Press release from Marketwire
easyhome Ltd. Increases Credit Facility to $50 Million, Reduces Cost of Borrowing
Tuesday, June 18, 2013
easyhome Ltd. Increases Credit Facility to $50 Million, Reduces Cost of Borrowing19:37 EDT Tuesday, June 18, 2013
MISSISSAUGA, ONTARIO--(Marketwired - June 18, 2013) - easyhome Ltd. (TSX:EH) ("easyhome" or the "Company"), Canada's largest merchandise leasing company and the leading provider of consumer loans as an alternative to traditional banks and payday lenders, today announced that its consumer lending subsidiary, easyfinancial Services, has increased its senior credit facility with Crystal Financial LLC to $50 million from $25 million. As well, the Company has reduced its financing costs going forward as the current interest rate on this senior credit facility has been reduced to 9.98% from 11.78%. When combined with the capital available under the bank revolving credit facility that supports the Company's merchandise leasing business, easyhome now has committed external debt financing totaling $85 million with a blended rate of 7.9% in addition to the $107 million book value of its shareholders' equity.
"The expanded term loan will allow us to capture more of the strong demand for alternative sources of consumer financing in the Canadian marketplace and continue growing our high margin financial services businesses", said Steve Goertz, easyhome's Chief Financial Officer. "We are pleased that Crystal Financial has increased their commitment to support the growth of easyfinancial Services. The reduction in our interest rate will have a meaningful positive impact to our net income beginning in the third quarter."
The Company launched easyfinancial Services in 2006 to provide term financing to consumers who were looking for credit alternatives that are more readily accessible than banks and less costly than payday lenders. Over the past 24 months, easyfinancial Services has grown its consumer loans receivable portfolio by over 140% to $80 million as at May 31, 2013. In the near term, the Company is confident that it will meet or exceed the high end of its loan book target for 2013 of $95 to $100 million.
The Company originally entered into a $20 million credit facility with Crystal Financial LLC on October 4, 2012. Since that time, easyfinancial Services has continued to grow at an accelerated pace while achieving strong financial results. The additional capital secured today will allow easyfinancial Services to maintain its growth and build upon its leadership position as an alternative provider of term financing to consumers. As well, the Company is confident that additional financing for easyfinancial Services, over and above the $50 million credit facility, will be available in the future as required due to the continued fast-paced growth of the consumer loans receivable portfolio.
$32.5 million of the amended facility must be drawn at closing (an increase of $7.5 million over the $25 million previously advanced) with the balance available in periodic advances of $2.5 million as required. The amended facility's maturity date is June 30, 2017.
"We are pleased to expand our term loan facility for easyfinancial Services," said Steven Migliero, Senior Managing Director of Crystal Financial. "From the time we started our initial review process over 12 months ago, the easyhome team has done exactly what they said they would do. The increased size and improved terms on the entire facility reflects our confidence in the strength of the easyfinancial Services team, systems, operating procedures and risk management practices."
This news release includes forward-looking statements about easyhome Ltd., including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'should', 'expects', 'anticipates', 'intends', 'plans', 'believe' or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenue, earnings or growth rates), ongoing business strategies or prospects about future events is also a forward-looking statement. Forward- looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors and the industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us, due to, but not limited to important factors such as our ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, secure new franchised locations, purchase products which appeal to our customers at a competitive rate, cope with changes in legislation, react to uncertainties related to regulatory actions, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance our system of internal controls. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements, which may not be appropriate for other purposes. We are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements whether as a result of new information, future events or otherwise, unless otherwise required by law.
As of May 31, 2013, easyhome Ltd. operated 191 easyhome leasing stores (including 9 consolidated franchise locations), 108 easyfinancial locations and had 49 franchise locations.
easyhome Ltd. is Canada's largest merchandise leasing Company, offering top quality, brand-name household furnishings, appliances and home electronic products to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. In addition, the Company is a leading provider of consumer loans as an alternative to traditional banks and payday lenders through its easyfinancial Services business. easyhome Ltd. is listed on the TSX under the symbol 'EH'. For more information, visit www.easyhome.ca.
About Crystal Financial
Crystal Financial is an independent commercial finance company that provides senior and junior secured loans for both asset-based and cash flow financings (minimum of $10 million in fundings) to middle-market companies. Its team of experienced, responsive professionals has underwritten, closed and managed more than $20 billion in secured debt commitments across a wide range of industries. For more information please visit www.crystalfinco.com.
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Senior Vice President and Chief Financial Officer