Callidus clarifies status of Bluberi Gaming Technologies debt
TORONTO, Dec. 8, 2015 /CNW/ - Callidus Capital Corporation ("Callidus" or the "Company") (TSX: CBL), today updated its September 30, 2015 MD&A disclosure in light of information requests it has received from shareholders and others regarding its loan to Bluberi Gaming Technologies Inc. and its involvement with Esco Marine.
Bluberi, a Quebec based gaming company, has applied for protection under the Companies' Creditors Arrangement Act.
Under an amended loan agreement dated June 10, 2015, Callidus provided Bluberi with secured credit facilities, of which approximately $84.1 million was outstanding as at November 12, 2015. Accrued interest and deferred fees relating to the Bluberi loan were $15.1 million at the end of the last reporting period, September 30, 2015, comprised of $12.9 million in accrued interest and $2.2 million in deferred fees.
Callidus' Bluberi security ranks ahead of junior creditors and, in light of that ranking, Callidus is working in conjunction with the Monitor and our financial advisor to achieve a full recovery (including all principal, interest and deferred fees) in priority to junior creditors even if the result is that there are insufficient assets to satisfy those creditors.
Letter of Intent signed to transfer Esco Marine assets – Callidus expects full payment of loan obligations
In June 2014, Callidus provided Esco Marine with a loan of approximately US $20 million, as part of a facility of up to US $34 million, to finance its ongoing operations. In accordance with Callidus' operating practices, the facility was secured by Esco Marine assets valued in excess of the loan. Esco Marine defaulted on its loan with Callidus by circumventing the blocked account arrangements and, in March 2015, filed for Chapter 11 bankruptcy protection.
On July 30, 2015, the United States Bankruptcy Court for the Southern District of Texas (Corpus Christi Division) approved a credit bid by Callidus that allows Callidus, or its designee, to acquire substantially all of the assets of Esco Marine, which include machinery and equipment, supporting rolling stock and spare parts; real property leasehold interests, including an 88-acre full service marine yard and recycling operation in Brownsville, TX; inventory; and assignable licenses and contracts.
Callidus has now signed a Letter of Intent with HRP Brownsville, LLC which is owned 50-50 by Hilco Redevelopment Partners and MCM Industrial Services, to effectively acquire, restart and operate Esco Marine Inc. Under the terms of the agreement, Callidus expects to ultimately receive full repayment (all principal, interest and fees) on its defaulted loan to Esco Marine.
Callidus is pleased to establish a business relationship with the principals of HRP Brownsville, Hilco and MCM. Hilco provides industrial asset monetization services to help maximize the value of underperforming and unwanted machinery, equipment and inventory. MCM is a leading US provider of demolition services.
As part of the agreement, HRP Brownsville will owe Callidus US $35 million for the assignment of the rights to the majority of the assets and Callidus will provide HRP Brownsville a loan facility. The loan facility and payment obligations will be a first ranking facility secured by all the assets of HRP Brownsville. In addition, Callidus will retain and realize on Esco Marine assets and claims not included in the sale to HRP Brownsville.
The transaction is expected to close January 15 2016, and is subject to regulatory approvals.
Callidus operates in the distressed lending sector
It is not uncommon for Callidus to deal with borrowers where it is expected that they will undertake some form of financial restructuring given the nature of their business. As the Company operates in the distressed lending sector, loans that go through a formal restructuring process offer an efficient tool for Callidus to protect its collateral, often while continuing to collect its contracted rate of return. Callidus uses a variety of techniques to mitigate potentially challenging situations, ranging from a cooperatively managed liquidation to a full court process in order to minimize any risk of loss.
Callidus has demonstrated a history of prudent risk management
As disclosed in our 2015 Q3 release, since 2006, Callidus has advanced 100 loans representing total credit facilities of $2.0 billion of which 60 loans have been fully repaid or realized. Since 2006 there have been realized losses of $15 million (approximately 0.3% annually of commitments, averaged over nine years). Of the 60 loans, five went through a form of restructuring and were fully repaid. The balance of the 52 loans was fully repaid, in some cases after informal loan restructurings. At November 4, 2015, 40 loans were outstanding representing total credit facilities of approximately $1.4 billion, and six loans were going through a form of restructuring.
At September 30, 2015, the estimated collateral value coverage across Callidus' aggregate net loans receivable was approximately 138% with a range between 100% and 384% on an individual loan basis.
Callidus provides link to public disclosure filed by Bluberi and Esco Marine
The following are links to public disclosure made by or in respect of Bluberi and by Esco Marine. Callidus does not warrant or accept responsibility for the accuracy or completeness of that disclosure:
About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the company's assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflows and outflows of each borrower, enabling Callidus to very effectively manage risk of loss.
Certain statements made herein contain forward-looking information. Although Callidus believes these statements to be reasonable, the assumptions upon which they are based may prove to be incorrect. Furthermore, the forward-looking statements contained in this press release are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.
SOURCE Callidus Capital Corporation
For further information: David Reese, President and Chief Operating Officer, (416) 945-3016, [email protected], www.calliduscapital.ca