Sydney, Nova Scotia, July 2 , 2008 - Nexient Learning Inc. (NEX: NXN.H), Canada's largest corporate training company, confirmed today that it completed its previously announced recapitalization on June 30, 2008, and that its common shares will trade on a consolidated basis on the opening of trading on the NEX exchange on July 3, 2008 under the trading symbol “NXL.H”. The recapitalization and share consolidation were previously agreed with Nexient’s debentureholders in a March 26, 2008 memorandum of understanding, announced by press release on March 26, 2008 and approved by Nexient shareholders at its annual and special meeting on June 4, 2008.
“The recapitalization strengthens the balance sheet to support the Company’s execution of its market leadership strategy,” says Stuart Bentley, Nexient’s newly appointed Chairman of the Board. Mr. Bentley also commented, “The board extends its appreciation to the shareholders for their endorsement of the plan and extends its appreciation to Colleen Moorehead for her unwavering focus on delivering a plan that satisfied all stakeholder interests.”
With the recapitalization completed, Colleen Moorehead will step aside as President and Chief Executive Officer of Nexient effective June 30, 2008, and Donna de Winter becomes the new President and Chief Executive Officer.
Colleen Moorehead said, “I am delighted with the shareholder support of the balance sheet plan, the strategy and leadership team going forward. There has been significant investment in business processes, infrastructure and customer alignment in the last two years that will support our strategy going forward. I am pleased to transition the President and CEO role to Donna de Winter effective June 30, 2008. She has partnered with me since September 2006, and she has my absolute confidence as the new leader of Nexient.”
“I would like to thank Colleen for her leadership. Colleen’s passion inspired us and her focus brought clarity to a customer first business approach,” said Donna de Winter, incoming President and CEO, “We now have the shareholders’ permission to execute our multi-year plan and our senior management team is unified around execution of the strategy. I am excited to take the organization forward delivering productivity and performance to career driven learners and results driven organizations.”
Details of the Recapitalization Plan
The recapitalization involved the restructuring of the existing secured debentures and warrants issued by Nexient or its subsidiary as follows:
(1) the conversion of the approximately $890,947 of debentures and accrued interest into 8,909,471 post-consolidation common shares;
(2) the conversion of approximately $9.6 million of debentures into 79,810,803 new voting preferred shares of Nexient, each convertible for no further consideration into one post-consolidation common share;
(3) the conversion of the $5.0 million debentures into $5.0 million of new 2nd Senior Debentures maturing on January 1, 2010 and bearing interest at a rate of 9.5% per annum, payable through additions to principal (or, at the option of the holder, in common shares of Nexient) until December 31, 2008 and thereafter payable in cash;
(4) the conversion of $5.0 million of outstanding debentures of Nexient into $5.0 million of new 3rd Senior Debentures maturing on January 1, 2010 and bearing interest at a rate of 12% per annum, payable as follows: (i) 10% interest payable through additions to principal (or, at the option of the holder, in common shares) until December 31, 2008 and thereafter payable in cash and (ii) 2% interest payable in common shares;
(5) the conversion of $10 million of outstanding debentures into new mezzanine debt maturing on January 2, 2010, bearing interest at a rate of 15% per annum, payable as follows: (i) until December 31, 2008, 12% interest payable through additions to principal (or, at the option of the holder, in common shares of Nexient) and 3% interest payable in common shares and (ii) after December 31, 2008, 4% interest payable through additions to principal (or, at the option of the holder, in common shares), 3% interest payable in common shares and 8% interest payable in cash;
(6) the cancellation of approximately 23.9 million pre-consolidation outstanding Series A, B, C, Series D and Series F warrants of Nexient held by the debentureholders;
(7) the issuance of 1,136,363 new warrants with respect to 2nd senior Debentures each exercisable for one post-consolidation common share at an exercise price to $0.12.
As part of the recapitalization, Nexient’s outstanding 34.8 million common shares (76.8 million on a fully diluted basis) have been consolidated on the basis of one new common share for every four old common shares. Nexient will be mailing a transmittal letter to its shareholders in the next few days requesting that shareholders exchange their old common share certificates to receive new consolidated common share certificates. The share consolidation is effective June 30, 2008, but shares will continue to trade on a pre-consolidation basis until the opening of trading on the NEX exchange on July 3, 2008. After giving effect to the recapitalization, the consolidation reduces the number of outstanding common shares from approximately 70.4 million (401.8 million on a fully diluted basis) to approximately 17.6 million (approximately 100.5 million on a fully diluted basis). Any fractional shares will be cancelled without further consideration.
Following completion of the recapitalization, holders of Nexient’s debentures hold approximately 92.2% of the outstanding voting securities of Nexient.
In connection with the recapitalization, senior management of Nexient are expected to receive options to acquire 1,740,352 post-consolidation common shares. The exercise price for half of these options is expected to be $0.12 per common share with the exercise price for the other half expected to be $0.18 per common share. In addition, management and directors are expected to receive additional performance incentives (which may be in the form of options, stock appreciation rights, deferred share units or other incentive securities) that are economically equivalent to up to 17,447,212 options. These incentives may entitle senior management and directors of Nexient to receive a cash payment for each incentive equal to the difference between the strike price of the incentive and the market price of the common shares at the time of payment. The strike price for half of the incentives is expected to be $0.12 per common share after giving effect to the consolidation, with the strike price for the other half of the incentives expected to be $0.18 per common share after giving effect to the consolidation. It is expected that the options and incentives will vest 20% annually over a five year period. Subject to regulatory approval, the management incentive may be paid in common shares or other securities (including debt) in lieu of cash. Allocation and issuance of these options and other incentives to individual members of senior management will be in the discretion of the Board of Directors.
About Nexient Learning Inc.
Nexient Learning Inc. is the largest corporate training and consulting company in Canada. Nexient delivers the broadest choice of top calibre, industry-recognized curricula in information technology, business process improvement and leadership and business skills. Nexient’s learning services include learning management systems, curriculum development and strategic consulting. With 18 locations across Canada, Nexient offers innovative learning solutions in both classroom and online formats. Common shares of Nexient are traded on the NEX exchange. More information is available on the company’s website at www.nexientlearning.com.
Forward Looking Statements
This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors including economic conditions which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The granting of options and other management incentives is in the discretion of the board and may be subject to regulatory approval and market activity. The Company specifically disclaims any obligation to update these forward-looking statements, except as required by applicable securities laws. There is no guarantee that forward-looking statements will prove to be accurate and readers should not place undue reliance on forward-looking statements.
For further information, please contact:
Donna de Winter
Chief Executive Officer
Nexient Learning Inc.
(416) 964-8688 ext. 2636
ddewinter@nexientlearning.com