The equity proceeds will go towards wholly owned subsidiaries of Novea, Jacana Warranty and Jacana Insurance to support a proprietary user application platform it developed that improves the consumer warranty and service contracts industry. The debt proceeds will support general corporate overhead expenses.
The investment is provided by Swiss-based Newpoint Financial Group, a global diversified financial services firm.
In exchange for Newpoint’s USD 50 million equity investment, Novea has issued to Newpoint 10% of its common stock and convertible redeemable preferred shares. As part of the transaction, Newpoint has also provided Novea with a USD 5 million, five-year, revolving line of credit, which Novea may draw down and use for corporate operational and overhead expenses.
In addition, Newpoint granted a warrant to purchase additional Novea common stock, which may be exercised at Newpoint’s discretion in an amount up to USD 50 million over the next 10 years, which increases the transaction if exercised in total value to USD 105 million. Other investment conditions include Newpoint having a board of directors and risk committee representation rights, Newpoint’s reinsurance company, Newpoint RE having first right of refusal on all Novea reinsurance business opportunities, and other customary covenants and monitoring rights.
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