pcNewsWire – Automotive Finco Corp. (TSX-V: AFCC), through its subsidiary Automotive Finance LP, intends to provide new debt financing to three affiliates of AA Finance Co LP in the aggregate amount of $43,000,000. The Investments will each have a 25-year term and bear interest at 10.5%, which will provide the Partnership with annual aggregate interest revenue of $4,515,000.
To finance the investments, Automotive Finco hasentered into an agreement with a syndicate of underwriters led by Canaccord Genuity Corp. for a bought deal of 3,705,000 common shares at $2.70 per Share and $10,000,000 aggregate principal amount of 6.75% convertible unsecured subordinated debentures due June 30, 2022 at a price of $1,000 per debenture for aggregate gross proceeds of $20,003,500.
Automotive Finco Corp. Announces Significant Transaction, Dividend Increase and $40 million financing
TORONTO, ONTARIO, May 29, 2017 – Automotive Finco Corp. (TSX-V: AFCC) (AFCC or the Company) is pleased to announce that, through its subsidiary Automotive Finance LP (the Partnership), it intends to provide new debt financing to three affiliates of AA Finance Co LP in the aggregate amount of $43,000,000 (the Investments). The Investments will each have a 25-year term and bear interest at 10.5%, which will provide the Partnership with annual aggregate interest revenue of $4,515,000.
Following completion of the Investments, the Partnership expects to generate annualized interest revenue of $8,015,000. Additional pro forma financial information for AFCC, following completion of the Investments, is displayed below:
Given the material increase in EBITDA* and confidence in its growth profile, the Company is pleased to announce an increase in its annual dividend to $0.205 per common share payable monthly ($0.0171 / month). This represents an increase of approximately 22% above its current dividend per share. The Company anticipates the dividend increase to be reflected beginning with the July 2017 payment and further information relating to the record date and payment date for such dividend payment will be announced by the Company in due course.
In order to finance the Investments, the Company is pleased to announce that the Company has entered into an agreement with a syndicate of underwriters led by Canaccord Genuity Corp. (the Underwriters) whereby they have agreed to purchase, on a bought deal basis, 3,705,000 common shares (the Shares) at $2.70 per Share and $10,000,000 aggregate principal amount of 6.75% convertible unsecured subordinated debentures due June 30, 2022 at a price of $1,000 per debenture (the Debentures, together with the Shares, the Securities) for aggregate gross proceeds of $20,003,500 (the Offering). The Company has also granted the Underwriters an over-allotment option to purchase up to an additional $1,500,000 principal amount of Debentures and up to an additional 370,500 Shares, in each case on the same terms and conditions of the Offering, exercisable in each case in whole or in part at any time up to and including the 30th day after closing
of the Offering.
The Debentures will be convertible at a price of $3.50 per common share, subject to adjustment in certain circumstances, and may be redeemed by the Company at any time following June 30, 2019 at 103% of face value, following June 30, 2020 at 102% of face value and following June 30, 2021 until maturity at 101% of face value (the Debentures may not be redeemed on or before June 30, 2019).
Concurrent with the closing of the Offering, the Company also expects to enter into agreements with certain investors to purchase $20,000,000 aggregate principal amount of the Debentures on a nonbrokered private placement basis and at the same terms described above (the Private Placement).
Completion of the Offering is subject to completion of the Private Placement. In accordance with applicable securities laws, the Debentures issued under the Private Placement and any Common Shares to be issued on their conversion will be subject to a four month and one day hold period from the date of issuance of the Debentures.
Closing of the Offering and Private Placement is expected to occur on or about June 20, 2017, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange and securities regulatory authorities.
The net proceeds of the Offering and Private Placement will be used to fund the Investments and for general corporate and working capital purposes.
The Offering will be made by way of short form prospectus which the Company intends to file with securities regulatory authorities in each of the provinces of Canada.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities being offered have not been approved or disapproved by any Canadian or United States securities regulatory authority, nor has any authority passed upon the accuracy or adequacy of the preliminary prospectus.
The TSX-V has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this press release.
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Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Not for distribution to United States newswire services or for dissemination in the United States. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
SOURCE: Automotive Finco Corp.