The Midnight Investor Program
A unique product offered by Midnight is the Investor Program. To raise capital Midnight periodically issues Senior Preferred Shares ("Midnight Shares") through this program. Midnight is offering Senior Preferred Shares pursuant to exemptions from prospectus requirements in securities laws. The Midnight Shares feature monthly dividends (1.0% pa), growth opportunities (up to 7.0% pa), and cashless subscription/early liquidity options that are intended to provide the opportunity for investors to use the capital gains exemption ("CGE").
- Yield – The Midnight Shares pay a cash monthly dividend at a 1% annual rate on the initial redemption amount.
- Growth – The redemption amount of the Midnight Shares may appreciate but up to 7.0% each year, depending on the performance of Midnight’s business.
- Liquidity – The Midnight Shares are redeemable after 5 years (less a day).
- Priority – The Midnight Shares rank senior to all other classes of Midnight shares and are protected by an anti-dilution clause.
We also have unique Cashless Subscription and Early Liquidity options that are designed to help investors use their lifetime capital gains exemptions. Every Canadian is entitled to use this exemption to shelter up to approximately $825,000 of capital gains from sales of qualifying shares. The lifetime capital gains exemption encourages risk taking and investing in qualifying businesses.
Under the Cashless Subscription option an Investor may undertake a tax-free exchange shares of any private Canadian company (Aco) for Midnight Shares. The Aco shares transferred to Midnight are then repurchased for 20% cash (at least) and an Aco note that bears annual interest at 10%. Due to the nature and scope of Midnight’s business, the Midnight Shares should qualify for the lifetime capital gains exemption (if held for at least 24 months) even if the Aco shares do not. A due diligence fee of 5% of the Aco share value is payable on each Cashless Subscription (capped at $50,000, plus GST/HST).
Under the Early Liquidity option an Investor may arrange to sell Midnight Shares after 24 months to a Midnight-affiliated trust. Under this option the proceeds will be 90% of the initial redemption amount of the Midnight Shares plus 100% of the growth in value that accrues before the sale closes.
The trust will pay the Investor an upfront deposit on the sale equal to 80% of the initial redemption amount of the Midnight Shares. The Investor may cancel the sale arrangement at any time, upon return of the deposit and payment of a penalty. On closing the sales price will be paid in cash, net of the deposit. Investors may be entitled to offset the gain realized on selling Midnight Shares to the trust using their lifetime capital gains exemption.
Determining whether an individual is able to use the lifetime capital gains exemption is complex and Investors are urged to seek professional advice. To help offset advisor costs, Midnight will refund up to $10,000 of professional fees paid
Please note that all issuances of Midnight Shares will occur under exemptions from prospectus requirements in securities laws. Midnight is not a mutual fund or a non-redeemable investment fund for securities law purposes. An investment in Midnight Shares involves risks. All Investors are urged to contact their professional advisors before investing.
Contact us for a copy of the Investor Information.