TORONTO, June 14,
2024 /CNW/ - Chesswood Group Limited
("Chesswood" or the "Company") (TSX: CHW) is
providing an update on its previously announced evaluation of the
strategic direction of the Company being supervised by a special
committee of its board of directors (the "Committee").
Over the course of its review to date, the Committee has come to
the view that, based on a variety of factors, including the
challenging economic conditions facing specialty finance companies,
together with ongoing capital constraints of the Company, it is in
the best interests of the Company to actively pursue a sale of one
or more of its business units or the Company as a whole, and
failing such sale or sales, to commence an orderly winddown of one
or more of its business units. During this process, several
parties have indicated an interest in acquiring the Company or
certain of its business units, although the current macro-economic
environment has dampened valuations from what may be achievable in
the future once interest rates are lowered and other performance
issues are resolved.
Recently, it came to the Company's attention that, after
properly adjusting for a system error, the Company is not in
compliance with its minimum borrowing base covenants under its U.S.
$300,000,000 syndicated revolving
credit facility (the "Credit Facility"). The system error
does not affect the calculation of the Company's receivables and
other assets or the liabilities reported in its financial
statements and related MD&A.
Chesswood has received a waiver from its syndicate of lenders
under the Credit Facility for the period to July 15, 2024 which will permit it to pursue
transactions to remedy the breach, all while allowing its
day-to-day operating activities to substantially continue. This
waiver will need to be revised and extended as Chesswood executes
on its plans that will bring it back into compliance with the terms
of the Credit Facility.
The Company's intention is to continue negotiations with the
various parties that have expressed an interest in the Company or
its business units while at the same time, augmenting its capital
position through various initiatives, including capital-raising
activities.
While the Company has obtained an initial waiver in relation to
the Credit Facility covenant breach, there can be no assurance that
any required changes or extensions to the waiver will be obtained.
Further, there can be no assurance as to the timing for completion
of any other capital raise or sale transaction for the Company or
one or more of its business units. As such, no undue reliance
should be placed on any expectations as to the occurrence of any of
the foregoing and any impact on the Company or shareholder value
arising therefrom.
ABOUT CHESSWOOD GROUP
LIMITED
Chesswood Group Limited is a Toronto,
Canada based holding company whose subsidiaries engage in
the business of specialty finance (including equipment finance
throughout North America and
vehicle finance and legal sector finance in Canada), as well as the origination and
management of private credit alternatives for North American
investors. Our shares trade on the Toronto Stock Exchange (under
the symbol CHW).
For information on Chesswood Group
Limited and its operating subsidiaries:
www.ChesswoodGroup.com
www.PawneeLeasing.com
www.TandemFinance.com
www.VaultPay.ca
www.VaultCredit.com
www.Rifco.net
www.WaypointInvestmentPartners.com
www.EasyLegal.ca
FORWARD-LOOKING
INFORMATION
This press release contains forward-looking statements within
the meaning of applicable securities laws. Forward-looking
statements in this press release may include, but are not limited
to, statements relating to the Committee's strategic review process
including the ongoing pursuit of selling one or more of the
Company's business units or the Company itself or any resulting
winddown, the revision and extension of the temporary waiver of the
Company's breach under the Credit Facility and impact of such
breach on its operations, and other statements that are not
material facts. Forward-looking statements are typically identified
by words such as "believe", "expect", "anticipate", "project",
"intend", "plan", "will", "may", "estimate" and other similar
expressions or the negative of these words or variations of them or
similar expressions.
Although the Company believes that the forward-looking
statements in this press release are based on information and
assumptions that are current, reasonable and complete, these
statements are by their nature subject to a number of factors,
risks and uncertainties, both general and specific in nature, that
could cause actual results to differ materially form those
expressed or implied by these forward-looking statements,
including, without limitation, the possibility that a waiver in
relation to the Credit Facility covenant breach may not be obtained
and the availability, timing or completion of any other capital
raise or sale transaction for all or part of the Company's
business. The Company cautions that the foregoing assumptions and
factors are not exhaustive and other factors could also adversely
affect its results. For more information on the risks,
uncertainties and assumptions that could cause the Company's actual
results to differ from current expectations, please refer to the
Company's publicly filed documents, including the Company's annual
information form and management's discussion and analysis of
financial condition and performance, which are available
electronically at www.sedarplus.ca.
Unless otherwise noted or the context otherwise indicates, the
forward-looking statements contained in this press release describe
the Company's expectations as at the date of this press release
and, accordingly are subject to change after such date. Except as
may be required by applicable securities laws, the Company does not
undertake any obligation to update or revise any forward-looking
statements contained in this press release, whether as a result of
new information, future events or otherwise. Readers are cautioned
not to place undue reliance on these forward-looking
statements.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED
HEREIN.
SOURCE Chesswood Group Limited