VANCOUVER, British Columbia, May 06, 2020 (GLOBE NEWSWIRE) -- Leonard Clough representing 140,000 of the Mogo Inc. (MOGO.TO) (“Mogo”) 10% Convertible Senior Secured Debentures due May 31, 2020 (the “Debentures”), has some serious concerns about the proposed amendments and urges shareholders to vote AGAINST the management proxy dated April 17, 2020 (the “Circular”) which was filed on www.sedar.com on April 27, 2020. The amendments appear to only benefit the common shareholders, like Mr. Michael Wekerle (Director) and Mr. Greg Feller (CFO & Director) who own significant share positions and relatively few debentures (see sedi.ca for disclosure of their securities holdings of Mogo).

April 27, 2020 News Release

Mogo’s April 27, 2020 news release states: “If the Amendments are not approved by the Convertible Debentureholders at the Meeting, the Company intends to repay the principal amount and all accrued interest owing under all of the Convertible Debentures through the issuance of common shares on May 31, 2020, as permitted by the governing indenture.”

Paying back the Debentures on May 31, 2020 through the issuance of common shares of Mogo benefits the Debentureholders as they are repaid in full at $100 (a 100% increase from the current price of approximately $50) but dilutes the common shareholders (including management/directors). Management, as major common shareholders, does not want that to happen and therefore want the Debentureholders to vote to approve the proposed amendments to benefit the current shareholders and management and to the detriment of the Debentureholders.

The Debentureholders currently have rights and expectations and Mogo wants to change those rights and previous expectations with the proposed amendments set forth in the Circular. Vote AGAINST the proposed amendments and receive full repayment with shares in the coming weeks.

Additionally, in the April 27, 2020 news release, management cleverly omitted the proposed amendment to create a $1.50 minimum price at which common shares may be issued to repay the principal amount of the Debentures at maturity. This omission introduces a scenario to Debentureholders that could result in a significant loss, a loss that is not currently possible if you vote AGAINST the proposed amendments. Read the Circular and analyze the risks and calculations to understand the full scope of the proposed amendments.

The Choice/Analysis to Make

The Debentureholders need to decide to either:

1. vote AGAINST the proposed amendments set forth in the Circular and have the Debentures repaid within the next few weeks with common shares of Mogo at a price based on the 20 day VWAP preceding the current maturity date; or
   
   

2. vote FOR the proposed amendments set forth in the Circular if you believe the Company will continue to be a going concern in two years and that the share price will be above $1.50, so that no loss is taken on your investment. In other words, the same opportunity as you have now to recoup your losses that currently sit at approximately 50% if you purchased at par.

Mr. Clough commented, “The proposal to amend the indenture of the Debentures is an effort by management to prolong the inevitable equity dilution by two years. The proposed amendments extend the time risk by another two years and introduces a whole new risk that doesn’t exist now, namely the floor price on future share issuances ($1.50). Beyond that, this whole thing is riddled with conflict, from the recommendation by management who receive the biggest benefit as the largest common shareholders and the proxy solicitation firm who recommended it. Go read the fine print and vote AGAINST the proxy statement and say no to Wekerle and Feller.”

Responses to Three Significant Amendments

1. Extension of the Maturity date to May 31, 2022.
   

   1. It is unlikely Debentureholders will receive cash upon maturity in two years (May 31, 2022 amended maturity date) as Mogo has certain financial covenants that restrict cash uses. It is a fair expectation that Debentureholders will have to take shares. So why wait? Vote “NO” and take the shares now.
      

   2. Management has suggested that by agreeing to extend the Debentures, there would be more time to increase the share price creating a more orderly market in the event that Debentureholders are issued shares. Based on that logic, who would agree to take less shares in the future than they could receive now? So why wait? Vote “NO” and take the shares now.
      

   3. The current market price of the Debentures is approximately $50, which is an indication of what the Debentureholders think of the proposal, as the price of the Debentures have declined since the announcement of the proposed amendments. This is a decline of 50%. However, if the Debentureholders vote AGAINST the proposed amendments in the Circular and it is defeated, then Debentureholders will get repaid $100 per debenture (in shares) almost immediately. A return of 100%. Even if the shares received are liquidated at a lower price than the value originally received, there is still a significant cushion of 100%. So why wait? Vote “NO” and take the shares now.

1. Reduction of the Conversion Price from $5 to $3.50.
   

   1. At a current share price of approximately $1.00, this amendment has little to no value to the current Debentureholders but it is likely management will say otherwise, despite the Mogo share price performance since inception that might suggest otherwise. Analyze the audited financial statements for the year ended December 31, 2019 which are available on www.sedar.com and pay attention to the net loss year over year. So why wait? Vote “NO” and take the shares now.
      

2. Establish a minimum price of $1.50 at which common shares may be issued to repay the principal amount of the Convertible Debentures at maturity.
   

   1. Considering the following, if the shares trade at the current price of approximately $1.00 in two years, upon maturity, Debentureholders would receive only two thirds of their original investment payable in shares, a 33% loss, as shares can only be issued at $1.50. In another example, if the stock was at $0.50, Debentureholders would lose 66% of their investment. So why wouldn’t debenture holders opt for $100 per debenture now as discussed in 1(c)? Presently, there is no floor, or minimum. Why would debenture holders vote in favour of this new risk that only benefits the common shareholders (management) with less dilution? Run the calculations and analyze the risks and realities before you make your decision. So why wait? Vote “NO” and take the shares now.
      

   2. In the April 27, 2020 news release, management cleverly omitted the proposed amendment to create a $1.50 minimum price at which common shares may be issued to repay the principal amount of the Debentures at maturity which is why Debentureholders must not rely on Management and read the Circular before making your decision. So why wait? Vote “NO” and take the shares now.

Audited Financial Statements

The December 31, 2019 audited financial statements of Mogo represents Mogo as a going concern based in part on management’s belief of “the base of investors and debt lenders historically available to the Company.” Analyze the audited financial statements for the year ended December 31, 2019 which are available on www.sedar.com and pay attention to the net loss year over year.

Annual Information Form

Mogo’s annual information form dated March 27,202, states that “We have a history of losses and may not achieve consistent profitability in the future. In addition, if we continue to grow rapidly, we may not be able to manage our growth effectively. We generated net losses of $10.8 million in 2019. As of December 31, 2019, we had an accumulated deficit of $101.6 million…… If we are unable to achieve and sustain profitability, the market price of our publicly listed securities may significantly decrease.”

Read the Circular and analyze the risks and calculations to understand the full scope of the proposed amendments. Vote AGAINST the proposed amendments and receive full repayment in shares at these prices levels now as opposed to hoping that things improve in the future and receive less shares for repayment and expose yourself to new risks that are not present today.

Mr. Clough is relying on the exemption under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) to make public broadcast solicitations. The foregoing information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations. This news release and any solicitation made by Mr. Clough in advance of the Mogo Debentureholders’ meeting is, or will be, as applicable, made by Mr. Clough, and not by or on behalf of the management of Mogo. A copy of this news release containing the information required in section 9.2(4) of NI 51-102 will be filed on Mogo’s company profile on SEDAR at www.sedar.com.

A proxy may be revoked by instrument in writing executed by a shareholder or by his or her attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized or by any other manner permitted by law.

Mogo’s office is located at 2100 – 401 West Georgia Street, Vancouver, BC, V6B 5A1.

Contact:
Leonard Clough
604-800-4715