Acuity Small Cap Corporation completes C$42 million initial public offering

Date Closed: 8/02/2007

Value: C$42 million

On August 2, 2007, Acuity Small Cap Corporation (the Corporation) completed its initial public offering of 4,000,000 units (Units) at a price of $10.00 per Unit for gross proceeds of $40,000,000.  Each Unit consisted of one class A share (Class A Share) and one full Class A Share purchase warrant (Warrant).  The Units separated into Class A Shares and Warrants immediately upon issue.  Each Warrant entitles the holder to purchase one Class A Share at a subscription price of $12.00 at 4:00 p.m. (Toronto time) on January 15, 2010.  On August 30, 2007 the agents for the offering exercised the over-allotment option in respect of 200,000 Class A Shares at a price of $9.70 per Class A Share and 261,280 Warrants at a price of $0.30 per Warrant for gross proceeds of $2,018,384.

The Corporation was created to invest in an actively managed portfolio consisting primarily of securities of small capitalization publicly listed issuers and, to a lesser extent, private issuers that Acuity Investment Management Inc. believes have the potential for significant capital appreciation.  The Corporation’s investment objectives are: (i) to provide holders of Class A Shares (Shareholders) with long-term capital appreciation and (ii) to provide Shareholders with monthly cash distributions (which initially is expected to be $0.50 per Class A Share per annum, representing a yield of 5% per annum based on the original issue price of $10.00 per Unit, and commencing in 2009 will be determined and announced by the Corporation on an annual basis).

The offering was made through a syndicate of agents co-led by CIBC World Markets Inc. and Canaccord Adams and that included BMO Capital Markets, National Bank Financial Inc., TD Securities Inc., Dundee Securities Corporation, HSBC Securities (Canada) Inc., Raymond James Ltd., Berkshire Securities Inc., Blackmont Capital Inc., Desjardins Securities Inc., GMP Securities L.P., IPC Securities Corporation, Richardson Partners Financial Limited and Wellington West Capital Inc.

BLG acted for the Corporation with a team that included Lynn McGrade, Michael DeCosimo and Dyana McLellan (securities/corporate) and Stephen Fyfe (tax).