The Futura Loyalty Group Inc.

The Futura Loyalty Group Inc.

January 04, 2011 09:28 ET

Futura Secures $936,029 in Financing Transaction

TORONTO, ONTARIO--(Marketwire - Jan. 4, 2011) - The Futura Loyalty Group Inc. (the "Company") (TSX VENTURE:FUT) today announced that it has secured $936,029 in financing commitments through a tax structured financing which was completed on December 31, 2010. $680,579 of the funds have been paid to the Company and the remaining $255,450 of the funds will be paid to the Company by March 31, 2011. The Company required these funds in connection with a loan previously disclosed in a press release dated April 21, 2009 which matured on December 31, 2010 and for working capital purposes.

The structure of the financing is comprised of two key elements. First, the Company sold its processing division (the "Processing Division") and second, the Company received a right to repurchase the Processing Division from these purchasers at a later date at fair market value, the purchase price of which may include the issuance of shares of the Company.

The Company sold the Processing Division for $8,000,000, less transaction costs of approximately $245,000 in an arm's length transaction. The purchase price is comprised of $855,000 in cash to be paid in two installments of $679,500 on December 31, 2010 and $175,500 on March 31, 2011, and the remainder via promissory notes due December 31, 2018. The Company also received interest of $1,079 on December 31, 2010 and will receive additional interest of $79,950 on March 31, 2011. In addition, the Company is working to secure additional buyers for the promissory notes which may result in the Company securing additional working capital of up to $700,000 on or before March 31, 2011.

The Company has been granted the option to repurchase the Processing Division between January 15, 2012 and June 30, 2012 (the "Call Option Period"). The purchase price for the Processing Division at the time the call option is exercised will be based on the fair market value of the Processing Division at the time and payment will be satisfied by the cancelling of the promissory notes and the issuance of shares of the Company for any additional value above the aggregate value of the promissory notes up to the fair market value. The Company anticipates that it will repurchase the Processing Division within the Call Option Period.

Madison Grant Fund Inc., an investment banking firm specializing in advising on tax structured financings for public companies, acted as advisor to the Company in connection with the transaction.

The Company is also in final negotiations with its current lender in connection with the loan previously announced on April 20, 2009 that matured on December 31, 2010 in order to finalize the terms that would see the maturity date for the loan extended. Any such extension of the loan will be subject to the approval of the TSXV.

"2010 was a great year for Futura, as we showed strong traction with a 170% increase in Aeroplan Miles issued compared to 2009 and a number of additional merchants issuing Aeroplan Miles. We expect this additional capital will help us grow significantly in 2011," said Mark Farrell, Chief Executive Officer of The Futura Loyalty Group.

About The Futura Loyalty Group Inc.

The Futura Loyalty Group markets a suite of coalition rewards programs to mid size retail and service businesses nationally. Currently the two programs being offered are Futura Rewards®, a proprietary cash rewards program, as well as Aeroplan. The company also licenses its proprietary technology solutions to companies and organizations looking to operate private label rewards programs.

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Forward-Looking Statements

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward looking statements are not historical facts, but reflect the Company's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including any risks and uncertainties described herein, as well as the risks and uncertainties detailed in our final long form prospectus dated November 29, 2005 filed with the regulatory authorities.

®Registered Trademark of The Futura Loyalty Group Inc.

The TSX-Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • The Futura Loyalty Group Inc.
    Mark Farrell
    President and CEO