Mississauga, Ontario--(Newsfile Corp. - December 16, 2015) - KST Industries Inc. ("KST") announced today that is has purchased $6,657,000 of aggregate principal amount of 6% convertible unsecured subordinated debentures (the "Debentures") of Data Group Ltd. ("DG") at a price of $3,328,500. The Debentures are listed for trading on the Toronto Stock Exchange ("TSX"), and the purchase was effected through the TSX.
The Debentures purchased represent 14.89% of the issued and outstanding Debentures at the date hereof.
KST currently owns 3,280,500 Common Shares of DG being 13.97% of the issued and outstanding Common Shares on the date hereof.
On November 12, 2015, DG announced the redemption of $33,500,000 (or approximately 75%) of the aggregate principal amount of the Debentures and that it has elected to satisfy its obligation to pay the redemption price by issuing and delivering Common Shares in lieu of cash. The number of Common Shares to be issued and delivered will be determined by dividing the redemption price by 95% of the volume - weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending December 16, 2015.
As indicated in the DG announcement, based on the then current trading price of the Common Shares, DG will be required to issue a large number of Common Shares, which will significantly dilute existing shareholders. Based on the current trading price, in the absence of the purchase of the Debentures, KST would following conversion of the Debentures have ceased to be an insider of DG as a result of its shareholdings in DG.
As a result of the purchase of the Debentures, it is expected that KST will continue to hold more than 10% of the Common Shares and thus remain an insider of DG. At this time KST is unable to determine the exact percentage of Common Shares it will hold after the conversion.
In addition to KST's holding of Common Shares and Debentures, KST has a relationship with Harinder Takhar, who is an insider of KST as a result of his being a member of the Board of Directors of KST.
Mr. Takhar is the Chief Executive Officer of KST and is one of two members of its Board of Directors, and is one of the two individuals who collectively, but not individually, have decision making authority over KST, including control and direction over the securities owned in DG.
In addition, KST is indirectly controlled by Mr. Takhar's daughters, who collectively, but not individually, have control and direction over the shares of KST.
The Debentures were acquired in the ordinary course of business for investment purposes. KST may acquire additional Common Shares and/or Debentures from time to time or dispose of same or all or continue to hold them.
Additional information regarding the conversion of the Debentures is available on www.datagroup.ca and in the disclosure documents filed by DG on the System for Electronic Documents Analysis and Retrieval (SEDAR) at www.sedar.com.
For further information, contact:
Mr. Joseph Jeyanayagam
Vice-President Finance and Admin. & CFO
KST Group Inc.
6400 Northam Drive
Mississauga, Ontario
L4V 1J1
Canada
Tel: 905-362-6400 ext. 1230
