Zaio Corporation Provides Update on Court Proceeding, Arranges Standby Facility, New Debt Facility, Conversion and Issuer Bid...

CALGARY, Aug. 31, 2016 /CNW/ - Zaio Corporation (TSXV: ZAO) (the "Company" or "Zaio") announces the decision by the Court of Queen's bench Alberta in the application by a group of convertible debenture holders to set aside the results of the meeting of convertible debentures held May 25, 2016. The Court has decided that the convertible debentures will not be automatically converted as previously announced (press release dated May 25, 2016). During this process, the Company preserved the rights of the debenture holders. No damages were sought in the application.

"The intent of the original offer was to help strengthen the Company's balance sheet and to give a fair and lucrative offer to the debenture holders," said Shane Copeland, CEO of Zaio Corporation. "In light of the outcome of the court case, Zaio will make an issuer bid to allow those who voted in favour of the original offer to participate."

The Company also announces that Zaio has arranged a standby facility to payout any outstanding convertible debentures at a maturity on May 9, 2017. The standby facility is for the amount of up to $5,000,000, by way of either direct funding by Stableview Asset Management or co-investment. Zaio (the "Borrower") will pay a standby fee of 7% of the standby amount to Stableview upon drawdown of the facility, satisfied by way of promissory notes, which in turn may be satisfied by the issuance of common shares of Zaio at the time of the drawdown at the Discounted Market Price (as defined in TSX Venture Exchange ("TSXV") policies on the date or added to the standby facility at the discretion of the Lender Representative. The standby facility will be utilized for repayment when due upon maturity of all outstanding, 10% secured, redeemable convertible debentures, maturing May 9, 2017 and to the extent not required for repayment of convertible debentures such other purposes, subject to the Lender Representative's prior approval. The standby facility will be available in a single drawdown of not less than $3,000,000 (or at the sole discretion of the Lender Representative) subject to the satisfaction or waiver of the drawdown conditions. The Borrower shall pay the Lenders on the Advance Date a drawdown fee of 20% of the amount of the Standby Facility drawn down to be added to the principal amount of the Standby Facility outstanding. The Maturity Date is Three (3) months from the Advance Date, which may be extended at the option of the Lenders for further nine (9) months (total one year). The Borrower will pay interest in the amount of 2% per month (for the three-month term), calculated and payable monthly in cash in arrears or at the option of the Lender's Representative in common shares issued at Discounted Market Price based on five-day volume weighted average price of the common shares. The interest rate reduces to 8% per annum collected and payable monthly in the event the standby facility is extended. The principal amount outstanding of the Standby Facility shall be convertible at the option of the Lender Representative at the lesser of Market Price (as defined in TSXV policies) and $0.11. The Borrower will pay for any and all reasonable legal expenses incurred with the establishment and maintenance of the standby facility.

Zaio has also arranged a debt facility of up to $4,000,000 lead by StableView Asset Management for general working capital needs essentially duplicating the terms of the facility of January 2016. Stableview has also agreed to convert the January 2016 facility into common shares of the Company, subject to the regulatory approval.

The issuer bid, standby facility, the Stableview facility and conversion are all subject to the approval of the regulatory bodies and the approval of the TSX Venture Exchange.

Zaio also announces that it is holding a shareholder conference call scheduled for Wednesday, August 31th, 2016 at 4:00pm Eastern Time. During the call, the executive management of the Company will provide shareholders with a corporate update and will discuss the Company's strategic plans and future growth prospects. A question and answer session will follow the corporate update.

CONFERENCE CALL DETAILS

Date: Wednesday, August 31, 2016
Time: 4:00 PM Eastern Time

Participant Dial-in Numbers:
Local – Toronto ([phone]
Toll Free – North America ([phone]
Conference ID: 59734882

Recording Playback Numbers:
Toronto ([phone]
Toll Free – North America ([phone]
Passcode: 734882 #
Expiry Date: Wednesday, September 7, 2016 4:00 PM Eastern Time

About Zaio Corporation

Zaio Corporation was founded on the simple premise that current real estate valuation technologies lacked the information and technology necessary to deal with today's dynamic housing market. Zaio is disrupting an industry that was once thought not possible through its proprietary valuation solutions.  Every day our GSE, banking, and investor clients rely on our proprietary solutions to fund loans and value assets. At Zaio, our mission is to ensure that our solutions provide businesses and consumers unparalleled insight into their real estate assets. For more information, visit www.zaio.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

This news release contains forward-looking statements which may include financial and business prospects, as well as statements regarding the Company's future plans, objectives or economic performance and financial outlooks. Such statements are subject to risk factors associated with the real estate industry, the overall economy in both Canada and the United States. Forward-looking information in this press release, includes, among other things, information relating to any applicable approvals required in order to complete the warrant surrender and share subscription which may include, but is not limited to, the approval of the TSX Venture Exchange. The Company believes that the expectations reflected in this news release are reasonable but actual results may be affected by a variety of variables and may be materially different from the results or events predicted in the forward-looking statements. Readers are therefore cautioned not to place undue reliance on these forward-looking statements. In evaluating forward-looking statements readers should consider the risk factors which could cause actual results or events to differ materially from those indicated by such forward-looking statements. These forward-looking statements are made as of the date hereof, and unless otherwise required by applicable securities laws, the Company does not intend nor does it undertake any obligation to update or revise any forward-looking statements.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities of the Company will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act)

SOURCE Zaio Corporation

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