Canadian online lending platform Mogo Finance Technology Inc (TSX: GO), which went public in June, has completed an agreement with the credit arm of Fortress Investment Group, a U.S. private equity firm. The transaction will provide Vancouver-based Mogo with a new expandable revolving credit facility of up to $200 million. The facility, which has a five-year term, will be used to finance expansion of its consumer installment loans of up to $35,000. Mogo also issued share purchase warrants to Drawbridge Special Opportunities Fund LP, another Fortress affiliate. As reported by peHUB Canada in May, the company has previously utilized credit provided by Fortress.
Canada’s Leading Online Lender, Mogo, Secures New Credit Facility of up to $200 million from Fortress
New facility allows Mogo to accelerate the expansion of its consumer loan products to all Canadians
VANCOUVER, Sept. 2, 2015 /CNW/ – Mogo Finance Technology Inc. (TSX: GO), one of Canada’s fastest growing financial technology companies, today announced it has finalized the previously disclosed agreement with Fortress Credit Co LLC (“Fortress”), part of Fortress Investment Group LLC’s (NYSE: FIG) Credit Funds business (“Fortress Credit”), on a new expandable revolving credit facility of up to $200 million. The new credit facility will be used to finance the continued expansion of Mogo’s consumer installment loans of up to $35,000 (MogoLiquid). The announcement comes shortly after Mogo reported its second quarter 2015 results with loan originations up 137% and revenue increasing by 122% compared with the second quarter of 2014.
“The new facility substantially increases the capital available to support the continued growth of our installment loans, while significantly lowering our cost of capital, both of which are key strategic objectives,” said Greg Feller, President & CFO of Mogo. “With the two credit facilities we now have in place, we have up to $250 million in available loan capital to grow our portfolio. We are very pleased to have the continued strong support of Fortress Credit, one of the largest and most successful consumer credit investors in the world.”
“With Mogo’s disruptive brand, product and technology solution, we believe they are uniquely positioned to offer Canadians increased savings, transparency and a vastly superior customer experience compared with traditional financial institutions,” said Dominick Ruggiero, a managing director of Fortress Credit. “We are pleased to be expanding our relationship with them as they continue their strong growth and pursue their broader vision of building a fully digital experience and brand focused on millennials.”
“One of the unique things about our solution is that we offer consumers across the full credit spectrum the opportunity to lower their cost of credit and get out of debt faster compared to their existing alternatives,” said Dave Feller, Mogo’s founder & CEO. “Given its attractive rates and simplicity, MogoLiquid is particularly appealing to the approximately 17 million prime consumers in Canada – the largest segment of the market. By leveraging technology, our proprietary credit risk algorithm, which goes well beyond the traditional credit bureau score, takes into account thousands of data points, allowing us to offer most consumers immediate savings from their existing credit options. In addition, with our unique Level Up program, we give our Mogo members a path to even lower rates which positions Mogo as their best alternative for affordable credit throughout their lifetime.”
The new facility has an initial commitment of $50 million and can be expanded under certain conditions up to $200 million with an initial effective rate of 9.5% (based on the initial credit facility interest rate of LIBOR plus 8% with a LIBOR floor of 1.5%). If the new facility is increased beyond $100 million, the incremental portion of the facility would have an effective rate of 8.5%, based on today’s LIBOR, for the first $50 million and an effective rate of 7.9%, based on today’s LIBOR, for the second $50 million. The term of the new facility is five years, with a two-year origination period and a three-year amortization period. The full terms of the new facility will be filed on www.sedar.com. The new facility is in addition to the Company’s existing facility with Fortress Credit.
Mogo also issued common share purchase warrants (the “Warrants”) to Drawbridge Special Opportunities Fund LP, a Fortress Credit affiliate, to purchase 83,333 Mogo common shares. The Warrants are exercisable at a price of $5.87 per common share for a period of 10 years from the date of issuance.
Fortress Investment Group LLC (NYSE: FIG) is a leading, highly diversified global investment management firm with approximately $72.0 billion in assets under management as of June 30, 2015. Founded in 1998, Fortress Investment Group LLC manages assets on behalf of over 1,600 institutional clients and private investors worldwide across a range of credit, private equity, liquid hedge funds and traditional asset management strategies. For additional information, please visit www.fortress.com.
At Mogo (TSX: GO), we are driven by the belief that technology and design can not only transform the way Canadians access financial solutions, but also give them a way to take control of their financial health. Through our online platform, we provide convenience, transparency, a more enjoyable customer experience, and greater value compared with traditional brick-and-mortar financial institutions. Since launching our first online loan product in 2006, Mogo has become the leading online lender in Canada, with over 1 million loans originated and the only full credit spectrum lender. With our ever-expanding portfolio of innovative and socially responsible financial solutions, including our unique Level Up program, free Mogo Prepaid Visa card, and Member Perks program, we’re building a digital financial brand for the next generation of savvy Canadians. To learn more about Mogo, visit mogo.ca.
This news release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the future growth of Mogo’s business and its intention to expand into other products and markets. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Mogo’s growth and its ability to expand into new products and markets are subject to a number of conditions, many of which are outside of Mogo’s control. For a description of the risks associated with Mogo’s business please refer to the long form prospectus dated June 18, 2015 and available at www.sedar.com. Except as required by law, Mogo disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.
Loan originations is a non-IFRS financial measure which is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Rather, this measure is provided as additional information to complement IFRS measures by providing further understanding of Mogo’s results of operations from management’s perspective. Non-IFRS measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Please, refer to Mogo’s managements’ discussion and analysis for the second quarter ended June 30, 2015 which is available at www.sedar.com for more information about our use of, and the limitations inherent in, non-IFRS measures and a reconciliation of loan originations to the most comparable IFRS measures.
SOURCE Mogo Finance Technology Inc
For further information: Craig Armitage, Investor Relations, email@example.com, (416) 347-8954
Photo courtesy of Mogo Finance Technology Inc