- Catalyst Fund II term being extended to at least June 2016
- Catalyst Fund III and IV terms confirmed for December 2019 and June
2022 respectively
- Catalyst Fund V first close of US $650
million of targeted US $1.25
billion
- Proposed normal course issuer bid for purchase of up to
2,561,396 of its common shares
TORONTO, April 27, 2015 /CNW/ - Callidus Capital
Corporation (TSX: CBL) ("Callidus" or the
"Corporation") has been advised by The Catalyst Capital Group
Inc., the manager of the Catalyst Funds, in light of the
substantial portfolio of assets that will continue to be held by
Fund II, that its current term is being extended to at least
June 30, 2016 and that further
extensions may be required in order to effect an orderly disposal
of Fund II assets. As well, Callidus has been advised that, subject
to further rights of extension, the term of Catalyst Fund III will
expire in December 2019 and the term
of Catalyst Fund IV will expire in June
2022.
Callidus had previously disclosed that the original term of
Catalyst Fund II (together with a parallel fund), had been extended
to April 2015 and that further
extensions might be granted. Fund II is the holder
of 1,849,057 Callidus common shares plus other shares
representing a carried interest entitlement of The Catalyst Capital
Group Inc. and its affiliates and associates that are subject to an
escrow arrangement as disclosed at the time of the IPO and held for
the long term benefit of The Catalyst Capital Group Inc. and its
affiliates and associates.
Callidus had also previously disclosed that Catalyst Fund III is
the holder of 18,277,595 common shares, and Catalyst Fund IV, the
holder of 7,989,900 common shares.
Fund V Participation
The Catalyst Capital Group Inc. ("Catalyst") recently announced
the first closing of its most recent fund, Catalyst Fund Limited
Partnership V ("Catalyst Fund V"), with US $650 million of capital commitments.
Catalyst Fund V is targeting aggregate commitments of US
$1.25 billion with a hard cap of
US$1.5 billion.
In accordance with the terms of the participation agreement
entered into in connection with Callidus' initial public offering
(the "Participation Agreement"), Catalyst Fund V is now entitled to
participate in the funding of new loans originated by Callidus,
thereby providing the Corporation with access to additional funds
to finance the expansion of its loan portfolio at cost.
Pursuant to the terms of the Participation Agreement, in the event
that the Corporation determines that additional funding is required
to finance expansion in the loan portfolio, Catalyst Fund V will be
entitled to fund a portion of the expansion in accordance with a
formula set out in the Participation Agreement which is based on
the available capital of each of Callidus and Catalyst Fund
V. By funding a portion of the growth, Catalyst Fund V will
acquire a participation interest in the new loan portfolio and will
assume all of the risks and rewards associated with that
participation interest. The portion of the new loan portfolio
owned by Fund V will be derecognized from Callidus' balance sheet
for the purposes of IFRS to the extent of Catalyst Fund V's
interest therein.
Callidus will also have the right to acquire Catalyst Fund V's
interest in the loan portfolio for an amount equal to the funded
amount thereof plus accrued and unpaid interest when Catalyst Fund
V determines to dispose of that interest. As part of that
sale, Catalyst Fund V will also provide a principal guarantee of
its percentage ownership interest in the relevant loans at the time
of sale to Callidus.
Additionally, the resulting increase in Catalyst Fund V's
participation interest will result in the principal guarantee to be
provided by Catalyst Fund V in the event Callidus repurchases the
participation interest covering a larger proportion of the loan
portfolios, thereby reducing Callidus' risk with respect to those
loans after such transfer.
The Corporation expects that its ability to access funds from
Catalyst Fund V, together with its other existing sources of
liquidity, will enable Callidus to fund the continued growth of its
loan portfolio which remains robust.
Normal Course Issuer Bid
Callidus also announced today that it will be submitting a
notice of intention to undertake a normal course issuer bid to the
Toronto Stock Exchange ("TSX") in connection with the purchase by
Callidus of up to 2,561,396 of its common shares, representing 5%
of the 51,227,920 common shares comprising Callidus' total issued
and outstanding common shares as of April
23, 2015. All common shares purchased by Callidus will be
purchased on the open market through the facilities of the TSX in
accordance with the rules, regulations and policies of the TSX and
will be cancelled. Callidus has not made any purchases of its
common shares in the preceding 12-month period. The normal course
issuer bid will be open for a maximum period of 12 months.
The normal course issuer bid remains subject to the approval of
the TSX. A further press release with additional details of
the normal course issuer bid will be issued upon approval of the
bid by the TSX.
Callidus determined to undertake the normal course issuer bid
after receiving advice of its financial advisors as, in the opinion
of management, its common shares have recently traded in a price
range that does not reflect the underlying value of the
Corporation. Callidus believes that any purchases under the
normal course issuer bid will benefit all persons who continue to
hold common shares by increasing their equity interest in the
Corporation.
The company believes that when combined with existing sources of
capital, including the cash generated by the current and growing
portfolio of loans and the now available capital from Fund V, the
issuer bid will not affect the company's ability to fund expected
growth.
Funds used by Callidus to effect purchases under the normal
course issuer bid will reduce Callidus' available capital and
thereby reduce its proportionate interest in the new loan
portfolio. However, Callidus does not view such adjustment as
material.
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 the company'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.
Forward-Looking Statements
This press release contains forward-looking statements that
involve a number of risks and uncertainties, including in respect
of the market price of the common shares and the benefit of the
normal course issuer bid to existing shareholders. Although
Callidus believes these statements to be reasonable, the
assumptions upon which they are based may prove to be incorrect.
Furthermore, the forward-looking statements contained in this press
release are made as at the date of this press release and Callidus
does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result
of new information, future events or otherwise, except as may be
required by applicable securities laws.
SOURCE Callidus Capital Corporation