Element Financial Corporation
TSX : EFN

Element Financial Corporation

December 10, 2013 10:45 ET

Element Financial Announces Increases of Previously Announced Offerings of Common Shares and Cumulative 5-Year Rate Reset Preferred Shares to an Aggregate of $500 Million

TORONTO, ONTARIO--(Marketwired - Dec. 10, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Element Financial Corporation (TSX:EFN) ("Element" or the "Company") is pleased to announce that it has amended the terms of its previously announced bought deal offering of common shares of Element ("Common Shares") to increase the size of such offering to approximately $400 million (the "Common Share Offering") and its previously announced bought deal offering of Cumulative 5-Year Rate Reset Preferred Shares, Series A of Element ("Series A Preferred Shares") to increase the size of such offering to $100 million (the "Preferred Share Offering", and together with the Common Share Offering, the "Offerings"), for aggregate gross proceeds for the Offerings of approximately $500 million.

Under the amended terms of the Common Share Offering, a syndicate of underwriters co-led by GMP Securities L.P, BMO Capital Markets, CIBC World Markets and RBC Capital Markets and including Credit Suisse Securities (Canada) Inc., National Bank Financial Inc., TD Securities Inc. and Cormark Securities Inc. (collectively, the "Common Share Underwriters") have agreed to purchase, on a bought deal basis, an aggregate of 29,100,000 Common Shares at a price of $13.75 per Common Share for total gross proceeds of approximately $400 million.

Under the amended terms of the Preferred Share Offering, a syndicate of underwriters co-led by GMP Securities L.P, National Bank Financial Inc., BMO Capital Markets, CIBC World Markets, RBC Capital Markets and TD Securities Inc. and including Manulife Securities Inc. and Hampton Securities Limited (collectively, the "Preferred Share Underwriters") have agreed to purchase, on a bought deal basis, an aggregate of 4,000,000 Series A Preferred Shares at a price of $25.00 per Series A Preferred Share for total gross proceeds of $100 million. Holders of the Series A Preferred Shares will be entitled, as and when declared by the Board of Directors of the Company, to receive a cumulative quarterly fixed dividend for the initial five-year period ending December 31, 2018 of 6.60% per annum. Thereafter, the dividend rate will reset every five years to an annual dividend rate equal to the 5-Year Government of Canada Bond Yield as quoted on Bloomberg on the 30th day prior to the first day of the relevant subsequent five year fixed rate period plus 4.71%. Holders of the Series A Preferred Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series B of the Company (the "Floating Rate Series B Preferred Shares"), subject to certain conditions and the Company's right to redeem the Series A Preferred Shares, on December 31, 2018 and on December 31 every five years thereafter. Holders of the Floating Rate Series B Preferred Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of the Company, equal to the then current three-month Government of Canada Treasury Bill yield plus 4.71%. Holders of the Floating Rate Series B Preferred Shares may convert their Floating Rate Series B Preferred Shares into Series A Preferred Shares, subject to certain conditions and the Company's right to redeem the Floating Rate Series B Preferred Shares, on December 31, 2023 and on December 31 every five years thereafter. The Series A Preferred Shares will not be rated.

The Company has granted to each of the Common Share Underwriters and the Preferred Share Underwriters an option (collectively, the "Over-Allotment Options"), which may be exercised at any time for a period of 30 days following the closing of the Offerings, to purchase at the issue price under the Offerings an additional 4,365,000 Common Shares for additional gross proceeds of up to approximately $60 million and an additional 600,000 Series A Preferred Shares for additional gross proceeds of up to $15 million. In the event that the Over-Allotment Options are exercised in their entirety, the aggregate gross proceeds of the Offerings will be approximately $575 million.

The net proceeds of the Common Share Offering and Preferred Share Offering will be used to originate and finance, directly or indirectly, finance assets and for general corporate purposes.

For each of the Common Share Offering and the Preferred Share Offering, Element will file a supplement to the final short form base shelf prospectus of Element dated December 6, 2013 with Canadian securities regulatory authorities in all Canadian provinces. The Offering is scheduled to close on or about December 17, 2013, subject to certain conditions, including obtaining all necessary regulatory approvals.

About Element Financial Corporation

With total assets of approximately $2.7 billion, Element Financial Corporation is one of North America's leading independent equipment finance companies. Element operates across North America in three verticals of the equipment finance market - Element Capital provides large ticket equipment financing, Element Finance serves the mid-ticket equipment finance market and Element Fleet provides vehicle fleet leasing and management solutions.

Forward-Looking Statements

This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. Forward-looking statements in this release include those related to the issuance and sale of Common Shares and Series A Preferred Shares and the use of proceeds from the Offerings. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Element, including risks regarding the equipment finance industry, economic factors and many other factors beyond the control of Element. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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