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TORONTO, June 29, 2017 /CNW/ - Callidus Capital Corporation (the "Company" or "Callidus") today provided an update on the current status of its business and ongoing privatization process.
Consistent with previous disclosure, the Company is continuing the process of soliciting proposals intended to lead to the privatization of Callidus. The complexity and diversity of the structures that have been proposed, has unfortunately resulted in the process taking longer than originally expected. As part of the formal privatization process, and as an alternative to proposals received, the Company has retained the services of a placement agent and advisory firm with experienced personnel dedicated to raising capital for alternative investments, including "private debt funds". The potential pursuit of a "private debt fund" as a competitor in the privatization process is specifically being explored because it may result in greater value to the Company's public shareholders than the proposals otherwise available to the Company. Should it be determined that the "private debt fund" is the preferred privatization alternative, Catalyst Capital Group Inc. ("CCGI") has advised that funds it manages would most likely participate and would do so on the same economic terms as the public shareholders. There can be no certainty regarding whether such a private debt fund transaction will be effected, its timing or the amounts that may be raised, if any. No proposal for any "private debt fund" has been received nor has this alternative been reviewed by the Special Committee of the Board of Directors established in connection with the privatization process.
As is typical of any process prior to final and definitive agreement, there can be no certainty that a transaction will be concluded or as to what price may be offered or accepted. CCGI, which manages funds that own approximately 68% of the issued and outstanding shares of Callidus, remains committed to completing a transaction on terms consistent with the previously published valuation range of $18 to $22 per share.
As of June 27, 2017, the Company's gross loans receivable, were approximately $1.03 billion. Over the past two quarters, Callidus has been focused on restarting growth in its loan portfolio. Callidus is actively pursuing up to $1.3 billion of potential loans ("the pipeline"), presented on a basis consistent with past reporting parameters. On June 28, 2017, Callidus closed and funded a new loan representing approximately $30 million (US$22.8 million) of facilities. In addition, the Company has a term sheet of approximately $330 million (US$255 million) signed back by a prospective borrower (which is included in the estimated pipeline number). If the due diligence being undertaken by the Company in relation to the prospective borrower is satisfactory, the term sheet is expected to convert into new loan facilities within the next three to four weeks. As previously disclosed, Callidus undertakes extensive due diligence before closing on a loan transaction and has historically closed on between 60% and 80% of signed back term sheets. There can be no assurance that the results of the due diligence related to these signed back term sheets will be satisfactory to Callidus.
Strengthening the Senior Management Team
As previously announced, it has been and remains Callidus' intent to further build the senior team to support and drive portfolio growth and quality. To that end, the Company has recruited two senior, experienced executives who have agreed to join the organization in the next two months. This includes an originator with extensive experience in mid-market centres in the western U.S. and an underwriter with considerable experience in leading the asset based lending and restructuring divisions of several large banks.
Normal Course Issuer Bid
In January 2017, Callidus commenced a normal course issuer bid ("NCIB") with respect to the common shares (see news release dated January 25, 2017). As at June 27, 2017, the Company had repurchased 727,088 common shares under the NCIB at a weighted average price of $15.8907 per common share. The Company intends to continue purchases under the NCIB as long as the common shares of the Company continue to trade at a discount to the Company's view of fair value.
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 laws.
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 borrower'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. Further information is available on our website, www.calliduscapital.ca.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company or in any investment fund to be managed by the Company. Any such securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any U.S. state securities law and may not be offered or sold in the United States except in compliance with the registration requirements of said Act and applicable U.S. state securities laws or pursuant to an exemption therefrom.
SOURCE Callidus Capital Corporation
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