MONTREAL, June 6, 2012 /CNW Telbec/ - B2B Trust, a subsidiary of
Laurentian Bank (TSX: LB), and AGF Management Limited (TSX: AGF.B),
today announced that they have entered into an agreement under which
B2B Trust will acquire 100% of AGF Trust Company ("AGF Trust") in a
share purchase transaction. B2B Trust will acquire AGF Trust for a cash
consideration corresponding to the net book value of the company at
closing of approximately $242 million.
AGF Trust currently provides GICs, term deposits, investment loans and
real estate secured loans through some 20,500 financial advisors and
1,050 mortgage brokers nationwide.
The agreement also includes a contingent consideration of a maximum of
$20.0 million over five years if credit quality reaches certain
criteria. As well, B2B Trust will cause AGF Trust, immediately after
closing, to repay subordinated indebtedness owed to and redeem
preferred shares held by AGF Management Limited, for total
consideration of $173.5 million. The transaction is expected to close in August 2012 subject to
applicable regulatory notifications and approvals.
As at the closing date, AGF Trust's assets are expected to be
approximately $3.8 billion, essentially including cash and marketable
securities of $0.7 billion and retail loans of approximately
The integration of operations, planned for 2013, is expected to result
in non-recurring charges of $30 to $35 million. This transaction is
expected to be accretive to the Bank's net income by approximately $28
to $30 million annually as of 2014.
In order to maintain its capital ratios, Laurentian Bank has entered
into arm's length subscription agreements relating to a private
placement of 2,867,383 subscription receipts for an amount before fees
of $100 million with the Caisse de dépôt et placement du Québec and for
an amount before fees of $20 million with Fonds de solidarité FTQ. The
subscription receipts will be issued at a price of $41.85 per receipt
and will be exchangeable, on a one-for-one basis, for common shares of
the Bank. The offering of subscription receipts is expected to close,
subject to the approval of the Toronto Stock Exchange, no later than
June 15, 2012, and the proceeds of such offering will be placed in
escrow until closing of the AGF Trust acquisition, at which point
the subscription receipts will be automatically exchanged for common
shares of the Bank. If the closing of the AGF Trust acquisition does
not occur at the latest on December 31, 2012, the proceeds of the
private placement will be returned to the subscribers.
After incorporating the estimated capital requirements for AGF Trust at
closing and the expected proceeds from the simultaneous private
placement, the Bank's Basel II Tier 1 Capital Ratio would be, on a pro
forma basis, approximately 10.3% as at April 30, 2012, still
comfortably above existing regulatory guidelines. Furthermore, the
Bank's Basel III Common Equity Ratio based on the full Basel III rules
applicable in 2019 (i.e. without transition arrangements) would be, on
a pro forma basis, approximately 7.3% as at April 30, 2012, in line
with expected regulatory requirements.
About Laurentian Bank
Laurentian Bank of Canada is a banking institution operating across
Canada and offering its clients diversified financial services.
Distinguishing itself through excellence in service, as well as through
its simplicity and proximity, the Bank serves individual consumers and
small and medium-sized businesses. The Bank also offers its products to
a wide network of independent financial intermediaries through B2B
Trust, as well as full-service brokerage solutions through Laurentian
Laurentian Bank is well established in the Province of Québec, operating
the third-largest retail branch network. Elsewhere throughout Canada,
it operates in specific market segments where it holds an enviable
position. Laurentian Bank of Canada has more than $30 billion in
balance sheet assets and more than $33 billion in assets under
administration. Founded in 1846, the Bank employs over 4,000 people.
SOURCE LAURENTIAN BANK OF CANADA
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