Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 38

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 38
---
 in respect of the COVID Loans. |

During the time that the COVID Loans were advanced to the REIT, the REIT had two independent trustees, namely Neil Labatte and Graham Senst. The independent trustees did not participate in the COVID Loans, were free from any interest in the COVID Loans, and were unrelated to the entities managed or controlled by Mr. Dondero that provided the COVID Loans.

The COVID Loans were filed with the TSXV at various points during 2020 and 2021, as loan submissions pursuant to TSXV Policy 5.1 – Loans, Loan Bonuses, Finder’s Fees and Commissions (“Policy 5.1”).

Although the TSXV accepted certain of the filings on this basis, in December 2023, the TSXV advised the REIT that certain of the COVID Loans were required to be treated as “Convertible Securities” under TSXV Policy 4.1 – Private Placementsrather than loans under Policy 5.1. Due to this determination, the TSXV required the following amendments (the “Amendments”) to the COVID Loans: (i) either the conversion feature be removed or limited to five years from the date of issuance of the COVID Loan; (ii) the conversion feature be limited to the principal amount of the COVID Loan (rather than the principal amount including interest); and (iii) the conversion price be fixed at a price equal to the market price of the REIT’s Units on the TSXV at the time of the issuance of the COVID Loan.

If the Amendments are implemented, only the principal amount of each of the COVID Loans will be convertible into Class B Units for five-year terms ending between February 2, 2025 and June 8,2026; however, the term of the COVID Loans shall remain as 20 years from their date of issuance. Any conversion of principal or interest of the COVID Loans into Class B Units or Units after the expiry of the 5-year conversion window will be subject to the approval of the Trustees and the TSXV. In addition, if the Amendments are implemented, the conversion price for the principal outstanding will be fixed at prices ranging from $1.435 to $3.219 in satisfaction of the requirements of the TSXV. For one COVID Loan in the amount of $400,000, the conversion term expired on September 9, 2024. Accordingly, to the extent the Amendments are implemented, a maximum number of 9,922,774 Class