Specialty lending platform Callidus Capital Corp (TSX: CBL) has secured US$50 million in bridge loan financing from Canadian private equity firm Catalyst Capital Group. Further advances of up to US$150 million may be provided by Catalyst, for a total of US$200 million. Callidus, which earlier this year flagged the possibility of securing new funds, said the facility has been accessed to support growth in its loan book. As of November 4 2014, the firm’s gross loans receivable stood at $684 million. Callidus went public in April 2014, however, Catalyst continues to be its majority investor, controlling or directing around 57.5 percent of its issued and outstanding common shares.
Callidus Capital Corporation Receives Bridge Financing
TORONTO, Nov. 24, 2014 /CNW/ – Callidus Capital Corporation (“Callidus” or the “Company”) (TSX: CBL), a provider of flexible and innovative asset-based loans, announced today that investment funds managed by The Catalyst Capital Group Inc. (“Catalyst Funds”) have advanced to the Company approximately USD $50 million pursuant to a subordinated bridge loan facility. Additional advances to the Company of up to USD $150 million may be made by the Catalyst Funds under this facility, for a total commitment of USD $200 million. Advances under the facility are intended to be used by the Company to fund growth in its loan book.
As previously disclosed, the Catalyst Funds had approved making loan facilities available to the Company and Callidus’ board had approved these facilities in principle, subject to complying with applicable related party regulatory requirements. The Company has determined that it is now appropriate to access these facilities due to continuing robust growth in its loan book. As previously disclosed, Callidus’ gross loans receivable at November 4, 2014 was $684 million as compared with $381 million at December 31, 2013. Notwithstanding this significant growth, no loans in Callidus’ loan portfolio are non-performing and there have been no realized loan losses over that period.
The Catalyst Funds are “related parties” of the Company for the purposes of applicable securities laws as they beneficially own, control or direct approximately 57.5% of the Company’s issued and outstanding common shares and approximately 56.2% of the common shares on a fully diluted basis.
The bridge loan ranks subordinate to the Company’s existing debt facilities. The final terms of the bridge loan remain subject to negotiation but will be consistent with terms applicable between arm’s length parties for similar subordinated credit facilities and will be subject to approval by the independent directors of Callidus.
Callidus intends to repay the bridge loan at such time as more efficient and less costly forms of capital are available. Callidus is continuing to explore financing sources including but not limited to both the private and public capital markets to ensure adequate and diversified funding sources. These sources include seeking increased availability from Callidus’ existing lenders, other secured debt, convertible debt and other equity linked forms of financing. However, as previously disclosed, Callidus considers the current market conditions for an equity offering to be unfavourable given the high cost of capital and has therefore determined to continue to explore other options and to avail itself of the bridge loan during such time.
Callidus considers its current and contemplated sources of liquidity, including amounts made available by the Catalyst Funds, sufficient to meet its requirements for the purposes of short term and long term operations and growth. Management currently intends that, notwithstanding significant growth in the Company’s loan book and the expectation of continuing rapid growth, it will fund operations by increasing the leverage rate until such time as other sources of financing are available on terms that better reflect the Company’s performance. The Company’s long term intention is to target a 40% leverage rate although, as previously disclosed, in the shorter term leverage could be allowed to exceed that rate. As at November 4, 2014, the Company’s leverage rate, or the percentage of total debt to gross loans receivable, was 36%. Management has determined that, at leverage rates of approximately 62%, the Company would have sufficient capital to finance its loan portfolio, including the anticipated growth. Therefore the board is allowing the leverage ratio to exceed the targeted level until such time as the board determines that the cost of capital from other sources of financing is appropriate.
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 company’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.
Certain statements made herein contain forward-looking information. Forward-looking statements in this release include those related to expected growth in the loan portfolio, repayment of the bridge loan and sufficiency of sources of liquidity. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements of Callidus, or developments in Callidus’ business or industry, to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors and assumptions include, but are not limited to, Callidus’ inability to successfully originate new loans due to competitive factors or adverse developments in the asset-based loans market; the availability of additional financing on acceptable terms, or at all, being dependent on capital market conditions and the operating performance of Callidus; the continued availability of funding under bridge loan facility provided by Catalyst Funds and Callidus’ existing loan facilities; and other factors and assumptions discussed in the section entitled “Risk Factors” in documents filed with the Ontario Securities Commission and other securities commissions across Canada, including Callidus’ prospectus dated April 15, 2014. If any such risks actually occur or assumptions prove to be incorrect, Callidus’ business, financial condition or results of operations could be materially adversely affected. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which 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.
SOURCE Callidus Capital Corporation
For further information: David Reese, Chief Operating Officer, (416) 945-3016, firstname.lastname@example.org, www.calliduscapital.ca
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