IOU Financial delivered a notice to North Mill Equipment Finance to inform the Norwalk, CT-based equipment finance company that the non-binding, indicative, unsolicited proposal IOU received from North Mill to acquire all outstanding shares of IOU at a price of $0.28 cash for each share did not constitute a “superior proposal” to the arrangement agreement entered into between IOU and 9494-3677 Québec Inc. on July 13. Based on this determination, IOU said the offer does not provide a basis upon which to enter into discussions with North Mill.

IOU’s decision follows a review of the North Mill proposal by a special committee of its board of directors of IOU, which received advice from legal counsel and a financial advisor.

The special committee and the board (with Philippe Marleau, Lucas Timberlake and Robert Gloer abstaining from deliberations and voting) arrived at the decision on the basis of the written confirmation provided to them by the 9494-3677 Québec Inc. and its affiliates, who own, control, direct or have subject to a hard lock-up more than 48% of the issued and outstanding shares (on a non-diluted basis), that they would not vote (or permit to be voted) any such shares in favor of the North Mill proposal. To be successfully consummated, the North Mill proposal would need, among other things, to gather the support of more than two-thirds of the holders of shares, which would not be possible in the present circumstances without the support of the 9494-3677 Québec Inc. and its affiliates. According to IOU, despite having been given an opportunity, in writing and orally, to clarify how it intended to overcome 9494-3677 Québec Inc.’s opposition to the North Mill proposal, North Mill did not propose any satisfactory course of action pursuant to which the North Milll proposal could reasonably be expected to be consummated.

The special committee and the board of IOU therefore reaffirmed its unanimous approval and recommendation (with Marleau, Timberlake and Gloer abstaining from deliberations and voting) that the shareholders vote for the plan of arrangement contemplated by the arrangement agreement with 9494-3677 Québec Inc., confirming that IOU will continue with the process set forth in the arrangement agreement, including holding a special meeting of shareholders on Sept. 12 for the purpose of considering and voting on the arrangement.

IOU Financial is a wholesale lender that provides growth capital to small businesses through a network of preferred brokers across the U.S. and Canada.