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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.
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