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TORONTO, July 18, 2016 /CNW/ - Callidus Capital
Corporation (TSX:CBL) ("Callidus" or the "Corporation") is pleased
to announce that it has received provisional investment grade
ratings for loans to be issued through a new securitization
facility. This facility is intended to serve as the
Corporation's primary senior growth-financing vehicle going
forward. The provisional ratings will be used for marketing, which
is expected to begin the week of July
25, and final ratings will be received when all
documentation is complete and the securitization transaction is
closed.
The facility, with four investment grade debt tranches ranging
from AAA (sf) to BBB (sf), is expected to be initiated at
$165 million and will augment
Callidus' existing facilities. The new securitization
facility will increase in size as new loans are added. The four
investment grade debt tranches ranging from AAA (sf) to BBB (sf),
represent approximately two-thirds of the initial expected issue
size.
"This additional financing diversifies our funding, and as our
loan book grows, it will become an increasingly larger portion of
our capital structure. It positions us well and in advance of
growth to support a lower, sustainable cost of capital for our
business," said Newton Glassman,
Chairman and CEO of Callidus. "With the foundation for future
loan growth funding well established, we will continue to return
significant capital to shareholders through the SIB and planned
NCIB."
Supports Incremental, Lower-Cost Liquidity and Re-starting
Loan Growth
Upon closing, the new facility will create incremental liquidity
for Callidus. It is estimated that the initial $165 million securitization will allow the
Corporation to lever the current loan portfolio by an incremental
$25 million. Callidus will
re-start growth of its loan portfolio within the next quarter, with
the intent of ultimately utilizing the facility as the primary
source of funding for incremental growth. The Corporation
remains committed to doubling the loan portfolio over the next two
to three years.
Debt with ratings and maturity similar to the new securitization
facility is currently trading in a range that would represent
approximately a 2% reduction in Callidus' cost of funds, compared
with the rates Callidus is paying under the current financing
facilities. Callidus expects securitization to represent a
growing proportion of the capital structure as it funds the
incremental growth in the loan portfolio and further reduces the
Corporation's cost of capital.
Enhances Financial Flexibility
A significant advantage of the new facility is the ability to
access funding more rapidly than is currently possible. It is
expected that in the future, when debt is funded through this
facility, the funding timeline will be reduced significantly - from
the current eight to 12 weeks, to approximately two to four
weeks.
Incremental Facility that Will
Grow in Significance
Proceeds from the new securitization facility will be used to
partially repay outstanding amounts under the existing facilities,
while those facilities are expected to largely remain in
place. Over time, as the securitization program expands,
Callidus will review and optimize the size of its other facilities
to achieve the most suitable capital structure to support the
doubling of its loan book.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any securities of the Company in
any jurisdiction in which such offer, solicitation or sale would be
unlawful.
About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a Canadian
company that specializes in innovative and creative financing
solutions for companies that are unable to obtain adequate
financing from conventional lending institutions. Unlike
conventional lending institutions who demand a long list of
covenants and make credit decisions based on cash flow and
projections, Callidus credit facilities have few, if any, covenants
and are based on the value of a borrower's assets, its enterprise
value and borrowing needs. Callidus employs a proprietary system of
monitoring collateral and exercising control over the cash inflow
and outflows of each borrower, enabling Callidus to very
effectively manage any risk of loss. Further information is
available on our website, www.calliduscapital.ca.
SOURCE Callidus Capital Corporation