FAQs on the First National Transaction with Birch Hill and Brookfield
1. What are the details of the transaction?
First National Financial Corporation (“First National” or the “Company”) has agreed to be acquired by private equity funds managed by Birch Hill Equity Partners (“Birch Hill”) and Brookfield Asset Management (“Brookfield”). Birch Hill and Brookfield will acquire all of the outstanding common shares of the Company for $48.00 per share in cash, other than shares rolled by Stephen Smith and Moray Tawse. Messrs. Smith and Tawse will each sell approximately two-thirds of their current shareholdings in the Company and will roll their remaining shares.
As a result of the transaction, Birch Hill and Brookfield will own an approximate 62% interest in First National, and Messrs. Smith and Tawse will each maintain an approximate 19% interest.
Upon closing of the transaction, the Company’s common shares will be delisted from the TSX. The Company’s preferred shares will continue to be listed on the TSX and, as a result, the Company will continue to be a reporting issuer.
First National intends to continue paying its regular monthly cash dividend of $0.208334 per common share in the ordinary course through to closing of the transaction and regular quarterly dividends on the preferred shares.
Further information can be found in the Company’s press release.
2. How does this transaction position First National for the future?
Management expects that the resources and expertise that Birch Hill and Brookfield will bring to the Company will put us in an even stronger position as we move forward.
First National will continue its mission to be the leading non-bank mortgage lender in Canada. We remain focused on building our business and delivering the great service that our customers have come to expect.
We expect that the transaction will create new opportunities for our business. We are confident that the continued ownership and involvement of our two co-founders, Stephen Smith and Moray Tawse, will preserve the entrepreneurial spirit, team culture, and the service-first mindset that has underscored our success over the past 37 years.
3. Will Stephen Smith and Moray Tawse continue to be involved in the business?
Yes, Messrs. Smith and Tawse will each maintain an approximate 19% interest in First National and will remain involved in the Company alongside Birch Hill and Brookfield.
4. Will the transaction change the way First National does business?
No – we will continue to operate as First National Financial LP, and we will remain focused on building our business and delivering the great service that our customers have come to expect.
5. Who should I call if I have questions about my mortgage, pre-approval or refinancing? Will there be any impact from the change in ownership?
The terms and conditions of your mortgage, pre-approval or refinancing will not be affected. Please continue to contact First National with any questions about your mortgage, pre-approval or refinancing.
6. Will First National change its name or move its headquarters?
No – we will continue to operate as First National Financial LP and maintain our headquarters in Toronto, Ontario.
7. Who will lead First National going forward?
Jason Ellis is expected to remain First National’s Chief Executive Officer and lead the business in all aspects of its operations. First National’s current leadership team is also expected to continue following the conclusion of the transaction.
8. What will happen to First National’s outstanding preferred shares and senior unsecured notes?
Under the terms of the transaction, the Company’s preferred shares are expected to remain outstanding and listed on the TSX in accordance with their terms following closing of the transaction.
The Series 3, Series 4 and Series 5 Senior Unsecured Notes of the Company will be redeemed on the closing of the transaction to the extent outstanding at such time. Each holder of company notes outstanding at such time will receive a cash amount equal to the applicable redemption price, plus accrued and unpaid interest, as of the closing date in accordance with their terms.
9. What are the next steps for shareholders in respect of the transaction?
The Company expects to hold a special meeting of shareholders to consider and vote on the transaction in September 2025. The transaction must be approved by two-thirds of the votes cast by shareholders, as well as by a simple majority of the votes cast by shareholders excluding the shares held by Messrs. Smith and Tawse and any other shareholders required to be excluded from such vote in the context of a “business combination” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. If approved at the meeting, the transaction is expected to close in the fourth quarter of 2025, subject to court approval, Competition Act (Canada) clearance and other customary closing conditions.
Further information will be provided in the information circular for the special meeting of shareholders.