TORONTO, May 31, 2011 /CNW/ - Counsel Corporation (TSX: CXS)
("Counsel"), a private equity investor focused primarily on the
financial services sector, today announced it has completed the
acquisition of substantially all of the outstanding shares of Street
Capital Financial Corporation ("Street Capital") for approximately $33
million. The purchase price was satisfied through a combination of the
issuance of 6,616,667 common shares of Counsel at $0.75 per share and
approximately $28 million in cash. Counsel financed a portion of the
purchase price through a $17.5 million acquisition debt facility
provided by a Canadian chartered bank. As part of the transaction,
Street Capital's senior management also has the potential to receive
additional cash payments, subject to Street Capital meeting certain
profit targets over the next eight years.
Since commencing operations in 2007, Street Capital has quickly become a
significant and successful participant in the insured residential
mortgage market in Canada, originating over $6.0 billion in mortgages
to date through its mortgage broker channel. For its fiscal year ended
October 31, 2010, Street Capital had net income of approximately $10.2
million on revenues of $55.7 million.
"Street Capital has a strong position in the residential mortgage market
and is led by experienced senior management," said Allan Silber,
Chairman and CEO of Counsel. "We anticipate Street Capital will
contribute consistent earnings to Counsel's bottom line. We look
forward to working with Street Capital's management team to continue to
grow the company's business."
The current management of Street Capital will continue to operate and
lead the business on a day-to-day basis. Counsel will provide ongoing
strategic, financial, and organizational guidance to assist the company
in realizing its growth plans and expanding its support and services to
the broker market. Street Capital will be well capitalized with total
equity capital of approximately $27.5 million. This figure includes an
additional $7.6 million that was invested by Counsel into Street
Capital for working capital purposes. Street Capital will also have the
benefit of a $2.5 million revolving credit facility provided by a
Canadian chartered bank. The additional capital is expected to be
accretive to Street Capital's earnings.
"We are extremely excited to be part of Counsel," said Ed Gettings,
Chief Executive Officer of Street Capital. "With Counsel's financial
and strategic expertise, and perspective as a pioneer in our industry,
we see an excellent opportunity to expand our line of innovative
products and services, while continuing to provide our brokers with the
strong levels of service they have come to expect from Street Capital."
Counsel has significant experience in the financial services sector and
deep capital markets expertise. Counsel also has strategic knowledge of
the broker channel, having launched FirstLine Trust, a pioneer in the
Canadian mortgage-backed securities business, now FirstLine Mortgages,
a division of CIBC Mortgages Inc.
Street Capital is extremely well situated in the large Canadian mortgage
market as it continued to rank 6th in Canada in terms of mortgages
originated through the broker channel during the quarter ended March
31, 2011. The residential mortgage credit outstanding in Canada now
exceeds $1 trillion.
About Counsel Corporation
Counsel Corporation (TSX: CXS) is a private equity investor focused
primarily on the financial services sector. Counsel leverages its
relationships, access to capital and strategic market experience to
unlock value in its investee companies. For further information, please
visit Counsel's website at www.counselcorp.com.
About Street Capital Financial Corporation
Street Capital Financial Corporation is a Canadian prime residential
mortgage lender. Street Capital offers a broad spectrum of high ratio
and conventional mortgages, competitive interest rates and exceptional
customer service. Street Capital is proud to work with mortgage brokers
to help more Canadians find financing solutions for home ownership. For
more information about Street Capital, visit: www.streetcapital.ca.
The statements made in this release that are not historical facts
contain forward-looking information that involves risks and
uncertainties. All statements, other than statements of historical
facts, which address Counsel's expectations, should be considered as
forward-looking statements. Such statements are based on knowledge of
the environment in which Counsel currently operates, but because of the
factors listed herein, as well as other factors beyond Counsel's
control, actual results may differ materially from the expectations
expressed in the forward-looking statements. Important factors that may
cause actual results to differ from anticipated results include, but
are not limited to, being able to realize on the expected benefits of
the Street Capital acquisition over time and other risks detailed from
time to time in Counsel's securities and other regulatory filings.
SOURCE Counsel Corporation
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