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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
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MCAN Mortgage Corporation
Email: [email protected]
President and Chief Executive Officer
Vice President and Chief Financial Officer
MCAN Mortgage Corporation