Bridging Finance Notice to Unitholders

December 8, 2020

Bridging Finance Inc. (“Bridging Finance“) recently sent out Information Circulars and Proxy Forms to all Unitholders in the Bridging Income Fund, Bridging Mid-Market Debt Fund and Bridging Indigenous Impact Fund relating to the following proposed changes. An FAQ on the proposed changes is also available below.

Bridging Finance Inc. – Notice of Meeting & Information Circular and Form of Proxy FAQ

English

 French

 

 

The main point on the Bridging Income Fund (LP and RSP), Bridging Indigenous Impact Fund and the Bridging Mid-Market Debt Fund (LP and RSP) is to change the notice period from monthly on 30 days notice to monthly on 90 days notice.

For the Bridging Income Fund (LP and RSP), there is also a proposal to eliminate the “catch-up fee” and set the Hurdle Rate to 6% which is in line with the Bridging Indigenous Impact Fund and Bridging Mid-Market Debt Fund.

Why are these changes being proposed? (Also in the FAQ, Question #4)

 The proposed changes to the funds aim to increase the protection of unitholders from the ongoing effects of COVID-19 and its potential related impacts. Further, these changes are being proposed to ensure greater consistency across the funds managed by Bridging Finance Inc.

  1. The changes to the redemption notice period, and the ability for the manager to accept or reject redemption requests, are being made for the following reasons:
    • The funds will be better able to manage liquidity to meet unitholder redemption frequencies;
    • It will provide the manager with increased flexibility in fulfilling the investment objective and utilizing the investment strategies of the funds;
    • Increased ability to meet investor expectations with respect to liquidity demands;
    • Enhanced liquidity risk management; and
    • Enhanced cash management ability in order to better protect unitholders from unusual fluctuations in redemption requests from unitholders.
  2. With respect to the change in incentive allocation payment to the general partner of the Bridging Income Fund LP and Bridging Income RSP Fund, the general partner believes that: (i) eliminating the “catch-up” incentive allocation currently payable to the general partner; and (ii) amending the defined “hurdle rate” will be beneficial to unitholders for the following reasons:
    • Simplification of the incentive allocation structure and consistency of the structure across funds managed by the manager;
    • Increased fairness and certainty to limited partners in calculating the incentive allocation structure.

The changes that are being voted on are as follows (they are also highlighted in the attached FAQ):

Bridging Income Fund LP:

  1. To increase the notice period required to submit redemption requests by unitholders of the fund from 30 days to 90 days.
  2. To amend the incentive allocation payable to the General Partner by:
    • (i) eliminating the “catch-up” incentive allocation payable to the general partner such that all net income of the Fund once such “Hurdle Rate” (as defined in subsection (ii)) shall be allocated as to 80% to the limited partners of the Fund and as to 20% to the general partner; and
    • (ii) amending the definition of “Hurdle Rate” in the Limited Partnership Agreement to “a Total Return per Unit of six percent (6%), as determined on the first business day of each fiscal year and applicable for the entire fiscal year”.
  3. To make certain other amendments to the Limited Partnership Agreement consequential to the foregoing.

Bridging Income Fund RSP:

  1. To increase the notice period required to submit redemption requests by unitholders of the fund from 30 days to 90 days.
  2. To permit the manager, in its sole discretion, to accept or reject redemption requests, where the manager intends to accept redemption requests in circumstances where, in the view of the manager, it would not be prejudicial to the fund to do so.
  3. To amend the performance fee payable to the manager by:
    • (i) eliminating the “catch-up” performance fee payable to the manager such that of all return of the Fund once such “Hurdle Rate” (as defined in subsection (ii)), an amount equal to 20% of such return shall be payable to the manager as a performance fee; and
    • (ii) amending the definition of “Hurdle Rate” to “a Total Return per Unit of six percent (6%), as determined on the first business day of each fiscal year and applicable for the entire fiscal year”.
  4. To make certain other amendments to the Trust Agreement consequential to the foregoing.

Bridging Indigenous Impact Fund:

  1. To increase the notice period required to submit redemption requests by unitholders of the fund from 30 days to 90 days
  2. To permit the manager, in its sole discretion, to accept or reject redemption requests, where the manager intends to accept redemption requests in circumstances where, in the view of the manager, it would not be prejudicial to the Fund to do so.
  3. To make certain other amendments to the Trust Agreement consequential to the foregoing.

Bridging Mid-Market Debt Fund LP:

  1. To increase the notice period required to submit redemption requests by unitholders of the fund from 30 days to 90 days
  2. To permit the manager, in its sole discretion, to accept or reject redemption requests, where the manager intends to accept redemption requests in circumstances where, in the view of the manager, it would not be prejudicial to the Fund to do so.
  3. To make certain other amendments to the Limited Partnership Agreement consequential to the foregoing.

Bridging Mid-Market Debt Fund RSP:

  1. To increase the notice period required to submit redemption requests by unitholders of the fund from 30 days to 90 days.
  2. To permit the manager, in its sole discretion, to accept or reject redemption requests, where the manager intends to accept redemption requests in circumstances where, in the view of the manager, it would not be prejudicial to the Fund to do so.
  3. To make certain other amendments to the Trust Agreement consequential to the foregoing.

For further details on the changes and information on how to vote, please contact us below and we thank you for your continued support.

Ian Baele, Senior Vice President, Sales – C: (416) 937-7641, ibaele@bridgingfinance.ca

Scott Miller, Director, Sales – C: (647) 984-7524, smiller@bridgingfinance.ca

David Sharpe, Chief Executive Officer – C: (647) 981-5658, dsharpe@bridgingfinance.ca;

 

 

 

Disclaimer:

The Funds are generally exposed to several risks. See the offering memorandum of the Funds for a complete description of these risks. The Funds are offered on a private placement basis pursuant to an offering memorandum and are only available to investors who meet certain eligibility or minimum purchase amount requirements under applicable securities legislation. The offering memorandum contains important information about each Fund including their investment objectives and strategies, purchase options, applicable management fees, performance fees, other charges and expenses, and should be read carefully before investing. Performance data represents past performance of the Funds and is not indicative of future performance. Data based on performance history of less than five years may not give prospective investors enough information to base investment decisions on. Please contact your own personal advisor on your particular circumstances. This communication is for educational purposes and does not constitute investment advice or an offer to sell or a solicitation to purchase securities of the Funds.

Bridging Finance is the manager of the Funds. Prepared by Bridging Finance Inc. (December/2020)