Dealnet Capital Corp.
TSX VENTURE : DLS

Dealnet Capital Corp.

December 21, 2015 15:24 ET

Dealnet's Consumer Finance Segment Announces Expanded Credit Facility With Material Reduction in Cost of Funds

TORONTO, ONTARIO--(Marketwired - Dec. 21, 2015) - Dealnet Capital Corp. ("Dealnet" or the "Company") (TSX VENTURE:DLS), is pleased to announce that the Company's consumer finance segment has entered into an agreement with the investment management arm of one of Canada's leading insurance companies (the "Lender") to amend and increase the Lender's existing debenture facility (the "Debenture Facility") with the Company (the "Amendment").

Currently, the Company has issued one debenture to the Lender under the Debenture Facility for $3 million, maturing in March 2018 and a current interest rate of 12% (the "Initial Debenture").

The principal amendments to the Debenture Facility include, among others, the following terms:

  • An increase in the Debenture Facility of up to $100 million from the existing limit of up to $50 million, at the option of the Lender, with an initial draw on closing of the Amendment of $7 million which is expected to occur in January 2016 (bringing the total amount outstanding under the Debenture Facility, including the Initial Debenture, to $10 million);
  • A decrease in the rate on the Initial Debenture to 5.99%;
  • For all future advances, a rate fixed at the time of advancement equal to the 10 year Government of Canada Benchmark Bond Yield + a margin ranging from 4.5% to 3.8% (with the margin declining as the total advancements under the Debenture Facility increases);
  • An increase in the term of the Debenture Facility to up to 10 years from the date of issuance of each debenture, from the existing term of three years; and
  • Funds from the Debenture Facility may be used for a wider variety of consumer financing products, including leases and loans of HVAC equipment, home improvement and other unsecured consumer finance loan products, subject to meeting minimum credit quality, default rates and concentration requirements.

As part of the Debenture Facility, the Company will issue to the Lender on closing 2,000,000 common share purchase warrants, with an exercise price of $0.67, and a term of three years, exercisable into 2,000,000 common shares of the Company. The warrants and the underlying common shares shall be subject to a four month hold period from the date of issuance of the warrants.

"We are delighted to have achieved this essential milestone which strengthens our treasury capacity and significantly reduces our cost of funds," noted Michael Hilmer, CEO of Dealnet. "The fact that this facility is effectively an increase at a lower cost from an existing funder illustrates the confidence in our platform, and the latitude of our originated loan capacity. We look forward to adding to our underwriting capacity on an ongoing basis."

The closing of the Amendment and the issuance of the warrants is conditional upon certain customary conditions being met, including final documentation and obtaining any necessary regulatory approvals, including the approval of the TSX Venture Exchange.

Forward Looking Statement

This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.

About Dealnet Capital Corp.

Dealnet is an engagement enabled consumer finance company that is initially focused on home improvement finance solutions including heating ventilation and air conditioning financing and leasing. Dealnet leverages its large scale customer service and engagement technology platform to attract home improvement dealers by providing front and back office services to them resulting in dealer origination growth.

For additional information please visit www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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