TORONTO, March 27 /CNW/ - Xceed Mortgage Corporation (TSX: XMC), a
Canadian originator of insured mortgages, today announced that it is taking
further measures to reduce the size of its organization, in line with the
volume of mortgages that it expects to originate for the foreseeable future
and its requirements to manage the approximately $2.5 billion of mortgages and
other assets that it currently has under administration.
The measures include the departure of an additional 74 employees,
including several members of the senior executive team, as well as reductions
in infrastructure, including office space. The measures announced today are
expected to result in additional annualized after-tax savings of about
$10-13 million. However, the measures will entail an additional after-tax
charge of $1.7 million for severance as well as the write-off of approximately
$4-5 million in deferred charges and fixed assets, all of which it expects to
recognize in the 2008 second quarter ending April 30, 2008.
"It is very difficult for us to have to lose so many excellent
individuals who contributed to Xceed's past growth and success," said Ivan
Wahl, Chairman and Chief Executive Officer. "When the current market turmoil
began last August, we had hoped that after a reasonable period of time the
environment would become calmer and we would be able to return to our past
business model as a leading provider of non-traditional residential mortgages
in Canada. That has not been the case and it has become clear that there is no
way of knowing when we will be able to return to that business model, if ever.
"Xceed has simplified its business. We are focused on maximizing value
for our shareholders by continuing to originate approximately $40-45 million
per month in new and renewing insured mortgage business that is saleable to
the Canada Mortgage Bond Program. Following the departures announced today,
the Company will continue to employ approximately 38 employees.
At these origination and infrastructure levels, we expect that our
business can return to profitability in the third quarter of fiscal 2008. In
so doing, we will also be protecting our ongoing liquidity, including the
preservation of residual interest cash flows from securitization vehicles as
well those cash inflows that result from the sale of previously originated
mortgages," he continued.
"These simplifications, at a reduced level of business volume require a
far smaller organization to manage," Mr. Wahl said.
The continuing senior management team will be comprised of industry
veteran Ivan Wahl, Chairman and Chief Executive Officer, and Karen Martin, in
her new role as President and Chief Financial Officer. Senior executives
leaving the company include Xceed's President and Chief Operating Officer,
Michael Jones, and its Chief Financial Officer, John Ayanoglou, who have
resigned their positions, but will remain on hand for a brief period to effect
an orderly transition of their responsibilities. Mr. Jones' responsibilities
will be assumed by Mr. Wahl, while Mr. Ayanoglou's responsibilities will
transition to Ms. Martin. Ms. Martin was formerly Xceed's Vice-President,
Securitization and Capital Markets, but held the title of Chief Financial
Officer prior to Mr. Ayanoglou.
As a result of the anticipated lower level of new mortgage originations
and a desire to further reduce standby charges, Xceed also announced that it
has reduced the size of its committed warehouse and other active
securitization program facilities, which were in total approximately
$550 million prior to this release, to approximately $500 million, and that it
may reduce these further in future.
Xceed Mortgage Corporation, based in Toronto, is a Canadian provider of
insured residential mortgages that it originates in Canada. The company has
approximately $2.5 billion of mortgages and other assets under administration.
Xceed's shares are traded on the Toronto Stock Exchange (TSX: XMC). To find
out more about Xceed Mortgage Corporation, visit our website at
Forward-looking statements in this document are based on current
expectations that are subject to significant risks and uncertainties. Actual
results might differ materially due to various factors such as the competitive
nature of the mortgage industry, the ability of Xceed to continue to execute
its growth and development strategy, and the reliance of Xceed on key
personnel. Xceed assumes no obligation to update these forward-looking
statements, or to update the reasons why actual results could differ from
those reflected in these. Additional information identifying risks and
uncertainties is contained in Xceed's regulatory filings available on its
website and at www.sedar.com.
For further information:
For further information: Investor and Media Relations: Richard Wertheim,
Wertheim + Company Inc., (416) 594-1600, firstname.lastname@example.org