C.A. Bancorp Inc.

C.A. Bancorp Inc.

May 13, 2011 08:50 ET

C.A. Bancorp Inc. Completes Sale of Interests in C.A. Bancorp Canadian Realty Finance Corporation and Provides Update on Realization Strategy

TORONTO, ONTARIO--(Marketwire - May 13, 2011) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) is pleased to announce the completion of the sale of all of its interests in C.A. Bancorp Canadian Realty Finance Corporation ("CRFC") to Green Tree Capital Management Corp. ("Green Tree") for an aggregate purchase price of $6.4 million (the "Transaction").

As part of the Transaction, C.A. Bancorp sold 966,160 Class A Shares which it owned (directly and indirectly) in CRFC, representing approximately 32% of the outstanding Class A Shares. C.A. Bancorp also sold its interests in both C.A. Bancorp Ltd. (the manager of CRFC) and C.A. Bancorp Realty Finance Inc. In addition, Green Tree assumed C.A. Bancorp's obligations under the commitment agreement dated January 31, 2008 between C.A. Bancorp and CRFC (the "Commitment Agreement").

The purchase price was satisfied by (i) a cash payment in the amount of approximately $4.1 million; (ii) a promissory note from Green Tree to the Company in the amount of $1.0 million; and (iii) Green Tree assuming a note payable to CRFC in the amount of approximately $1.3 million.

In connection with the transaction, Michael Lovett, Managing Director, Real Estate Capital has the left the Company to pursue other opportunities.

Realization Strategy

Since mid-2010, as previously disclosed, the Board of Directors of C.A. Bancorp considered that C.A. Bancorp's interests would be best served through seeking opportunities to realize on C.A. Bancorp's assets and by the distribution of any realized proceeds to its shareholders (the "Realization Strategy"). The Realization Strategy is distinct from a liquidation in that, in certain instances, the Company's interests may be better served by realizing on a given asset through a process, or on or about its scheduled realization date, as compared to an immediate compelled sale.

In support of the Realization Strategy, the Company has:

  • completed the dispositions of certain assets for aggregate cash proceeds of $32.9 million;
  • completed a $29.6 million substantial issuer bid by way of modified "Dutch Auction" ("Issuer Bid"), pursuant to which the Company purchased for cancellation approximately 14.2 million shares at a purchase price of $2.09 per share. The Issuer Bid was an accretive transaction for remaining shareholders;
  • reduced its normal operating expenses, and continued to explore more cost effective operational methods and structures;
  • sought and pursued an advance income tax ruling on tax effective means of distributing capital to shareholders in the future;
  • eliminated all long-term debt and any contingent liability associated with the Commitment Agreement; and
  • increased the net book value of the Company to $2.53 per share as at December 31, 2010.

The Company continues to evaluate strategies and opportunities to maximize value for C.A. Bancorp and its stakeholders, whether through disposition or maintenance of its various interests. As part of that effort, the Company continues to engage in discussions, which are at various stages of advancement, with third parties concerning possible transactions relating to its assets. Subject to the risk factors outlined below, the Company is currently of the view that were its remaining assets monetized the resulting proceeds would (on a per share basis) exceed recent trading prices.

The Company intends to effect a further return of capital to its shareholders; the exact timing and means of such distribution have not been determined.

C.A. Bancorp Inc.

C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. C.A. Bancorp has historically focused on investments in small- and middle-capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors. The Company is currently executing its Realization Strategy.

This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue" or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Without limiting the generality of the foregoing, there can be no assurance of any kind that the Realization Strategy will yield a value equal or close to the net book value per Company common share. These forward-looking statements are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company's Annual Information Form, in the Management's Discussion and Analysis for the year ended December 31, 2010 and in the Directors' Circular dated June 4, 2010 and in our other filings with Canadian securities regulators. In particular, there is no assurance of any nature whatsoever as to the Company's ability to monetize any of its assets, the price(s) that would be realized or the timing of such realizations. Additional important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel, ability of the Company to generate positive future returns for investors, Company's success in preserving capital, managing debt, maintaining liquidity and managing operating costs. The expression of the Company's intention to make distributions of proceeds to shareholders is not a guarantee of a distribution, or that any specific amount will be distributed; whether or not such distributions are effected, and the timing and amount of same, are subject to the foregoing risks. This news release makes reference to the net book value per share which is a non-GAAP financial measure. The Company calculates the net book value per share as it believes it to be an important metric that shareholders use and frequently request and refer to because shareholders often view the Company as an holding company of investments in private entities. Net book value is a non-GAAP financial measure that does not have any standardized meaning prescribed by Canadian GAAP and therefore it is unlikely to be comparable to similar measures presented by other issuers. This classification is not a Canadian GAAP measure and should not be considered either in isolation of, or as a substitute for, measures prepared in accordance with Canadian GAAP.

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