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Would enhance TD's position as a leading North American credit card
provider
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Would add significant growth to attractive premium travel segment of
TD's card portfolio
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Financially attractive opportunity that would fit within TD's risk
appetite
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Conditional agreement - contractual right to match, to expire on August
9, 2013
TORONTO, June 27, 2013 /PRNewswire/ - TD Bank Group (TD) (TSX and NYSE: TD) and
Aimia (TSX: AIM) today announced that they have entered into a
conditional program agreement under which TD would become the primary
credit card issuer for Aeroplan, a loyalty program owned by Aimia,
starting on January 1, 2014, subject to a contractual right to match
the same terms by Aeroplan's current primary credit card issuer. The
right to match period expires on August 9, 2013.
Provided the 10-year agreement becomes effective, it would enhance TD's
position as a leading North American credit card provider and expand
the attractive premium travel segment of TD's card portfolio through a
suite of co-branded Aeroplan credit cards. The new cards would combine
Aeroplan's leading loyalty platform with TD Canada Trust's distribution
network, while adding to TD's strong line-up of existing credit cards,
including travel cards, which meet a variety of customer needs and
preferences.
TD expects that, as structured, the agreement would not have a material
impact on 2014 earnings and would make a solid contribution to 2015
earnings. As part of the agreement, TD would make a $100 million
upfront payment and commit to minimum annual miles purchases for the
first three years. While TD currently expects to exceed its annual
miles purchases commitment, in case of any shortfall below its
commitment levels, TD would make a payment to compensate Aimia for the
gross margin on the shortfall. The agreement contemplates a joint
marketing spend by TD and Aimia of around $140 million in the first
four years to support the new cards and program features.
If Aeroplan's incumbent credit card issuer exercises its contractual
right to match the same terms on or before August 9, 2013, TD is
entitled to receive a break fee of $80 million to cover transaction
expenses.
Under the agreement, TD would offer a new suite of cards beginning in
2014, as announced by Aimia in a news release today. The suite will include enhanced premium, premium and mid-market
cards, along with a card for Canadian small business owners and a card
for customers travelling frequently between Canada and the U.S.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as
TD Bank Group (TD). TD is the sixth largest bank in North America by
branches and serves approximately 22 million customers in four key
businesses operating in a number of locations in key financial centres
around the globe: Canadian Personal and Commercial Banking, including
TD Canada Trust and TD Auto Finance Canada; Wealth and Insurance,
including TD Wealth, TD Direct Investing, an investment in TD
Ameritrade, and TD Insurance; U.S. Personal and Commercial Banking,
including TD Bank, America's Most Convenient Bank, and TD Auto Finance
U.S.; and Wholesale Banking, including TD Securities. TD also ranks
among the world's leading online financial services firms, with
approximately 8 million active online and mobile customers. TD had
CDN$826 billion in assets on April 30, 2013.The Toronto-Dominion Bank
trades under the symbol "TD" on the Toronto and New York Stock
Exchanges.
Caution Regarding Forward-Looking Statements
From time to time, TD makes written and/or oral forward-looking
statements, including in this press release, in other filings with
Canadian regulators or the U.S. Securities and Exchange Commission, and
in other communications. In addition, representatives of TD may make
forward-looking statements orally to analysts, investors, the media and
others. All such statements are made pursuant to the "safe harbour"
provisions of, and are intended to be forward-looking statements under,
applicable Canadian and U.S. securities legislation, including the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, but are not limited to, statements regarding TD's
objectives and priorities for 2013 and beyond and strategies to achieve
them, and TD's anticipated financial performance. Forward-looking
statements are typically identified by words such as "will", "should",
"believe", "expect", "anticipate", "intend", "estimate", "plan", "may",
and "could".
By their very nature, these statements require TD to make assumptions
and are subject to inherent risks and uncertainties, general and
specific. Especially in light of the uncertainty related to the
financial, economic, political and regulatory environments, such risks
and uncertainties - many of which are beyond TD's control and the
effects of which can be difficult to predict - may cause actual results
to differ materially from the expectations expressed in the
forward-looking statements. Risk factors that could cause such
differences include: credit, market (including equity, commodity,
foreign exchange, and interest rate), liquidity, operational (including
technology), reputational, insurance, strategic, regulatory, legal,
environmental, and other risks, all of which are discussed in the
Management's Discussion and Analysis ("MD&A") in TD's 2012 Annual
Report and in the Second Quarter 2013 Report to Shareholders.
With regard to TD's conditional agreement with Aimia pursuant to which
TD would become Aeroplan's primary credit card issuer, there can be no
assurance that the conditional agreement will become effective, or if
the conditional agreement becomes effective, there can be no assurance
that TD will realize the anticipated benefits or results due to a
variety of factors, including: a delay in the agreement becoming
effective or in the launch of the cards; higher than anticipated costs
to launch the cards; higher than expected payment under mile purchase
commitment; lower than anticipated (i) interchange rates, account
origination, card usage or card spend, (ii) appeal or market acceptance
of Aeroplan's program, and/or (iii) yields (finance charges/fees);
industry competition; differences in the credit performance and risk
characteristics of the Aeroplan program relative to TD's expectations;
and changes in network rules, regulatory or legal environment
(including any litigation).
We caution that the preceding list is not exhaustive of all possible
risk factors and other factors could also adversely affect TD's
results. For additional information, please see the "Risk Factors and
Management" section of the 2012 MD&A. TD's material general economic
assumptions are set out in TD's 2012 Annual Report under the heading
"Economic Summary and Outlook" and for each of the business segments
under the heading "Business Outlook and Focus for 2013" and in TD's
Second Quarter 2013 Report to Shareholders under the headings "Business
Outlook."
All such factors should be considered carefully, as well as other
uncertainties and potential events, and the inherent uncertainty of
forward-looking statements, when making decisions with respect to TD
and we caution readers not to place undue reliance on TD's
forward-looking statements.
Any forward-looking statements contained in this press release represent
the views of management only as of the date hereof and are presented
for the purpose of assisting TD's shareholders and analysts in
understanding TD's objectives and priorities and anticipated financial
performance as at and for the periods ended on the dates presented, and
may not be appropriate for other purposes. TD does not undertake to
update any forward-looking statements, whether written or oral, that
may be made from time to time by or on its behalf, except as required
under applicable securities legislation.
SOURCE TD Bank Group