Regulatory approval granted to move the sale forward
Montfort Capital Corp. is proceeding with the sale of its mortgage lending business after obtaining an exemption order from the Ontario Securities Commission (OSC).
First announced in late 2024, the regulatory approval allows the transaction to move forward. The company expects to complete the sale on March 26, 2025, subject to final conditions outlined in its definitive share purchase agreement.
The sale involves Brightpath Capital Corp., Brightpath Servicing Corp., and Brightpath II Servicing Corp., which together make up Montfort’s mortgage lending operations.
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The buyer, Brightpath Holdings Corp., is controlled by Blake Albright, a former director and senior officer of Montfort.
The purchase price consists of $13 million in intercompany debt owed by Montfort to Brightpath and the value of 17.5 million Montfort common shares and eight million 8% Class A preferred shares, calculated at 95% of the market price at closing.
As part of the transaction, Brightpath Holdings will transfer 11.5 million Montfort shares and all preferred shares back to Montfort for cancellation.
The company will also assume Montfort’s outstanding intercompany debt and issue a non-interest-bearing promissory note equal to the value of six million Montfort shares, priced at 95% of the market value at closing.
In addition, all of Albright’s security-based compensation, including stock options, restricted stock units, and performance share units, will be returned to Montfort for cancellation.
The OSC’s exemption order relieves Montfort from issuer bid requirements under National Instrument 62-104, allowing the transaction to proceed without additional regulatory conditions.
Montfort has agreed not to finalize the sale for at least five business days following the exemption order’s issuance, making March 26 the earliest possible closing date.
Montfort CEO Ken Thomson described the sale as part of the company’s strategic transition toward other lending segments based in its Toronto office.
"I would like to thank our special committee members for their leadership, stewardship and invaluable guidance as we look to conclude the sale transaction," said Thomson.
The agreement also includes a call right provision, giving Montfort the option to repurchase the six million shares at the original sale price, provided the transaction does not create a new control person under TSXV rules and the share price meets or exceeds the agreed value.
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If Montfort does not exercise this option within three years, Brightpath Holdings may sell the shares to a third party, with proceeds applied against the promissory note. Any remaining balance would be forgiven.
Montfort’s board and special committee considered alternative strategies before determining that the sale terms were reasonable, even if the value of the shares declines before closing or if Montfort is unable to recover amounts owed under the promissory note. They factored in mortgage market conditions, including rising loan defaults and declining property values in certain regions.
The TSX Venture Exchange granted conditional approval of the sale on February 6, 2025. Shareholder approval is not required unless the transaction results in the creation of a new control person.
With Montfort shifting its business focus, how do you view this decision and its potential impact? Share your perspective in the comments.
