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Grows finance assets from $6 million to $1 billion in 27 months
TORONTO, July 3, 2012 /CNW/ - Element Financial Corporation (TSX:EFN) ("Element"), one of Canada's leading independent equipment finance companies, today announced that it has completed the previously announced acquisition of 100% of TLSI Holdings Inc. ("TLS"), the holding company of TLS Fleet Management ("Transportaction"), from Scotiabank and the company's other shareholders for aggregate consideration of $146.7 million plus debt (the "Acquisition"). The Acquisition provides Element with more than $460 million of lease assets and brings its total assets to approximately $1 billion.
"Transportaction's fleet management business provides Element with a very strong entry point into a segment of the equipment leasing market that has traditionally had attractive returns and low credit losses," noted Steve Hudson Element's Chairman and Chief Executive Officer. "In addition to being immediately accretive to our 2012 financial results, Transportaction's strong market position and its established reputation for innovation, responsiveness and superior customer service are expected to make an important contribution to Element's continued growth as Canada's leading independent equipment finance company."
The approximately $522 million funding required to complete the Acquisition was satisfied through a combination of $122 million in cash and approximately $400 million advanced under a new securitization arrangement for the Transportaction vehicles and lease assets. As part of the closing of the Acquisition, Element and TLS entered into arrangements with an affiliate of a Canadian Schedule I bank providing for the securitization of substantially all of TLS' vehicles and related lease assets (the "Securitization Arrangements"). Pursuant to the Securitization Arrangements, Element has sold to a newly formed limited partnership (the "Partnership") the eligible vehicles and lease assets owned by TLS, and the Partnership issued notes to the bank's securitization conduit to finance the purchase. The Partnership and related Securitization Arrangements have been established as a permanent funding structure to finance the securitization of future Element and TLS lease assets.
In conjunction with the Acquisition, Element increased its warehouse funding facilities to $75 million. As a result, together with the new Securitization Arrangements, Element has increased its available third party funding capacity from $355 million to $805 million.
"In 27 months, we have grown our finance asset portfolio from $6 million to approximately $1 billion while preserving credit quality and minimizing credit losses," added Mr. Hudson. "Our new funding facilities, together with the $87 million from our recent equity financing, provide Element with a strong balance sheet and position the Company for continued growth."
GMP Securities L.P. and BMO Capital Markets acted as financial advisors to Element in connection with the Acquisition.
About Element Financial Corporation
Element Financial Corporation is an independent finance company that originates, manages and funds equipment leases. Element Financial Corporation operates in three specific segments of the equipment finance market through Element Capital, a business unit operating in large ticket equipment leasing, Element Finance that currently originates equipment finance assets within specific segments of the mid-ticket equipment finance market through its four specialized groups: manufacturing and industrial, transportation and construction, healthcare and golf equipment, and Element Fleet which provides fleet leasing for vehicles, trucks and equipment together with value-added services. Each business vertical has national scope and coverage. Please see www.elementfinancial.ca for Element's latest corporate presentation.
Forward Looking Statements
This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release, including the integration of TLS into Element following the Acquisition and any synergies related thereto, Element's increased funding facilities and the anticipated growth of the TLS and Element Fleet Leasing business, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, including risks regarding Element's increased indebtedness and risks relating to the equipment finance industry, economic factors and the equity markets generally and many other factors beyond the control of Element. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
For further information:
Genoa Management Limited
Senior Executive Vice President
(416) 386-1067 ext. 219