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TORONTO, Nov. 27, 2013 /CNW/ - MCAN Mortgage Corporation ("MCAN" or the
"Company") announced today that the partners in MCAP Commercial LP
("MCAP"), other than MCAN, have elected to invest an additional $100
million in MCAP (the "Capital Investment") to allow for additional
growth and expansion of operations. The injection of additional
capital will dilute MCAN's investment to 16.5% (before giving effect to
the Sale Transaction discussed below).
In conjunction with the Capital Investment, MCAN also announced the
entering into of an agreement to sell approximately 1.7% of the equity
it holds in MCAP to another partner in MCAP for approximately $5.7
million (the "Sale Transaction"), approximately $2.8 million to be
received immediately and approximately $2.9 million anticipated to be
received in January, 2014. The Sale Transaction results in the
reduction of MCAN's ownership of MCAP to 14.8% after giving effect to
the Capital Investment (reduced from 23.4% as reported as at the end of
the third quarter, 2013).
The issue price of the units issued pursuant to the Capital Investment
and the sale price of the units pursuant to the Sale Transaction is
approximately 33% above the carrying value of the units on MCAN's
Consolidated Balance sheet as at the end of the third quarter, 2013.
The combination of the additional investment and MCAN's sale noted above
will result in both a dilution gain and gain on sale that will be
announced as part of the fourth quarter results from operations. The
announcement of the fourth quarter results are expected to be finalized
and announced in February 2014.
Mr. Jandrisits, President & CEO commented, "while the additional
investment by our partners in MCAP enables additional growth in both
operations and future projected income, this transaction also enables
MCAN to realize on a portion of its investment in MCAP. "
This press release may contain forward-looking statements, including
statements regarding the business and anticipated financial performance
of MCAN and MCAP. These forward-looking statements can generally be
identified as such because of the context of the statements and often
include words such as MCAN "believes", "anticipates", "expects",
"plans", "estimates" or words of a similar nature. These statements are
based on current expectations, and are subject to a number of risks and
uncertainties that may cause actual results to differ materially from
those contemplated by the forward-looking statements. Some of the
factors that could cause such differences include legislative or
regulatory developments, competition, technology change, global market
activity, interest rates, changes in government and economic policy and
general economic conditions in geographic areas where MCAN operates.
Reference is made to the risk factors disclosed in MCAN's 2013 Annual
Information Form, which are incorporated herein by reference. These and
other factors should be considered carefully and undue reliance should
not be placed on MCAN's forward-looking statements. Subject to
applicable securities law requirements, MCAN does not undertake to
update any forward-looking statements.
MCAN is a public company listed on the Toronto Stock Exchange under the
symbol MKP and is a reporting issuer in all provinces and territories
in Canada. MCAN also qualifies as a mortgage investment corporation
("MIC") under the Income Tax Act (Canada) (the "Tax Act").
MCAN's primary objective is to generate a reliable stream of income by
investing its corporate funds in a portfolio of mortgages (including
single family residential, residential construction, non-residential
construction and commercial loans), as well as other types of financial
investments, loans and real estate investments. MCAN employs leverage
by issuing term deposits eligible for Canada Deposit Insurance
Corporation ("CDIC") deposit insurance up to a maximum of five times
capital (on a non-consolidated tax basis) as permitted by the Tax Act.
The term deposits are sourced through a network of independent financial
agents. As a MIC, MCAN is entitled to deduct from income for tax
purposes 100% of dividends, except for capital gains dividends, which
are deducted at 50%. Such dividends are received by the shareholders as
interest income and capital gains dividends, respectively.
MCAN's wholly-owned subsidiary, Xceed Mortgage Corporation ("Xceed"),
focuses on the origination and sale to third party mortgage aggregators
of residential first-charge mortgage products across Canada. As such,
Xceed operates primarily in one industry segment through its sales team
and mortgage brokers.
MCAN also participates in the Canada Mortgage Bonds program, and other
securitizations of insured mortgages.
SOURCE: MCAN Mortgage Corporation
For further information:
MCAN Mortgage Corporation
President and Chief Executive Officer
Vice President and Chief Financial Officer
MCAN Mortgage Corporation