RIFCO INC.
TSX VENTURE : RFC

RIFCO INC.

May 01, 2008 09:30 ET

RIFCO Receives Second Letter Of Credit From BMO

RED DEER, ALBERTA--(Marketwire - May 1, 2008) - RIFCO INC. (TSX VENTURE:RFC) is pleased to announce that it has negotiated a second letter of credit (LOC) from Bank of Montreal (BMO). The second LOC increases RIFCO's total LOCs from $2.0M to $3.0M. The LOCs forms part of RIFCO's existing senior debt facility and by themselves do not increase RIFCO's total available capital.

Delivery of the LOC to our third party securitization trust administrator will result in a $1.0M cash release from the retained interest cash holdback. The released cash will be used to pay down RIFCO's senior debt borrowing and reduce senior debt interest expenses.

RIFCO's capital strategy is to use its senior debt borrowing to fund its origination of auto loan receivables. The majority of these receivables are ultimately sold through a securitization facility which effectively provides fixed, matched funding. RIFCO continues to maintain two $30 million securitization facilities with Securcor Trust and Community Credit Union.

RIFCO has experienced a substantial increase in the enrollment of participating dealers and corresponding loan origination volume. As a result of this growth, and in order to maintain available capacity on its senior debt facility, RIFCO intends to increase the size and frequency of securitizations to match the higher loan origination volume levels.

In addition, BMO has also provided a temporary credit facility increase of $1.0M to $8.5M until May 31, 2008. This increase will provide additional origination capacity while securitization levels are increased to match the higher origination levels.

RIFCO has previously reported access to a $2M warehouse credit facility that was made available by a special purpose trust entity. The facility was solely available for periods of up to 60 days for loan build up prior to securitization. Pricing and administration for the facility had made it unattractive to date, and in the 3 years since arranged it had not been accessed by RIFCO. Access to this facility has expired and will not be renewed.

RIFCO has been granting automobile loans in Canada since December 2002. In March 2008, the Company announced that it would focus on its growing network of automobile dealers and on increasing originations of non-prime auto loans.

About RIFCO Inc.

RIFCO is a specialty consumer finance corporation currently providing motorists with non-prime Auto Financing through a growing network of new & used vehicle dealers operating in all provinces except Saskatchewan and Quebec. RIFCO Inc. operates through its wholly owned subsidiary Repair Industry Finance Corporation.

The common shares of RIFCO INC. are traded on the TSX Venture Exchange under the symbol "RFC". RIFCO Inc. has 19.23 million shares outstanding.

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

Contact Information

  • RIFCO Inc.
    Lance A. Kadatz
    Vice President and Chief Financial Officer
    (403) 314-1214 Ext 111
    (403) 314-1132 (FAX)
    Email: kadatz@rifco.net
    Website: www.rifco.net