Special meeting of Element shareholders to be held on September 20, 2016 to consider approval of the transaction ECN Capital to
acquire INFOR Acquisition Corp. subsequent to its separation from Element
TORONTO, ONTARIO--(Marketwired - July 25, 2016) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRES OR DISSEMINATION IN THE UNITED STATES
Element Financial Corporation (TSX:EFN) ("Element" or the "Company"), one of North America's leading fleet management and
equipment finance companies, today announced that its Board of Directors has unanimously approved plans to proceed with the
reorganization of Element into two separate publicly-traded companies (the "Separation Transaction") targeted for closing on
October 3, 2016. Following the Separation Transaction, Element Financial Corporation, to be renamed Element Fleet Management
Corp. ("Element Fleet") will be established as an approximately $18.0 billion world class fleet management company to be led by
Bradley Nullmeyer as CEO, and ECN Capital Corp. ("ECN Capital") will be established as an approximately $5.9 billion North
American commercial finance company to be led by Steven Hudson as CEO.
Credit Commitments
Both Element Fleet and ECN Capital have received underwriter commitments for the establishment of separate senior credit
facilities following completion of the Separation Transaction.
Element's existing senior credit facility will be amended and restated so as to provide for an aggregate of US$4.0 billion in
three year revolving funding for Element Fleet. Such facility will provide for advances denominated in U.S., Canadian, Australian
and New Zealand dollars and will complement Element Fleet's established Chesapeake funding programs to fund its current and
future finance asset originations.
Commitments have been received in respect of a separate and distinct US$2.5 billion three-year revolving senior credit
facility in favour of ECN Capital in connection with the Separation Transaction. Such facility will provide for advances
denominated in U.S. and Canadian dollars and will be available to fund its current and future finance assets.
Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Toronto-Dominion Bank and
BNP Paribas Securities Corp. acted as Co-lead Arrangers and Co-Bookrunners for each of the separate credit facilities and Bank of
Montreal acted as the Administrative Agent.
"With this approval by Element's Board of Directors and the receipt of these new credit commitments, we now meet two important
milestones on our schedule to separate Element into two distinct market-leading public companies," said Steven Hudson, Element's
Chief Executive Officer. "The separation transaction provides shareholders with a ground floor opportunity to participate in the
growth of the world's largest publicly traded fleet management company as well as a North American leader in commercial finance
that is transitioning to an asset management business," said Bradley Nullmeyer, President of Element Financial Corporation.
"Management fully endorses the recommendation of the Board and we encourage Element's shareholders to vote in favour of the
transaction at the upcoming shareholders meeting," added Mr. Hudson and Mr. Nullmeyer.
ECN Capital's Acquisition of INFOR Acquisition Corp.
Element also today announced that Element, ECN Capital and 2510204 Ontario Inc., a wholly owned subsidiary of Element
("Subco"), have entered into a definitive agreement with INFOR Acquisition Corp. (TSX: IAC.A, IAC.WT) ("IAC") whereby ECN Capital
will acquire all of the issued and outstanding shares in the capital of IAC (the "IAC Acquisition") following completion of the
Separation Transaction.
At closing of the IAC Acquisition, each outstanding share in the capital of IAC will be acquired in exchange for a specified
number of ECN Capital common shares. The exchange ratio will be based on the fair market value of ECN Capital as at closing of
the Separation Transaction and the net assets of IAC immediately prior to the closing of the IAC acquisition. The net assets of
IAC at such time are expected to consist of the funds received from IAC's initial public offering less the aggregate amount of
funds paid to IAC shareholders that have validly exercised their rights of redemption in connection with the IAC Acquisition and
certain expenses.
In addition, the IAC Acquisition is also conditional on INFOR Financial Group having entered into an escrow agreement with ECN
Capital, on terms acceptable to it, providing for an escrow of 25% of the ECN Capital common shares that INFOR Financial Group
will receive under the IAC Acquisition. Such shares will not be released from escrow until the trading price of the ECN
Capital common shares exceeds, for a period of 20 consecutive trading days, 130% of the trading price of the ECN Capital common
shares on the date of closing of the IAC Acquisition.
Element believes that the opportunity to secure the capital provided by IAC shortly following the separation will enhance ECN
Capital's ability to implement key strategic initiatives that it believes will enhance shareholder value consistent with its
increased focus on asset management.
Immediately following completion of the IAC Acquisition, Neil Selfe (currently Chief Executive Officer of IAC) and William
(Bill) T. Holland (a current director of IAC) will be appointed as directors to the board of ECN Capital. Mr. Selfe will also
join the ECN Capital management team as Executive Vice Chairman. This formalizes the close relationship Mr. Selfe and the INFOR
Financial Group management team have had with the ECN Capital management team. "The acquisition of IAC will provide ECN Capital
with immediate access to cash of approximately $220 million at market rates that will enable it to accelerate the implementation
of its growth strategy," said Steven Hudson. "As well, the additions of Neil Selfe and Bill Holland to the board provide ECN
Capital with proven expertise in the asset management industry to help guide ECN Capital through this important stage of its
growth as it transitions to an asset management business."
Conditions to the Transactions
Completion of the Separation Transaction is subject to certain conditions, including the approval of the Ontario Superior
Court of Justice, the approval of the Toronto Stock Exchange (TSX) and the approval of two-thirds of Element shareholders voting
at the special meeting of Element shareholders to be held on September 20, 2016 (the "Special Meeting").
Completion of the IAC Acquisition is subject to certain conditions, including the approval of the Ontario Superior Court of
Justice, the approval of the Toronto Stock Exchange, the issuance of a receipt from the Ontario Securities Commission for the
non-offering prospectus of IAC to be filed in connection with the IAC Acquisition, the approval of a majority of Element
shareholders voting at the Special Meeting for the issuance of ECN Capital common shares in connection with the IAC
Acquisition, the approval of the IAC shareholders, the completion of the Separation Transaction and holders of less than 25% of
the outstanding Class A Restricted Voting Shares of IAC exercising their rights of redemption in connection with the IAC
Acquisition.
Fairness Opinions
Element's Board of Directors received a written fairness opinion from BMO Capital Markets that based upon and subject to the
various factors, assumptions, qualifications and limitations set forth therein, the consideration to be received under the
Separation Transaction is fair, from a financial point of view, to Element's shareholders.
In addition, PricewaterhouseCoopers LLP ("PwC") provided the Board of Directors with a written fairness opinion that, subject
to various factors, including the scope of review, limitations and assumptions, PwC is of the opinion that the IAC Acquisition is
fair, from a financial point of view, to Element's shareholders.
ECN Capital Board of Directors
On completion of the Separation Transaction and the IAC Acquisition, ECN Capital's board of directors will include:
- William W. Lovatt (Chairman) - current Chairman of Element and former EVP and CFO of Great-West Lifeco Inc.;
- Bradley Nullmeyer (Vice Chair) - current President of Element;
- William T. Holland - Chairman of CI Financial Corp.;
- Steven K. Hudson (CEO of ECN Capital) - current CEO of Element;
- Neil M. Selfe (Executive Vice Chairman) - current CEO of INFOR Financial Group and IAC;
- Paul Stoyan - current chair of Element's Corporate Governance Committee
- Pierre Lortie - current chair of Element's Credit Committee
- Gordon Giffin - current director of Element; and
- David Morris - Former Senior Audit Partner at Deloitte & Touche LLP
Element Fleet Board of Directors
On completion of the Separation Transaction, Element Fleet's board of directors will include:
- Richard Venn (Chairman) - current Vice-Chairman of Element and chair of Element's Risk Committee;
- Steven Hudson (Vice Chair) - current CEO of Element;
- Bradley Nullmeyer (CEO of Element Fleet) - current President of Element
- William Lovatt - current Chairman of Element and former EVP and CFO of Great-West Lifeco Inc.;
- Joan Lamm-Tennant - current director of Element
- Honourable Brian Tobin - current director of Element
- Paul Damp - current Chairman of DH Corporation
Anticipated Timing
The Separation Transaction will be completed by way of a plan of arrangement under the Business Corporations Act
(Ontario) that requires such arrangement be approved by two-thirds of Element shareholders voting at the Special Meeting and by
the Ontario Court. Element intends to apply to obtain an interim order from the Ontario Superior Court of Justice in respect of
the Separation Transaction on July 28, 2016.
Subject to IAC receiving timely regulatory, court and shareholder approval of the IAC Acquisition, the IAC Acquisition is
expected to close by the middle of October. The Separation Transaction is separate from, and not conditional on, the IAC
Acquisition.
The Special Meeting will be held on September 20, 2016 to approve, among other things, the Separation Transaction and the
issuance of ECN Capital common shares in connection with the IAC Acquisition. It is currently expected that the Management
Information Circular to be prepared in connection with the Special Meeting will be finalized and made available on Element's
SEDAR profile at www.sedar.com on or about August 8, 2016.
Arrangement Agreement
Both the Separation Transaction and the IAC Acquisition are governed by the terms of the arrangement agreement entered into
today between Element, ECN Capital, Subco and IAC (the "Arrangement Agreement").
A copy of the Arrangement Agreement will be included in the Management Information Circular to be filed under Element's
profile on SEDAR at www.sedar.com.
About Element Financial Corporation
With total assets of $23.9 billion, Element Financial Corporation is one of North America's leading fleet management and
equipment finance companies. Element operates across North America in four verticals of the equipment finance market (Fleet
Management, Rail Finance, Commercial & Vendor Finance, and Aviation Finance) and in Australia and New Zealand in the Fleet
Management business.
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, including
with respect to the Separation Transaction and the IAC Acquisition, the anticipated benefits of the Separation Transaction and
IAC Acquisition, the ability to complete the Separation Transaction on a tax-deferred basis, the ability to satisfy the
conditions in connection with each of the Separation Transaction and IAC Acquisition, the expected timing of the closing of the
Separation Transaction and the IAC Acquisition, the expected amount of capital to be obtained pursuant to the IAC Acquisition,
the expected timetable for obtaining the interim orders and holding of the Special Meeting, the future financial and operating
performance of each of Element Fleet and ECN Capital, the strategic advantages, business plans and future opportunities of each
of Element Fleet and ECN Capital, the establishment of the credit facilities for Element Fleet and ECN Capital and the ability of
ECN Capital to transition to an asset management business. The forward-looking events and circumstances discussed in this release
may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Element,
including risks regarding the equipment finance industry, economic factors, risks related to completion of the Separation
Transaction and the IAC Acquisition, the possibility that the proposed the Separation Transaction and the IAC Acquisition will
not be consummated within the anticipated time period or at all, including as a result of regulatory, market or other factors,
the risk that the necessary regulatory, court and shareholder approvals, as applicable, will not be obtained in connection with
the Separation Transaction or the IAC Acquisition and the potential for disruption to our business in connection with the
Separation Transaction or the IAC Acquisition, 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. A discussion of the material risks and assumptions associated with this outlook can be found in Element's 2015
MD&A, and 2015 Annual Information Form, all of which have been filed on SEDAR and can be accessed at www.sedar.com. 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.