The Notes are being offered on a private placement basis in Canada pursuant to an offering memorandum in reliance upon exemptions from the prospectus requirements under applicable securities legislation. First National intends to use the net proceeds of the Notes offering to repay indebtedness, as described in further detail below, and for general corporate or partnership purposes. The Notes are offered through a syndicate of dealers co-led by TD Securities and CIBC Capital Markets, supported by RBC Capital Markets, BMO Capital Markets, Desjardins Securities, National Bank Capital Markets, Scotiabank, ATB Capital Markets and Laurentian Bank Securities.
As previously announced, the plan of arrangement of First National, pursuant to which a newly-formed acquisition vehicle controlled by private equity funds managed by Birch Hill Equity Partners Management Inc. and private equity funds managed by Brookfield Asset Management will acquire all of the outstanding common shares of First National (the “Arrangement”), is expected to be completed in October 2025. Closing of the Arrangement is currently scheduled to occur on or about October 22, 2025. The offering of the Notes is expected to close on October 23, 2025, the day after the scheduled closing date of the Arrangement.
As also previously announced, First National’s currently outstanding 2.961% Series 3 Senior Unsecured Notes due November 17, 2025 (the “Series 3 Company Notes”), 7.293% Series 4 Senior Unsecured Notes due September 8, 2026 and 6.261% Series 5 Senior Unsecured Notes due November 1, 2027 (collectively, the “Existing Company Notes”), are required to be redeemed upon the closing of the Arrangement.
If, as currently scheduled, the Arrangement closes prior to the closing of the offering of the Notes, the Existing Company Notes will be redeemed in accordance with the Arrangement agreement and the net proceeds of the offering of Notes will be used to, among other things, repay other indebtedness. If the closing of the Arrangement is delayed and the offering of the Notes closes before closing of the Arrangement, the net proceeds of the offering will be used to, among other things, redeem the Existing Company Notes upon the closing of the Arrangement.
If the Arrangement is not consummated on or prior to April 27, 2026 (the outside date agreed to by the parties in the Arrangement agreement) or such later date as may be extended in accordance with the Arrangement agreement (the “Outside Date”), or the Arrangement agreement is terminated on or at any time prior to the Outside Date in accordance with its terms without consummating the Arrangement (each, a “Special Mandatory Redemption Event”), First National will be required to redeem the Series 2025-3 Notes in full, at a redemption price equal to 101% of the principal amount of the Series 2025-3 Notes, plus accrued and unpaid interest, if any, up to, but excluding, the date of the special mandatory redemption (a “Special Mandatory Redemption”). The Series 2025-1 Notes and Series 2025-2 Notes are not subject to the Special Mandatory Redemption.
If a Special Mandatory Redemption Event occurs, First National intends to use the net proceeds of the offering of the Notes to (i) redeem the Series 2025-3 Notes pursuant to the Special Mandatory Redemption, (ii) repay the Series 3 Company Notes upon their maturity, (iii) make a loan to First National Financial LP (the “Partnership”) which will allow the Partnership to repay indebtedness under its bank credit facility, and (iv) use the balance, if any, for general corporate or partnership purposes.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.