HIRE Technologies to Acquire Leaders and Co., Consulting in Governance and Leadership Inc., Announces $5.0 Million Loan Facility and Up to $3.0 Million Concurrent Financing

August 6, 2021 – HIRE Technologies Inc. (TSXV: HIRE) (“HIRE” or the “Company”), a company focused on modernizing and digitizing human resources solutions, announces that it has entered into a definitive arm’s length share purchase agreement dated August 5, 2021 (the “Agreement”) with the shareholders of Leaders and Co., Consulting in Governance and Leadership Inc. (“Leaders”), to acquire all of the issued and outstanding shares of Leaders (the “Acquisition”).

Acquisition Highlights

  • The proposed addition of a high margin premier executive search firm to the HIRE network will enhance HIRE’s geographic reach into Québec and boost its EBITDA performance.
  • For the fiscal year ending January 31, 2021, Leaders recorded $3.9 million in Revenue and $1.0 million in EBITDA. For the trailing twelve months ending March 31, 2021 EBITDA was $1.3 million.
  • HIRE was provided with a term-loan facility of $5.0 million from FirePower Capital to continue its acquisition strategy.
  • HIRE concurrently announces a non-brokered private placement to directly support the Acquisition in an amount of up to $3.0 million.

Leaders is an innovative and trusted executive search firm with clients across Canada, strong national and international alliances, and a leading Diversity and Indigenous recruitment practice.

“The Partners at Leaders have created a successful practice based on deep research and exceptional customer service. I am convinced that they will contribute long-term value to HIRE as well as to our clients and existing portfolio companies,” said Simon Dealy, HIRE’s CEO. “We also look forward to collaborating closely with the other Leaders International affiliates in Vancouver, Edmonton, and Calgary and its international network through Penrhyn International.”

Richard Joly, Managing Partner of Leaders remarked, “It is imperative that executive search firms operate with a view to broaden their networks to remain competitive in our industry. First with our national alliances in 2018, then with our international network at Penrhyn International, and now with our partnership at HIRE, our team of 17 professionals can continue to grow their practices and leverage proprietary tools, including the Leaders Report®, all while being supported by HIRE’s shared services.”

The purchase price for the Acquisition is payable as to $4.4 million in cash, 3,559,871 common shares of the Company at a deemed price of $0.309 per share (the “Consideration Shares”), and $1.0 million in an earn-out payable over three years in cash subject to meeting prescribed financial thresholds. The entire leadership team of Leaders, Richard Joly, Cynthia Labonté, Laurie Sterritt, Yanouk Poirier, and Philippe Burton, will be continuing in the business following the Acquisition.

Closing of the Acquisition is subject to customary closing conditions including receipt of any necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange, and the closing of the Loan and Concurrent Financing.

FirePower Capital Term-Loan Facility
HIRE is also excited to announce that it has entered into a definitive agreement with FirePower Capital (the “Lender”) for a $5.0 million non-revolving term loan facility (the “Loan”). Pursuant to the terms of the definitive agreement, the disbursement of $3.0 million will be made to finance the Acquisition (the “Initial Draw”). The balance of the Loan may be drawn in two $1.0 million increments for future acquisitions (“Subsequent Draws”).

The Loan will have a three-year term and will bear interest at 12% and is secured over all of the present and future property of the Company and its current operating entities. The Loan and Subsequent Draws is subject to customary financial and other covenants for a transaction of this type.

Concurrently with the release of the Initial Draw, HIRE has agreed to issue 2,613,493 share purchase warrants (“Facility Warrants”) to the Lender. Pursuant to the terms of the certificate representing the Facility Warrants, each Facility Warrant will entitle the Lender to purchase one Company common share at a price of $0.383 for a period of 3 years with a cashless exercise feature. With each Subsequent Draw, HIRE has agreed to issue that number of additional warrants such that the aggregate value is equal to 5% of the Loan at an exercise price equal to the 5 day volume weighted average market price of the Company common shares at the time of a Subsequent Draw plus 10% (“Future Warrants”). The issuance of the Facility Warrants and Future Warrants are subject to approval of the TSX Venture Exchange.

Private Placement Financing
HIRE intends to complete a non-brokered private placement financing of up to $3.0 million at $0.30 per unit with each unit consisting of one common share and one half of one share purchase warrant with each whole warrant exercisable for one common share for a period of 24 months at $0.45 per common share (the “Concurrent Financing”).

The Company may pay eligible finders a fee consisting of: (i) a cash payment equal to 7% of the gross proceeds raised from the Concurrent Financing and (ii) non-transferable finders’ warrants entitling the holder to purchase that number of common shares as is equal to 7% of the units, in each case, attributable to units purchased by subscribers introduced to the Company by eligible finders (the “Finder Warrants”). Each Finder Warrant is exercisable for one common share at a price of $0.30 per common share until 24 months after closing of the Concurrent Financing.

The Consideration Shares, the Facility Warrants, Future Warrants and all securities issued in connection with the Concurrent Financing will be issued pursuant to an exemption from applicable securities laws and be subject to a four-month and one day hold period from their date of issue under applicable Canadian securities laws, in addition to such other restrictions as may apply under applicable securities laws of jurisdictions outside Canada.

The Company intends to use the proceeds of the Concurrent Financing and the Loan for the completion of the Acquisition. The Concurrent Financing is integral to the proposed Acquisition and therefore the Company expects to rely on the “part and parcel pricing” exemption outlined in Section 1.7 of TSX Venture Exchange Policy 4.1. The balance of proceeds from the Loan will be used to advance the Company business plan and for working capital purposes.

The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Payment of Debenture Interest in Equity and Engagement Agreement
The Company also announces that it issued a total of 204,501 common shares in satisfaction of its obligations to pay $73,620 in interest to the holders of its 9% unsecured debentures issued August 21 and 24, 2020. For further information, please see the Company press release dated July 19, 2021.

The engagement agreement announced by the Company on May 12, 2021 between the Company and Eight Capital was mutually terminated on August 5, 2021.

About HIRE Technologies Inc.
HIRE is investing in and shaping the future of human resource management with a technology- first focus, by consolidating and modernizing the staffing marketplace. The Company owns and operates staffing firms as well as platform technology that it uses to help those firms become more technologically advanced. The Company is a disciplined capital allocator due to its technology DNA and extensive experience in building and growing staffing companies of all types. HIRE has a large recurring revenue base and helps our clients manage change in the workplace in order to achieve success.

www.hire.company

About Leaders
Leaders is one of Canada’s top executive search firms. Leaders offers clients an extensive global database, unprecedented leadership in diversity-centric and indigenous executive recruitment, bilingual capabilities, and the Leaders Report® – a unique research methodology that has created a new standard in search transparency. As a member of Penrhyn International, Leaders also has access to a global network of talent.

www.leadersinternational.com

About FirePower Capital
FirePower Capital is the private capital and M&A advisory firm built for Canada’s entrepreneurs. Its team of 30+ deal professionals help their mid-market businesses complete mission-critical transactions by advising them or investing in their companies directly.

www.firepowercapital.com

For further information, please contact:

HIRE Technologies Inc.
Simon Dealy, Chief Executive Officer
Phone: (647) 264-9196
Email: investors@hire.company
Web: hire.company

Forward-Looking Information
This press release contains “forward-looking statements” or “forward-looking information” (collectively referred to hereafter as “forward-looking statements”) within the meaning of applicable Canadian securities legislation.

All statements that address activities, events, or developments that HIRE expects or anticipates will, or may, occur in the future, including statements about HIRE and Leader’s business prospects, future trends, plans, strategies and HIRE’s acquisition strategy, the satisfaction of conditions to and the closing of the Acquisition and related transactions and the expected benefits to HIRE and Leaders resulting from the Acquisition, the satisfaction of conditions to and closing of the Loan and Concurrent Financing and related transactions, involvement of finders and use of proceeds, and TSX Venture Exchange approval to close the Acquisition, Loan and Concurrent Financing and related transactions and issuances of securities are forward-looking statements. In some cases, forward-looking statements are preceded by, followed by, or include words such as “may”, “will,” “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “proposes”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, “anticipate” or the negative of those words or other similar or comparable words.

Although the management of HIRE believes that the assumptions made and the expectations represented by such statements are reasonable, there can be no assurance that a forward-looking statement herein will prove to be accurate.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of HIRE to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. Risks and uncertainties applicable to the Company, as well as trends identified by the Company affecting it and the staffing industry can be found in the Company’s Annual Information Form dated June 8, 2021 and its continuous disclosure record available on SEDAR.

Such cautionary statements qualify all forward-looking statements made in this press release. HIRE undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Case Studies

Corrosion Service
One of three equal shareholders of Corrosion Service, an infrastructure services company, approached FirePower, seeking to buy out the other two. Although this was a highly sensitive situation, we were able to structure a deal that led to a successful close.

Read Full Case Study
Market Insights
From the archives: October 2020

A Comparative Data Maturity Score for the Mid-Market: How do you stack up?
"Data is the new oil."  By now, most have heard this quote dating back to 2006 and credited to British mathematician Clive Humby, who…

Read Full Report