RIFCO ACQUISITION CLOSE AND REVOLVER RENEWED/EXPANDED RIFCO Shareholders - took $21 million in cash and 498k shares issued. once again, getting bigger without much equity dilution. about 2.7% dilution based on last quarter shares outstanding.
adding $326 million in gross finance receivables. chw had $1.4 billion in gross finance receivables outstnding as of sep30/21, so rifco pushes gross receivables up by 23.3% to $1.726 billion at fairly modest dilution cost to shareholders.
corporate revolver moves from us$200m to us$300m and accordion from us$50 to us$100 with lowered cost of funds and term out to 2025. so a 60% increase in total facility size (US$250 to US$400million). good support from a number of tier one banks.
more encouraging news from this one. i especially like management careful treatment of equity and avoiding unneeded dilution. when i got involved in spring 2020, gross receivables were $1 billion and shares out were 16.3 million. now gross receivables are $1.73 billion (+73%) and shares outstanding are 19 million (+17%), with the book of bizness now much better diversified across geography, industry group and much more prime credit focussed, as well as much lower cost of funds.
from release:
Chesswood Group Limited (TSX: CHW) ("Chesswood"), North America's only publicly traded commercial equipment finance company focused on small and medium-sized businesses, and Rifco Inc. (TSXV: RFC) ("Rifco"), a leading Canadian alternative auto finance company, are pleased to announce the successful completion of Chesswood's strategic acquisition of Rifco pursuant to the previously announced statutory plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").
The Arrangement was approved by 98.90% of the votes cast by Rifco shareholders at the special meeting of Rifco shareholders held on December 17, 2021. After obtaining the requisite Rifco shareholder approval, the Court of Queen's Bench of Alberta approved the Arrangement on January 10, 2022.
Under the terms of the Arrangement, Rifco shareholders were entitled to elect to receive $1.28 for each Rifco common share (a "Rifco Share") held in the form of: (i) cash (the "Cash Consideration"); (ii) common shares of Chesswood ("Chesswood Shares") at a deemed price of $14.05 per Chesswood Share (the "Share Consideration"); or (iii) a combination of Cash Consideration and Share Consideration. Of the aggregate consideration of approximately $28 million, Chesswood paid $21,019,623.68 in cash and issued 498,605 Chesswood Shares.
Further details of the Arrangement are set out in Rifco's management information circular dated November 25, 2021 (the "Circular"). If a registered Rifco shareholder did not make a valid consideration election by December 10, 2021 ("Non-Electing Shareholders"), that Rifco shareholder has been deemed to have elected to receive Share Consideration in exchange for their Rifco Shares. Non-Electing Shareholders should send their completed letters of transmittal and election forms and certificates representing their Rifco Shares to the depositary for the Arrangement, TSX Trust Company, in accordance with the instructions contained in the letter of transmittal and election form in order to receive the Share Consideration to which they are entitled pursuant to the Arrangement. A copy of the Circular and letter of transmittal and election form can be found under Rifco's profile at www.sedar.com.
"We are excited to work with Rifco's management and staff to strengthen Rifco's market position by leveraging off of Chesswood's strengths and are so glad to have them join the Chesswood family," said Ryan Marr, Chesswood's President and CEO.
The Chesswood Shares issued as Share Consideration were listed for trading on the Toronto Stock Exchange (the "TSX") upon closing of the Arrangement. The Rifco Shares were delisted from the TSX Venture Exchange (the "TSXV") at the close of trading on the date hereof.
Corporate Revolver Renewal
Chesswood is also pleased to announce it has completed the renewal of its corporate revolver. This facility is provided by a syndicate of banks, including leading Canadian and U.S. banks active in our industry, and is co-led by RBC Capital Markets and TD Securities.
"Our revolving credit facility provides us tremendous opportunity to fund our current and future growth. We are excited to announce we are expanding the base commitment to US$300 million and the accordion feature to US$100 million, for a total potential facility amount of US$400 million," said Marr. "This renewal provides greater financial and operational flexibility for the company as it pursues its strategic plan, including a welcomed reduction in our cost of funds. This renewal reflects the strong commitment Chesswood continues to receive from its lenders. We're very grateful for the support of our lenders in Canada and the United States" added Marr.
The term of the senior revolving facility now extends to January 2025 and provides the Company with a strong capital base from which to support future growth.