SEC Form SC 13E3/A filed by EXFO Inc (Amendment)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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SCHEDULE 13E-3

(Amendment No. 1)

RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(e)

EXFO, INC.

(Name of Subject Company)

EXFO, INC.

11172239 Canada Inc.

G. Lamonde Investissements Financiers Inc.

9356-8988 Québec Inc.

Germain Lamonde

Philippe Morin

(Name of Person(s) Filing Statement)

Subordinate Voting Shares without par value

(Title of Class of Securities)

302046107

(CUSIP Number of Class of Securities)

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(Name, address, and telephone numbers of persons authorized to receive notices and communications on behalf of the persons filing statement)

 

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with Copies to:

This statement is filed in connection with (check the appropriate box):

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐

Check the following box if the filing is a final amendment reporting the results of the transaction: ☐

CALCULATION OF FILING FEE

☒	Check box if any part of the fee is offset as provided by § 240.0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	Amount Previously Paid:	$14,028.69
	Form or Registration No.:	Schedule 13E-3
	Filing Party:	EXFO, INC.
	Date Filed:	7/16/2021

This Amendment No. 1 which amends and supplements the Rule 13e-3 Transaction Statement on Schedule 13E-3, together with the exhibits attached hereto (the “Transaction Statement”), is being filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), jointly by EXFO, Inc., a corporation existing under the laws of Canada (“EXFO”), and 11172239 Canada Inc. (“Purchaser”), G. Lamonde Investissements Financiers Inc., 9356-8988 Québec Inc., Germain Lamonde, and Philippe Morin (each, a “Filing Person,” and collectively, the “Filing Persons”) with respect to the plan of arrangement (the “Plan of Arrangement”) contemplated by an arrangement agreement among EXFO, Purchaser and G. Lamonde Investissements Financiers Inc., dated as of June 7, 2021 (as amended by the Amending Agreement dated July 7, 2021, the Second Amending Agreement dated July 12, 2021, and the Third Amending Agreement dated August 9, 2021 (the “Arrangement Agreements”)) pursuant to which Purchaser will acquire all of the outstanding subordinate voting shares of EXFO (the “Subordinate Voting Shares”) not already owned, directly or indirectly, by G. Lamonde Investissements Financiers Inc. 9356-8988 Québec Inc., Germain Lamonde, and Philippe Morin (to the extent an agreement is reached between the Purchaser or any of its affiliates and Philippe Morin such that Philippe Morin will, effective upon closing of the transaction, become a shareholder of the Purchaser) for the per Subordinate Voting Share consideration of $6.25 and EXFO will become a wholly-owned subsidiary of Purchaser. A copy of the Plan of Arrangement is included as Appendix B to the Management Proxy Circular, which is attached as Exhibit (a)(2)(i) to the Transaction Statement (the “Circular”). A special meeting of the Company’s shareholders has been called for August 13, 2021 (the “Meeting”) to approve a special resolution approving the Plan of Arrangement in the form attached as Appendix A to the Circular (the “Arrangement Resolution”). The Circular has been provided to EXFO’s shareholders pursuant to applicable Canadian law.

All references in the Transaction Statement to the consideration per Subordinate Voting Share payable to shareholders at the closing of the Arrangement are hereby amended to reflect a purchase price of $6.25 per Subordinate Voting Share.

ITEM 2. SUBJECT COMPANY INFORMATION

Item 2(f) is hereby amended and supplemented as follows:

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During the past two fiscal years, EXFO purchased a total of 254,243 subordinate voting shares (the “Shares”). In the fourth fiscal quarter of 2019, EXFO purchased 54,160 Shares, ranging from US $3.70 to US $3.92 per Share, with an average price of US $3.82 per Share. In the first fiscal quarter of 2020, EXFO purchased 54,528 Shares, ranging from US $3.75 to US $4.45 per Share, with an average price of US $4.13 per Share. In the first fiscal quarter of 2021, EXFO purchased 138,255 Shares, ranging from US $2.57 to US $2.92 per Share, with an average price of US $2.75 per Share. In the second fiscal quarter of 2021, EXFO purchased 7,300 Shares at a market price of US $3.85 per Share.

EXFO did not purchase any shares in the third fiscal quarter of 2019, the second, third and fourth fiscal quarters of 2020, as well as in the third fiscal quarter of 2021.

ITEM 4. TERMS OF THE TRANSACTION

Item 4(a)(2) is hereby amended and supplemented as follows:

In accordance with the Third Amending Agreement, Purchaser will acquire all of the outstanding subordinate voting shares (the “Subordinated Voting Shares”) of EXFO not already owned, directly or indirectly, by G. Lamonde Investissements Financiers Inc. 9356-8988 Québec Inc., Germain Lamonde, and Philippe Morin (to the extent an agreement is reached between the Purchaser or any of its affiliates and Philippe Morin such that Philippe Morin will, effective upon closing of the transaction, become a shareholder of the Purchaser) for the per Subordinate Voting Share consideration of $6.25.

 

The approval of the Arrangement Resolution (as defined in the Transaction Statement) is assured with respect to the two-thirds (66^2/3%) of the votes cast by all of the Shareholders as Mr. Lamonde holds directly or indirectly 93.53% of the voting rights attached to all of the issued and outstanding Shares and Mr. Lamonde has also agreed to vote his Multiple Voting Shares in favour of the Arrangement Resolution.

Item 5(e) is hereby amended and supplemented as follows:

On August 9, 2021, the Purchaser offered to increase the purchase price under the Arrangement from US $6.00 to US $6.25 per Subordinate Voting Share not held directly or indirectly by Germain Lamonde and Philippe Morin, and announced that it would enter into voting and support agreements (the “Support Agreements”) with Westerly Capital Management LLC (“Westerly Capital”), Mr. Chris Galvin and EHP Funds Inc., shareholders of EXFO who beneficially own or have control or direction over 3,161,487 Subordinate Voting Shares in the aggregate, or approximately 14.75% of all the issued and outstanding Subordinate Voting Shares of EXFO, other than the Subordinate Voting Shares held directly or indirectly by Germain Lamonde and Philippe Morin. Under the terms of the Support Agreements, Westerly Capital, Mr. Chris Galvin and EHP Funds Inc. have each agreed to support and vote the portion of the 3,161,487 Subordinate Voting Shares of EXFO that each controls in favour of the Arrangement.

On July 20, 2021, Viavi’s CEO, Mr. Oleg Khaykin, delivered by email to Mr. François Côté, in his capacity as Lead Director of the Corporation, and to Mr. Lamonde, a proposal from Viavi in which Viavi offered to acquire all outstanding Shares of the Corporation at a price of US $8.00 per Share. The proposal included a definitive form of Arrangement Agreement. Viavi also issued a press release announcing such proposal. Mr. Lamonde reiterated to the Board, immediately after receiving the email from Viavi and considering the press release issued, that, in his capacity as controlling shareholder of the Corporation, he would not support a transaction with Viavi.

On July 21, 2021, the Special Committee met, followed by a meeting of the Board on July 22, 2021, to consider the proposal from Viavi. Both the Special Committee and the Board, with Mr. Lamonde and Mr. Philippe Morin having recused themselves from the meeting, reviewed and diligently considered the Viavi proposal along with their legal advisors. The unambiguous statement by Mr. Lamonde affirming that he rejects the Viavi proposal led the Special Committee to recommend to the Board not to, and thereafter the Board to conclude that it will not, pursue such proposal as it is not capable of being completed and therefore does not qualify as an Acquisition Proposal that would reasonably be expected to constitute a Superior Proposal as defined in the Arrangement Agreement.

On August 9, 2021, the Purchaser offered to increase the purchase price under the Arrangement from US $6.00 to US $6.25 per Subordinate Voting Share not held directly or indirectly by Germain Lamonde and Philippe Morin, and announced that it would enter into voting and support agreements with Westerly Capital Management LLC, Mr. Chris Galvin and EHP Funds Inc., shareholders of EXFO who beneficially own or have control or direction over 3,161,487 Subordinate Voting Shares in the aggregate, or approximately 14.75% of all the issued and outstanding Subordinate Voting Shares of EXFO, other than the Subordinate Voting Shares held directly or indirectly by Germain Lamonde and Philippe Morin. Under the terms of the Support Agreements, Westerly Capital, Mr. Chris Galvin and EHP Funds Inc. have agreed to support and vote the 3,161,487 Subordinate Voting Shares of EXFO that they control in favour of the Arrangement.

 

On August 9, 2021, the Special Committee met, followed by a meeting of the Board, with Mr. Lamonde and Mr. Philippe Morin having recused themselves from such meeting, to consider the increased purchase price proposed by the Purchaser. The Special Committee recommended to the Board to, and the Board subsequently resolved to, approve the increased purchase price proposed by the Purchaser and to enter into a third amending agreement amending the Arrangement Agreement and Plan of Arrangement in order to reflect such increased purchase price. The terms of the Arrangement Agreement and Plan of Arrangement otherwise remained unchanged.

In making its determinations, the Special Committee, comprised of independent directors of the Corporation, with the assistance of its financial and legal advisors, carefully reviewed, considered and relied upon a number of substantive factors described in the Transaction Statement under the heading “Reasons for the Recommendation.” Such factors were also considered in determining the fairness of the Arrangement to the Minority Shareholders.

The special committee adopted TD Securities’ analyses and conclusion as its own and that the board of directors adopted the special committee’s analyses and conclusion as its own.

The Special Committee’s consideration of the factors described in the Transaction Statement under the heading “Reasons for the Recommendation” reflects its assessment of the fairness of the Arrangement to the Minority Shareholders in relation to the going concern value of the Company. In reaching its conclusion as to fairness, the Special Committee did not consider the liquidation value or net book value of the Corporation. The liquidation value was not considered because the Corporation is a viable going concern with no plans to liquidate. The Special Committee did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a material indicator of the value of the Corporation as a going concern. The Special Committee did not consider purchase prices previously paid for Subordinate Voting Shares in the past two years because, to the knowledge of the Special Committee, no such purchase of Subordinate Voting Shares was made by Mr. Lamonde or his affiliates in the last two years (other than by EXFO pursuant to its normal course issuer bid programs) in the last two years and purchases of Subordinate Voting Shares by persons other than Mr. Lamonde or his affiliates were not deemed relevant by the Special Committee in its analysis of the fairness of the Arrangement.

 ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS

The reports of TD Securities to the Board of Directors and/or the Special Committee of EXFO, as applicable, are attached hereto as Exhibit (c)(ii), (c)(iii), and (c)(iv).

The aggregate amount of fees payable to TD Securities by EXFO in connection with its work as it relates to the current transaction is CAN$800,000.

On August 9, 2021, Investissement Québec agreed to provide Purchaser with additional credit facilities of up to US $3,000,000, conditional on the contribution of Mr. Germain Lamonde for an equivalent amount. An English translation of the letter containing this agreement between Investissement Québec and Purchaser is attached hereto as Exhibit (b)(iii).

 

ITEM 16 – EXHIBITS

Item 16 is hereby amended and supplemented as follows:

 

SIGNATURES

After due inquiry and to the best of our knowledge and belief, the undersigned hereby certify that the information set forth in this statement is true, complete and correct.

 

 

 

† Previously filed as an exhibit to the Transaction Statement.

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