C.A. Bancorp Inc.

C.A. Bancorp Inc.

March 01, 2013 18:11 ET

C.A. Bancorp Inc. Reports 2012 Financial Results

TORONTO, ONTARIO--(Marketwire - March 1, 2013) - C.A. Bancorp Inc. ("C.A. Bancorp" or the "Company") (TSX:BKP) today announced its audited consolidated financial results for the year ended December 31, 2012.

In connection with the advancement of the Company's Realization Strategy (as previously defined) effective October 1, 2010, the Company, in preparing its financial statements (i) applied Accounting Guideline 18 - Investment Companies ("AcG-18") and (ii) adopted the liquidation basis of accounting. As an investment company under AcG-18, C.A. Bancorp has received exemptive relief from the requirement to adopt International Financial Reporting Standards until January 1, 2013. The Company has applied for additional relief extending this period to January 1, 2014 to correspond with the deferral granted by the Canadian Accounting Standards Board to investment companies.

2012 Financial Highlights

For the year ended December 31, 2012, the Company reported:

  • Revenues of $1.7 million compared to $1.9 million in 2011;
  • Net gain from results of investments of $1.3 million compared to a net gain from results of investments of $9.3 million in 2011; and
  • Net earnings of $1.2 million or $0.10 per share compared to a net earnings of $8.9 million or $0.72 per share in 2011.
As at December 31, 2012, the Company's:
  • Cash and working capital totaled $25.0 million or $2.04 per share;
  • Investments were valued at $16.4 million or $1.33 per share;
  • Accrued liquidation costs were $0.3 million or $0.03 per share; and
  • Shareholders' equity (or net book value1) was $41.1 million or $3.35 per share.
2012 Financial Results Discussion
Statement of Operations Highlights
Year Ended December 31,
In C$ millions except per share amounts 2012 2011
Revenue $ 1.7 $ 1.9
Net results of investments 1.3 9.3
Expenses, taxes and non-controlling interest (1.9 ) (2.3 )
Net earnings $ 1.2 $ 8.9
Net earnings per share $ 0.10 $ 0.72

1 Net book value per share is a non-GAAP financial measure and is calculated as total shareholders' equity under Canadian Generally Accepted Accounting Principles (Canadian GAAP) divided by the number of common shares outstanding at December 31, 2012. See the cautionary statement regarding use of Non-GAAP financial measures at the end of this release.

Consolidated revenues declined slightly for the year ended December 31, 2012 compared to the prior year as the Company terminated its asset management agreements in connection with the sale of its interest in NorRock Realty Finance Corporation (formerly C.A. Bancorp Canadian Realty Finance Corporation) in the second quarter of 2011. This was offset slightly by an increase in investment income from its investment in Digital Payment Technologies Corp. ("DPT").

Consolidated net results of investments for the year ended December 31, 2012 yielded a net result of $1.3 million compared to a net gain from results of investments of $9.3 million in 2011 related to the Company's previous investment in High Fidelity HDTV Inc. The Company recorded an unrealized gain related to the Company's investment in DPT in 2012.

The Company's operating expenses for the year ended December 31, 2012 compared to the previous year were lower as the Company reduced its employee expenses in-line with its diminishing operations. The majority of the Company's operating expenses are related to those associated with a public company and are generally fixed and recur on an annual basis. The Company also incurred or accrued one-time corporate expenses in 2012 related to the Offer (defined herein).

Balance Sheet Highlights
In C$ millions except per share amounts December 31, 2012 December 31, 2011
Cash and liquid assets $ 25.5 $ 13.4
Investments in private entities and loans receivable 16.4 27.8
Other assets 0.1 0.1
Total Assets $ 41.92 $ 41.32
Total Liabilities 0.8 1.32
Total Shareholders' Equity $ 41.1 $ 39.92
Number of shares outstanding (millions) 12.3 12.3
Net book value per share $ 3.35 $ 3.26
Closing market price per share $ 3.10 $ 2.25
Market price discount to net book value 7 % 31 %

The Company had cash and liquid assets of approximately $25.5 million ($25.0 million net of current liabilities) at December 32, 2012. The Company believes it has sufficient working capital to support the Company's operations.

As at December 31, 2012, the Company had no debt and total accrued liquation costs of $0.3 million. The Company is required to make significant estimates and exercise judgment in determining accrued liquidation costs. The Company reviewed contractual commitments such as lease termination costs and professional fees to determine the estimated costs to be directly incurred through the Realization Strategy period. The Company has not accrued the ongoing operating costs that are anticipated to be incurred through the Realization Strategy period such as payroll and related expenses, general and administration costs and other corporate expenses.

2 Rounding.

Subsequent to Year-end

On January 10, 2013, the Company and CDJ Global Catalyst LLC ("CDJ") entered into a support agreement under which CDJ agreed, subject to customary conditions, to offer to acquire all of the issued and outstanding common shares of the Company for cash at a price of $3.20 per share (the "Offer"). The Offer commenced on January 25, 2013. The Offer was made by CDJ, on behalf of accounts in respect of which it exercises discretion and control, by way of a take-over bid circular. CDJ, on behalf of managed accounts over which it has sole discretion, exercises control over 2,442,051 or 19.9% of the 12,269,280 issued and outstanding common shares.

As part of the Offer, directors and officers who own common shares and other shareholders of the Company, representing approximately 29.37% of the issued and outstanding common shares entered into lock-up agreements to tender to the Offer.

The Offer will be open for acceptance for a period of not less than 35 days and will be conditional upon, among other things, more than 50% of the common shares of the Company (on a fully-diluted basis and excluding those held or controlled by CDJ) being validly deposited under the Offer and not withdrawn. In addition, the Offer will also be subject to other customary conditions. The support agreement includes customary restrictions on the Company seeking alternatives to the Offer (subject to "fiduciary out" provisions in the event of an unsolicited superior proposal), and standard "deal protection" provisions include a termination fee and right to match in favour of CDJ. The Offer is expected to expire on or about March 4, 2013.

On March 1, 2013, the Company entered into an agreement to sell all of its interests in Blue Ant Media Inc. and Aventine Management Group Inc. to a third party for aggregate consideration of $1.9 million. The proposed transaction remains subject to certain conditions, including without limitation, receipt of consents and regulatory approvals and is expected to close within the next 30 days.

Financial Information

For a comprehensive review of the Company's results, shareholders are encouraged to read the Company's 2012 audited consolidated financial statements and accompanying Management's Discussion and Analysis, copies of which will be available on the Company's website at www.cabancorp.com and on SEDAR at www.sedar.com.

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.

Caution Regarding Forward-Looking Information

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, 2012 and in the Directors' Circular dated June 4, 2010 and in our other filings with Canadian securities regulators. 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, ability of the Company to execute the Realization Strategy or any alternative strategy; the satisfaction of the minimum tender condition and completion of the CDJ Offer, the Company's success in preserving capital, managing debt, maintaining liquidity and managing operating costs; the receipt of any regulatory approvals or consents required to complete previously announced transactions. 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.

Cautionary Statement Regarding the Valuation of Investments in Private Entities

In the absence of an active market for its investments in private entities, fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the outlook and prospects, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private market transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed . The amounts at which the Company's investments in private entities could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination.

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