CPVC Financial Corporation
TSX VENTURE : LHB

July 11, 2008 18:37 ET

CPVC Financial Increases Assets Under Administration

MONTREAL, QUEBEC--(Marketwire - July 11, 2008) -

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CPVC Financial Corporation ("CPVC Financial" or the "Corporation") (TSX VENTURE:LHB) today announced that it has closed its previously announced acquisition (the "Acquisition") of the issued and outstanding shares (the "GP I Shares") of CPVC General Partner LP I Inc. ("GP I") for a purchase price of $1,010,000 which was paid in the form of secured non-convertible debentures of CPVC Financial.

GP I owns all of the issued and outstanding shares of FIER CPVC Montreal Management Inc. ("Gestion FIER"), the general partner of FIER CPVC Montreal L.P. ("FIER CPVC"), an investment limited partnership located in Montreal, Quebec that has a term ending in December 2015. As at December 31, 2007, FIER CPVC had assets of $19 million consisting mainly of subordinated loans to small and medium size businesses located in the Province of Quebec.

Under the terms of the partnership agreement of FIER CPVC, the Corporation is entitled to annual administrative fees equal to the difference between its yearly expenses and 2% of the maximum capital contributions committed to by the limited partners of FIER CPVC of $15 million ($300,000 per annum).

The purpose of the Acquisition is that it is consistent with CPVC Financial's evolving business model. To date, CPVC Financial has used its own capital to make investments. In the future, it is expected that the majority of investments made by CPVC Financial will no longer be made directly by the Corporation, but will rather be made by investment limited partnerships managed by CPVC Financial. The Acquisition is consistent with this objective. This approach is designed to allow CPVC Financial to increase assets under management without dilution to its shareholders, while maximizing the Corporation's cash flows and their predictability over the long term which will ultimately allow the Corporation to maximize distributions to its shareholders.

The Acquisition was a non-arm's length transaction as Alain Lambert and William L. Hess, directors, officers and principal shareholders of CPVC Financial, as well as Robert E. Brown, a principal shareholder of CPVC Financial, are also Vendors.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and has neither approved nor disapproved the contents of this press release.

Contact Information

  • CPVC Financial Corporation
    William L. Hess
    Chairman
    (514) 395-1420