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Westaim Completes JEVCO Acquisition

Published: 04/05/2010

By Erin Brady, Yana Ermak, Miho Felicio, Gordon Goodman, Chris Hersh, Tom Kapsales, Bernice Karn, Robert Kligman, Laurie LaPalme, Bruce Leonard, John P. McGowan, Christopher B. Norton, Brian Reeve

On March 29, 2010, The Westaim Corporation completed the acquisition of all of the shares of JEVCO Insurance Company from Kingsway Financial Services Inc ("KFS"). The aggregate purchase price payable by Westaim to KFS in respect of the Acquisition is $264.2 million, subject to certain adjustments. In accordance with the terms of the Purchase Agreement, Westaim made a cash payment to KFS of $236.7 million. In addition, Westaim deposited the sum of $27.5 million with an escrow agent to be held in trust pending certain adjustments to the purchase price in accordance with the Purchase Agreement. Immediately prior to the completion of the Acquisition, KFS made a payment of $12 million to JEVCO to settle certain intercompany balances and JEVCO paid a cash dividend to KFS in the aggregate amount of $10.8 million.

In order to finance the Acquisition, Westaim had previously issued a total of 550 million subscription receipts at an issue price of $0.50 each for gross proceeds of $275 million. All 550 million Subscription Receipts were automatically converted immediately prior to the completion of the Acquisition into an aggregate of 486,147,088 common shares of Westaim and 63,852,912 Series 1 Class A non-voting, convertible participating preferred shares of Westaim having the terms and conditions specified in the Articles of Amendment filed by Westaim on February 26, 2010.

GMP Securities LP acted as financial advisor to Westaim in connection with Acquisition and as the sole lead manager in respect of both a $50 million bought deal and a $59.5 million best efforts underwriting of Subscription Receipts.

Cassels Brock acted for the Westaim Corporation with a team that included Gordon Goodman (Financial Services and Insurance - Corporate & Regulatory), Brian Reeve (Financial Services and Insurance - Corporate & Regulatory), Laurie LaPalme (Business Law and Insurance - Corporate & Regulatory), Erin Brady (Business Law and Insurance - Corporate & Regulatory), Miho Felicio (Business Law and Insurance - Corporate & Regulatory), Chris Hersh (Competition, Antitrust & Foreign Investment), Yana Ermak (Competition, Antitrust & Foreign Investment), Bruce Leonard (Insolvency & Restructuring), Chris Norton (Tax), Bernice Karn (Intellectual Property), Tom Kapsales (Real Estate), John McGowan (Employment Law), Rob Kligman (Research Partner, Litigation), Jessica Fingerhut (Business Law), Richard Da Costa (Financial Services) and Jonathan Tkatch (Securities).