TORONTO, March 6, 2013 /CNW/ - Equitable Group Inc. (TSX: ETC and ETC.PR.A) ("Equitable" or the "Company") today announced it has repurchased $15.8 million of its $23 million 6.50% fixed rate Series 8 Debentures, an initiative that will further reduce its expenses in future periods.
On January 3, 2013, the Company also redeemed $9.5 million of 7.10% Series 7 Debentures and repaid its $12.5 million bank term loan, which bore an interest rate of 6.41%.
The combined savings from these repayments will amount to $0.02 per share per quarter through until the end of 2014. An early payment premium of $0.04 per share related to the Series 8 debentures will be incurred in the first quarter of 2013, which will result in a net cost of $0.02 in that period.
These repayments were made possible by the successful issuance of $65 million of 5.40% fixed rate Series 10 Debentures in October, 2012, which elevated the Company's already strong capital ratios.
On a pro forma basis assuming these redemptions took place December 31, 2012, the Company's total capital ratio was a strong 16.5%, fully supportive of the Company's continued growth and performance. Moreover, the redemption would not affect the company's December 31, 2012 pro-forma Common Equity Tier I ratio of 12.2%. The Company believes that even after the redemptions its current capital base and its earnings in future periods will provide sufficient capital to support its strategic objectives and ongoing growth.
"These deliberate moves serve to lower our expenses without diminishing our ability to grow or altering the fact that on every measure, including new CET1 rules now in force, Equitable is well capitalized," said Andrew Moor, President and Chief Executive Officer. "We are pleased that these redemptions have reduced our average cost of debt to 5.6% from 6.4% just one year ago."
ABOUT EQUITABLE GROUP INC.
Equitable Group Inc. is a niche mortgage lender. Our primary business is first charge mortgage financing, which we offer through our wholly owned subsidiary, The Equitable Trust Company. Founded in 1970, Equitable Trust is a federally incorporated trust company. It actively originates mortgages across Canada. It serves single family, small and large commercial borrowers and their mortgage advisors. It also serves the investing public as a provider of insured Guaranteed Investment Certificates. Equitable Trust is active in providing GICs across all Canadian provinces and territories. Equitable Group's shares are traded on the Toronto Stock Exchange under the symbols ETC and ETC.PR.A respectively. Visit the Company on line at www.equitabletrust.com and click on Investor Relations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made by the Company in this news release, in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws ("forward-looking statements"). These statements include, but are not limited to, statements about the Company's objectives, strategies and initiatives, financial result expectations and other statements made herein, whether with respect to the Company's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may" , "could", "would", "might" or "will be taken", "occur" or "be achieved." Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in the Management's Discussion and Analysis and in the Company's documents filed on SEDAR at www.sedar.com. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting the Company and the Canadian economy. Although the Company believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Company in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business at current levels, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
SOURCE: Equitable Group Inc.
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