Carfinco Offers to Acquire Western Funding Incorporated under Chapter 11
EDMONTON, Nov. 1, 2013 /CNW/ - Carfinco Financial Group Inc. ("Carfinco") today announced that it has become the "stalking horse bidder" and proposed plan sponsor for the acquisition of all of the new equity ownership interests of Western Funding Incorporated ("WFI") and Global Track GPS LLC ("Global Track," and together with WFI, the "Companies" and each, a "Company") to be issued pursuant to a plan of reorganization (the "Plan") subject to confirmation by the United States Bankruptcy Court for the District of Nevada (the "Court"). On September 4, 2013, each of the Companies commenced a chapter 11 bankruptcy case in the Court.
The completion of the transactions are subject to, amongst other conditions, execution of a stock purchase agreement between the parties (the "Definitive Agreement"), a sale process for competing bids for the acquisition of the Companies, and an order of the Court confirming the Plan. Carfinco is also seeking an order of the court approving reimbursement of certain expenses and a break-up fee in the event that it is not the successful bidder and an alternative transaction is consummated.
The purchase price, to be paid in cash, offered by Carfinco for 100% of the new common shares of each reorganized Company (the "Acquired Shares") free and clear of all encumbrances is equal to 70% of the net finance receivables of the Companies at the time of closing, plus all costs up to $200,000 necessary to cure monetary defaults of contracts to be assumed through the bankruptcy process (the "Cure Costs"). The initial cure costs paid by Carfinco up to and including $100,000 in the aggregate will decrease the purchase price by the same amount. The Companies will seek to have the confirmation hearing on or about December 20, 2013.
Carfinco anticipates the net finance receivables to be in excess of $30 million upon closing and contemplates financing the purchase through a combination of equity and a new senior debt facility secured by the assets of the Companies. The new senior debt facility will also provide the Companies the capital required to grow the finance receivables. Carfinco intends to provide the equity portion of the purchase price with equity available subsequent to a bought deal financing in the spring of 2013.
WFI is a specialized indirect consumer finance company providing automobile financing to borrowers with limited access to traditional credit. WFI acquires and services installment loan contracts originated by a network of approved automobile dealers throughout the United States. GPS presently has no employees and holds certain intellectual property rights for its global position system collateral recovery technology. WFI and GPS are headquartered in Las Vegas, Nevada and were established in California and Delaware respectively.
About Carfinco Financial Group Inc.
Carfinco, through its Canadian and US subsidiaries (the "Subsidiaries"), focuses on providing indirect consumer vehicle loans to borrowers unable to obtain financing through traditional lending sources. A network of select independent and franchise dealerships offer the Subsidiaries payment plans to their customers who must, along with the vehicle, meet the Subsidiaries underwriting guidelines. The shares of Carfinco trade on The Toronto Stock Exchange under the symbol "CFN".
Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements.
SOURCE Carfinco Financial Group Inc.For further information:
Mr. Tracy A. Graf
CEO & Director of Carfinco Financial Group Inc.
Web site: www.carfinco.com
The Howard Group Inc.
Web site: www.howardgroupinc.com