Montfort
closes on the third acquisition in the past year
bringing total consolidated assets to $475 million
VANCOUVER, BC, Oct. 3, 2022
/CNW/ - Montfort Capital Corporation ("Montfort" or the
"Company") (TSXV: MONT) (OTCQB:
MONTF), a leading alternative lender utilizing
focused strategies, experienced management teams and advanced
technology, is pleased to announce it has closed on the acquisition
of approximately 78% of Langhaus Financial Partners Inc.
("Langhaus"). Langhaus is the parent company of Langhaus
Financial Corporation ("LFC"), Canada's largest independent provider of
insurance policy backed loans, with a specific focus on
high-net-worth individuals and entrepreneurs. The Langhaus
acquisition was previously announced on May
12, 2022. The total common share valuation of Langhaus is
$12 million and the board, management
and vendors of Langhaus are at arm's length to the Company.
The acquisition was completed pursuant to a share purchase
agreement, by way of a $7.02 million
cash payment to the vendors plus contingent payments totaling
$2.34 million to be paid upon the
achievement of certain financial targets during an earn-out period.
Montfort has not issued common or
preferred shares as part of the purchase price.
Coincident with the acquisition, Langhaus and Montfort have entered into a lock-up agreement
with certain holders of non-voting preferred shares of LFC who are
also selling shareholders of Langhaus, representing approximately
53% of the outstanding preferred shares of LFC having an aggregate
original purchase price of $6.57
million (the "Lock-Up Agreement"). The Lock-Up
Agreement provides for a 6-month period post-closing of the
acquisition for these holders of existing preferred shares of LFC
to exchange their shares for a new series of preferred shares to be
issued by LFC that will, subject to certain conditions, be
redeemable in cash on October 3rd,
2024 for the original purchase price of the existing
preferred shares of LFC and any accrued and unpaid dividends or, at
the option of the holder, exchangeable into a new class or series
of preferred shares of the Company having substantially similar
terms and ranking on an equivalent basis to the outstanding Series
A Preferred Shares of the Company, including the option to convert
such preferred shares into common shares of the Company.
"We would like to welcome the Langhaus team to the family of
Montfort private credit
companies," said Mike Walkinshaw,
CEO of Montfort. "TIMIA Capital,
Pivot Financial, Brightpath Capital, and now Langhaus are leaders
in their respective private credit verticals and continue to
experience growth in 2022. The successful integration of Pivot has
provided important experience onboarding private credit companies
to the Montfort platform.
With the recent close of the Brightpath and Langhaus acquisitions,
we look forward to leveraging our financing relationships,
back-office platform, and technology expertise to make each of
these businesses more efficient and more profitable."
For fiscal 2021, Langhaus generated approximately $6.5 million in revenue with an approximate net
loss of $954,000. During the
first quarter of 2022, Langhaus achieved breakeven and generated
approximately $14,000 in net income.
Langhaus had approximately $123.4
million in long-term debt at the December 31, 2021 year-end. (All figures
reflecting consolidated information, including Langhaus' subsidiary
LFC.)
For the combined entity, which now includes TIMIA Capital, Pivot
Financial, Brightpath Capital and Langhaus, Montfort reports the following financial
metrics:
- Pro forma combined assets of approximately $475 million at the date of close.
- For the year ended December 31,
2021, key pro forma full year amounts for the combined
entity include:
-
- Revenue of approximately $29.7
million, an increase over Montfort's consolidated revenue of
$9.7 million for Fiscal 2021
- Operating expenses of approximately $23.5 million, an increase over Montfort's consolidated operating expenses of
$6.7 million for Fiscal 2021
- Net income after taxes of $4.5
million, an increase over Montfort's consolidated net income of
$2.4 million.
- The acquisition is expected to be accretive for Montfort shareholders during fiscal 2024 based
upon forecasted growth and financing costs incurred.
No finder's fees were payable in connection with the proposed
transaction.
In addition, the Board of Directors of Montfort approved the issuance of 1,285,000
stock options and 350,000 restricted and performance share units to
members of management and employees of Montfort, Brightpath and Langhaus.
About Langhaus
Langhaus Financial is the leading
non-bank provider of insurance policy-backed lending solutions to
high-net-worth individuals and entrepreneurs throughout
Canada. Working cooperatively with Canada's major insurance companies and top
advisers, the Langhaus team designs flexible lending programs in a
way that best meets the needs of borrowers, with an expertise in
structured finance transactions and complex borrower structures
that fall outside the typical purview of Canadian banks.
About Montfort Capital Corporation
Montfort manages a diversified family of
specialized private credit brands that utilize focused strategies
and experienced management teams combined with advanced technology
to improve fee related performance. Montfort facilitates transparency for its
investors through public company reporting. For further
information, please visit www.montfortcapital.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Forward-Looking Information
Certain information and statements in this news release contain
and constitute forward-looking information or forward-looking
statements as defined under applicable securities laws
(collectively, "forward-looking statements"). Forward-looking
statements normally contain words like 'believe', 'expect',
'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may',
'will', 'should', 'ongoing' and similar expressions, and within
this news release include any statements (express or implied)
respecting the future growth of the Company, the Company's future
financial performance and the impact and benefits of the completion
of the Company's recent acquisitions, the future financial
performance of Langhaus, and the future accretive value to the
Company's shareholders of the acquisition of Langhaus.
Forward-looking statements are not guarantees of future
performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances, including, without limitation, the following
assumptions: that the Company and family of private credit
companies are able to meet their respective future objectives and
priorities, assumptions concerning general economic growth and the
absence of unforeseen changes in the legislative and regulatory
framework for the Company; assumptions regarding the Company's
ability to integrate its recently completed acquisitions in order
to achieve anticipated benefits.
Although management believes that the forward-looking statements
are reasonable, actual results could be substantially different due
to the risks and uncertainties associated with and inherent to
Montfort's business. Material
risks and uncertainties applicable to the forward-looking
statements set out herein include, but are not limited to, the
Company having insufficient financial resources to achieve its
objectives; availability of further investments that are
appropriate for the Company on terms that it finds acceptable or at
all; successful completion of exits from investments on terms that
constitute a gain when no such exits are currently anticipated;
intense competition in all aspects of business; reliance on limited
management resources; risks related to the integration of the
businesses of its recently completed acquisitions, general economic
risks and risks related to the private credit market; new laws and
regulations and risk of litigation. Although Montfort has attempted to identify factors
that may cause actual actions, events or results to differ
materially from those disclosed in the forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, predicted, estimated or intended. Also,
many of the factors are beyond the control of Montfort. Accordingly, readers should not
place undue reliance on forward-looking statements. Montfort undertakes no obligation to reissue
or update any forward-looking statements as a result of new
information or events after the date hereof except as may be
required by law. All forward-looking statements contained in this
news release are qualified by this cautionary statement.
SOURCE Montfort Capital Corp.