Element Financial Corporation

Element Financial Corporation

February 20, 2013 07:58 ET

Element Financial Corporation Announces $125 Million Bought Deal Equity Financing to Fund Growth

TORONTO, ONTARIO--(Marketwire - Feb. 20, 2013) -


Element Financial Corporation (TSX:EFN) ("Element" or the "Company"), Canada's leading independent equipment finance company, today announced it has agreed to sell on a bought deal basis, an aggregate of 16,130,000 Common Shares, at a price of $7.75 per Share (the "Offering") to a syndicate of underwriters co-led by GMP Securities L.P., Barclays and BMO Capital Markets, for aggregate gross proceeds of $125,007,500. The net proceeds of the Offering will be used to originate and finance, directly and indirectly, finance assets and for general corporate purposes.

In conjunction with the publication of its Q4 2012 financial results yesterday, the Company announced that it is establishing the Element Equipment Finance Fund (the "Fund") as a funding vehicle to complement the Company's existing securitization and syndication arrangements. The Fund will be capitalized with equity from Element and debt from Element's institutional funding partners and will specifically focus on secured equipment financing transactions in the $1.5 million to $25 million range. With target leverage for the Fund in the range of 70% to 80%, Element believes it can significantly increase returns on the capital it contributes to this funding vehicle.

"The additional capital provided by this offering will allow Element to more fully benefit from the robust pipeline of quality financing transactions that we are seeing across our chosen market segments," said Steven Hudson, Element's Chairman and CEO. "As noted in our Q4 earnings release, Element has commenced a process to fund our first $500 million funding vehicle specifically dedicated to financing transactions in the $1.5 million to $25 million range. Proceeds from this equity financing, together with support from our institutional funding partners, will be used to capitalize this first fund. When this funding vehicle is fully capitalized, its deployment will give Element Capital access to the more profitable transaction economics that are currently available to the mid-ticket transactions originated by Element Finance," added Mr. Hudson.

The Company will file a preliminary short form prospectus for the Offering with Canadian securities regulatory authorities in all Canadian provinces. The Offering is scheduled to close on or about March 8, 2013, subject to certain conditions, including obtaining all necessary regulatory approvals.

The Common Shares have not been, nor will be, registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to U.S. persons absent registration or applicable exemption from the registration requirement of such Act and applicable state securities laws. This news release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under the securities laws of any such jurisdiction.

About Element Financial Corporation

With total assets of approximately $1.5 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 leasing, Element Finance serves the mid-ticket equipment finance market and Element Fleet provides vehicle fleet leasing and management solutions through the Company's TLS Fleet Management division.

Forward-Looking Statements

This release includes forward-looking statements regarding the expected issuance and sale of common shares and the use of proceeds from the issuance. 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. The forward-looking events and circumstances discussed in this release, including the issuance and sale of common shares and the use of proceeds from the issuance, 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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