Canadian specialty lender Callidus Capital Corp (TSX: CBL) has selected Goldman, Sachs & Co as financial advisor to lead the company’s privatization process. Toronto-based Callidus, which announced earlier this month it planned to solicit privatization proposals, said the process is now underway. It is expected to be completed by the second quarter of next year. Catalyst Capital Group, the company’s majority owner, said it is not planning to sell its interest or bid for additional shares. Callidus also announced an increase in its substantial issuer bid and the expected close of its securitization program.
Callidus Capital Appoints Goldman, Sachs & Co. as Financial Advisor to Lead Privatization Process, Extends Substantial Issuer Bid and Increases Size by an Additional 1.5 Million Shares, and Expects to Close Securitization Program by November 15, 2016
TORONTO, Oct. 31, 2016 /CNW/ – Callidus Capital Corporation (TSX:CBL) (“Callidus” or the “Company”) today provided an update on three significant and independent developments in its ongoing capital markets program – the selection of Goldman, Sachs & Co. (“Goldman Sachs”) as Financial Advisor to lead the previously announced privatization process for the Company, the extension of the expiry and increase in the size of the outstanding substantial issuer bid, and the expected closing date of its securitization program.
Goldman Sachs Appointed Financial Advisor to Lead Privatization Process
The Company announced Goldman Sachs has been engaged to act as financial advisor in connection with the previously announced privatization process. The process is now underway and is expected to be completed before the end of the second quarter of 2017. Material updates to the process will be provided as they occur.
Extension of Expiry and Increase in the Size of the Outstanding Substantial Issuer Bid
The Company also announced that it is increasing the number of shares eligible under its current substantial issuer bid (the “Offer”) by 1,500,000 shares, or approximately an additional 3% of the shares outstanding shares as at October 27, 2016. Under the revised Offer, Callidus has offered to purchase for cancellation up to 5,071,428 of its outstanding common shares (the “Shares”) at $16.50 per share, from its shareholders. Under the revised Offer, the aggregate maximum purchase price payable by Callidus is Cdn $83,678,562.
The Company’s Board of Directors has received an opinion (the “Liquidity Opinion”) from National Bank Financial to the effect that, based on and subject to the assumptions and limitations set out therein, there was a liquid market for the shares as of October 31, 2016. The Liquidity Opinion also states that it is reasonable for the Board to conclude that, following the completion of the Offer in accordance with its revised terms, there will be a market for holders of the shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time of the making of the revised Offer.
The Offer is currently scheduled to expire at 5:00 p.m. (Toronto time) on October 31, 2016. Callidus is extending the Offer to 5:00 p.m. (Toronto time) on November 30, 2016, as may be further extended or withdrawn by the Corporation. As at October 28, 2016, the Company had taken up and paid for 2,683,100 shares under the Offer.
Callidus will mail a notice of variation and extension to its shareholders, setting out the revised number of eligible shares and the new expiry date of the Offer. This press release is for information purposes only and is not an offer to buy or the solicitation of an offer to sell any Shares.
Securitization Program Expected to Close On or Before November 15, 2016
As previously announced, the Company has received provisional investment grade ratings for loans to be issued through a new securitization program. The securitization, with four investment grade debt tranches ranging from AAA (sf) to BBB (sf), will be initiated at $165 million and is expected to close on or before November 15, 2016. The four investment grade debt tranches ranging from AAA (sf) to BBB (sf), represent approximately two-thirds of the initial expected issue size.
The initial $165 million securitization will allow the Company to lever the current loan portfolio by an incremental $25 million. Callidus has re-started growth of its loan portfolio and will utilize the facility as the primary source of funding for incremental growth. The Corporation remains committed to doubling the loan portfolio over the next two to three years.
Debt with ratings and maturity similar to the new securitization facility is currently trading in a range that would represent at least a 2% reduction in Callidus’ cost of funds, compared with the rates Callidus is paying under the current financing facilities further reducing the Company’s cost of capital.
This press release contains forward-looking statements such as those related to the expected completion of the privatization process and an initial $165 million securitization. Such forward-looking statements involve a number of risks and uncertainties. Although Callidus believes these statements to be reasonable, the assumptions upon which they are based, including the stability of capital market conditions, may prove to be incorrect. Furthermore, the forward-looking statements contained in this press release are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the borrower’s assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflow and outflows of each borrower, enabling Callidus to very effectively manage any risk of loss. Further information is available on our website, www.calliduscapital.ca.
For further information: Paula Myson | (416) 945-3226 | firstname.lastname@example.org
Photo courtesy of Reuters/Lucas Jackson