CTSDF) is pleased to announce that Portage CyberTech Inc. (“Portage CyberTech”), its recently formed cybersecurity-focused SaaS entity, has closed a non-brokered private placement. Portage CyberTech issued 43,750,000 common shares at a price of $0.80 per common share for gross proceeds to Portage of $35 million (the “Private Placement”). Upon completion of the Private Placement, Converge owns approximately 53% of Portage CyberTech, based on a $75 million valuation following completion of the Private Placement.

Portage CyberTech is a new cybersecurity-focused SaaS entity that combines 100% of Converge’s existing Becker-Carroll and Vivvo business units. Portage CyberTech enables governments and enterprises to securely offer digital services to their citizens and customers and better protect identities and private data sharing. Portage CyberTech’s products enable the ability to expand digital services, streamline data-sharing, drive down costs, and simplify the end-customer experience with exceptional time to service.

The creation of Portage is a result of Converge’s strategy to unlock and create shareholder value in high growth markets. Converge recognizes that SaaS businesses have distinct research and development and marketing economics, and Portage CyberTech intends to pursue a liquidity event (including through a public listing of Portage CyberTech shares) for all shareholders as it scales up to address its high growth market. An inter-company partner agreement between Converge and Portage CyberTech will support international customer engagements for a range of hosting options, including 24-7 support, so customers can benefit from Converge’s highly successful cross selling and go to market strategies. Portage CyberTech intends to use the net proceeds from the Private Placement for acquisitions and other general corporate purposes. Don Cuthbertson has been appointed the Chief Executive Officer of Portage CyberTech.

Shaun Maine and Don Cuthbertson, Converge’s Chief Executive Officer and Chief Technology Officer, respectively, have subscribed for Portage CyberTech common shares under the Private Placement. Such transactions are considered to be “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators ("MI 61-101"). Such transactions are exempt from the valuation and minority approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(a) of MI 61-101, respectively.

About Converge
Converge Technology Solutions Corp. is a software-enabled IT & Cloud Solutions provider focused on delivering industry-leading solutions and services. Converge’s regional sales and services organizations deliver advanced analytics, cloud, and cybersecurity offerings to clients across various industries. The Company supports these solutions with managed services, digital infrastructure, and talent expertise offerings across all major IT vendors in the marketplace. This multi-faceted approach enables Converge to address the unique business and technology requirements for all clients in the public and private sectors. For more information, visit convergetp.com.

For further information contact:
Converge Technology Solutions Corp.
Email: investors@convergetp.com
Phone: 416-360-1495

Forward-Looking Statements

This press release contains certain “forward‐looking information” and “forward‐looking statements” (collectively, “forward‐looking statements”) within the meaning of applicable Canadian securities legislation regarding Converge and its business. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward‐looking statements. Forward‐looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward‐looking statements. These forward-looking statements include, but are not limited to, the unlocking of shareholder value, the expectation of a liquidity event for Portage CyberTech shareholders, the benefits of the partnership between Portage CyberTech and Converge, the intended use of the net proceeds of the Private Placement, the execution of Portage CyberTech’s growth strategy and timing and completion of acquisitions. Except as required by law, Converge assumes no obligation to update the forward‐looking statements of beliefs, opinions, projections, or other factors, should they change. The reader is cautioned not to place undue reliance on forward‐looking statements. For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company’s annual information form, which is available on SEDAR under the Company’s profile at www.sedar.com, and the consolidated financial statements of the Company for the years ended December 31, 2020 and 2019, together with the corresponding Management’s Discussion and Analysis for additional risk factors described under “Risks and Uncertainties”.

FAQ

What is the purpose of the private placement closed by Converge Technology Solutions?

The private placement aims to raise $35 million for Portage CyberTech to support acquisitions and corporate purposes.

How much of Portage CyberTech does Converge own after the placement?

Converge owns approximately 53% of Portage CyberTech following the private placement.

What is Portage CyberTech focusing on?

Portage CyberTech is focused on providing cybersecurity solutions to governments and enterprises.

What will the funds from the private placement be used for?

The funds will be used for acquisitions and other general corporate purposes.

Is there any risk associated with the private placement?

Yes, forward-looking statements in the PR indicate that actual results may differ from the expectations due to risks and uncertainties.