The Endurance Fund Corp.
TSX VENTURE : END.P

June 06, 2006 12:40 ET

Endurance Fund Announces Proposed Acquisitions

TORONTO, ONTARIO--(CCNMatthews - June 6, 2006) - Jason C. Monaco, President and CEO of the Endurance Fund Corp. (the "Corporation") (TSX VENTURE:END.P), is pleased to announce that the Corporation has entered into a Letter of Intent dated May 29, 2006 with Universal Settlements International Inc. ("USI") pursuant to which USI has agreed to act as:

(i) an agent for the Corporation to source equity financing for the Corporation in an amount not less than US$4,500,000 (the "Proposed Financing"); and

(ii) a consultant for the Corporation to source, manage and provide other services related to a portfolio of Life Settlement Policies.

The Corporation has also entered into a Conditional Purchase Agreement dated June 2, 2006 with USI to purchase from USI four individual Life Settlement Policies for the principal amount of US$4,500,000 (the "Proposed Acquisitions") payable in cash. The Proposed Financing and the Proposed Acquisitions are intended to constitute an arm's length Qualifying Transaction of the Corporation as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange"), pertaining to Capital Pool Companies.

Upon completion of the Proposed Financing and the Proposed Acquisitions, the Corporation expects to meet the minimum listing requirements for a Tier 1 issuer as an Investment Company on the Exchange. These requirements are summarized below:

(i) Minimum net tangible assets on closing of $5 Million Canadian;

(ii) Adequate Working Capital and Financial Resources for 18 months following closing of the proposed transactions;

(iii) Publicly disclosed satisfactory investment policy and strategy

which includes the Corporation's:

a. Investment criteria and strategy

b. Diversification requirements

c. Conflict of interest provisions

d. Contractual rights of access to books and records of the investees

(iv) Board or advisory board comprised of individuals with adequate backgrounds and experience which demonstrates significant expertise in making investment decisions; and

(v) Minimum of 50% of the Corporation's available funds allocated to a minimum of two specific investments.

Proposed Acquisitions

Life Settlements Policies

The Corporation has entered into a Conditional Purchase Agreement with USI pursuant to which the Corporation has agreed to purchase from USI and USI has agreed to sell to the Corporation a portfolio of four separate Life Settlements Policies (the "Purchased Policies") currently owned by USI for a purchase price of US$4,500,000 payable in cash. The policies have a combined Death Benefit Face Value of US$9,434,000 and a range of life expectancies from 60 to 85 months. These policies originate in the United States and are held by a trustee domiciled in the United States on behalf of USI.

The completion of the purchase and sale is subject to a number of conditions including:

(i) closing of the Proposed Financing;

(ii) completion of due diligence by the Corporation of the Purchased Policies including reviews of medical examinations and life expectancies of policy holders and policy charges, an assessment of the financial viabilities of the underlying insurers and confirmation of legal and beneficial ownership of the Purchased Policies;

(iii) approval from the Corporation's Investment Advisory Committee; and

(iv) receipt of Exchange approval.

Background of Life Settlements Industry

A Life Settlement is the sale of an existing life insurance policy for a lump sum of cash that is more than the cash surrender value. The amount paid to the seller is calculated based on the policy's face value and specific life expectancy of the underlying insured.

The US market is highly regulated on a state-by-state basis with strict confidentiality and disclosure requirements. Life settlements are currently regulated in 20 states in the US. Currently, more than US$9 trillion of life insurance policies are in force in the United States, of which US$150 billion are eligible for life insurance settlement. The life insurance settlement industry has grown from $0 in the 1990's to US$13 billion.

USI is a private Ontario company based in Kitchener, Ontario and is involved in various activities in the financial services industry. Amongst other things, USI has established relationships with Life Settlement Brokers in the United States, as well as trustees, administrators and other consultants whom have the ability to provide services with respect to the management of portfolios of Life Settlement Policies.

The principal shareholders of USI are Tony Duscio, a resident of Kitchener, Ontario, Jeff Panos, a resident of Kilbride, Ontario and Chris Halas, a resident of Mississauga, Ontario. It is proposed that, upon completion of the Proposed Financing and Proposed Acquisition, Tony Duscio will be nominated to serve on the Board of Directors of the Corporation, along with the existing four board members.

Other Proposed Acquisition - Property and Casualty Insurance Brokerage

The Corporation has also entered into a Letter of Intent (the "LOI") dated June 5, 2006 with two arm's length individuals resident in Ontario (the "Brokerage Partners") and licensed with the Registered Insurance Brokers of Ontario ("RIBO"), whereby the Corporation and the Brokerage Partners will partner together to each acquire a 50% interest in a third party private Ontario insurance brokerage (the "Target Brokerage") which is licensed with RIBO.

Pursuant to the terms of the LOI, the Corporation has agreed to finance 50% of the acquisition cost of the Target Brokerage plus provide working capital after closing of the acquisition in the form of a staged secured convertible loan, the proceeds of which will be used to implement a business plan to be mutually agreed upon by the parties. The Brokerage Partners will run the day to day affairs of the Target Brokerage and the Corporation and the Brokerage Partners will have equal participation on the Board of Directors of the Target Brokerage. As consideration for the convertible loan, the Corporation will be given a first right of refusal by the Brokerage Partners to purchase the 50% of the Target Brokerage held by the Brokerage Partners at a price equal to the fair market value at the time of purchase.

The Brokerage Partners have identified several existing licensed brokerages for acquisition and expect to be able to conclude an acquisition now that the Corporation has provided a financial commitment to support the purchase. The Corporation anticipates that the acquisition cost of the Target Brokerage will be equal to approximately 200% of the annualized net commissions of the Target Brokerage and will not exceed $675,000, of which the Corporation will be responsible for the payment of 50%.

The completion of the acquisition of the Target Brokerage is subject to a number of conditions including:

(i) closing of the Proposed Financing;

(ii) completion of due diligence by the Corporation of the Brokerage;

(iii) finalization of a shareholders agreement between the Corporation and the Brokerage Partners;

(iv) approval from the Corporation's Investment Advisory Committee; and

(v) receipt of Exchange approval.

Completion of the Proposed Financing and Proposed Acquisitions are subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transactions cannot close until the required shareholder approval is obtained. In addition, other conditions include all other necessary regulatory, court and third party approvals and authorizations, the completion of a definitive agreement setting forth the terms and conditions contained in the letter of intent and completion of due diligence. There can be no assurance that the transactions will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in accordance with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has not reviewed and does not accept responsibility for the adequacy of the content of this press release.



TSX Venture: END.P
Shares issued: 7,470,000
Closing price April 26, 2005: $1.22


Contact Information

  • The Endurance Fund Corp.
    Jason C. Monaco
    President
    (416) 742-5600