TORONTO, Dec. 4, 2014 /CNW/ - Callidus Capital Corporation
("Callidus" or the "Company") (TSX: CBL), a provider
of flexible and innovative asset-based loans, announced today an
update on the status of its business.
Portfolio Growth
We are pleased to report that as at December 1, 2014, our gross loan commitments
totalled $913 million, almost
doubling that amount as compared to December
31, 2013 and an increase of $371
million from November 4,
2014. From those loan commitments, a total of $752 million has been advanced and remains
outstanding. This represents an increase of $68 million (10%) in loan advances from
November 4, 2014. We are making
this disclosure because during our quarterly public teleconference
call on November 7, 2014, we stated
that it was our intention to inform the market when the size of the
loan portfolio changed by more than 10%. Our intention is to
announce changes of approximately 10% in gross loans receivable on
a go forward basis.
As disclosed previously, we have hired new originators in
Seattle, Washington to cover the
Pacific coast, British Columbia,
and Alberta, and in Montreal to cover each of the Quebec and Eastern Canadian markets. These new
originators have identified a number of opportunities that are
beginning to contribute to the growth in the loan portfolio.
The first loan initiated by one of these new originators closed
since our last report as at November 4,
2014.
Callidus' deal pipeline has remained relatively stable since
last announced on November 7, 2014,
with potential loans with a total value of approximately
$600 million, of which $170 million represents term sheets that have
been signed back by the borrowers. As previously disclosed,
Callidus undertakes extensive due diligence before closing on a
loan transaction and has historically closed on approximately 60%
to 80% of signed back term sheets.
Catalyst Offers to sell $50
Million of Loans to Callidus
Catalyst Fund Limited Partnership IV has advised Callidus that
it intends to sell 100% of its $50
million participation interest in the loan portfolio on or
before December 31, 2014 and has
offered Callidus the opportunity to acquire that interest in
exchange for Callidus common shares at a share price to be
determined and approved by the independent directors of
Callidus. Completion of the proposed acquisition is subject
to complying with related party and other regulatory requirements
and the approval of the Toronto Stock Exchange. The participation
agreement between Callidus and Catalyst Fund Limited Partnership IV
provides the Company the option to acquire all or part of the
interest in the loan portfolio at par plus accrued interest and
fees.
As previously disclosed, Catalyst Fund Limited Partnership IV
and other investment funds managed by The Catalyst Capital Group
Inc. Own approximately 57.5% of the outstanding common shares of
Callidus (56.2% on a fully diluted basis) and have provided the
Company with a subordinated bridge loan facility, currently in the
principal amount of USD $200 million,
of which approximately USD $75
million has been advanced to date in order to support growth
in the loan portfolio.
Callidus intends to repay the bridge loan at such time as more
efficient and less costly forms of capital are available. Callidus
is continuing to explore financing sources including but not
limited to both the private and public capital markets to ensure
adequate and diversified funding sources. These sources include
seeking increased availability from Callidus' existing lenders,
other secured debt, convertible debt and other equity linked forms
of financing. However, as previously disclosed, Callidus considers
the current market conditions for an equity offering to be
unfavourable given the high cost of capital and has therefore
determined to continue to explore other options and to avail itself
of the bridge loan during such time.
As previously disclosed, the Callidus board has allowed the
leverage on Callidus' balance sheet to exceed the targeted leverage
ratio of 40% until such time as the Callidus board feels the cost
of equity, or equity linked securities is appropriate.
Management has determined that, at leverage rates of approximately
62%, the Company would have sufficient capital to finance its loan
portfolio, including anticipated growth. The present leverage
rate of the Company is approximately 43%.
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.
Non-IFRS Measures
This press release contains references to gross loans
receivable, which is not a generally accepted accounting measure
under International Financial Reporting Standards and therefore the
definition used by the Company may differ from the definition of
such term used by other entities. The Company defines "gross loans
receivable" as the sum of (i) the aggregate amount of loans
receivable on the relevant date, (ii) the loan loss allowance on
such date, (iii) the book value of assets held for sale as they
appear on the balance sheet, and (iv) discounts on loan
acquisitions. Management believes that gross loans receivable is a
useful supplemental measure that may assist purchasers in assessing
the financial performance and the cash anticipated to be generated
by the Company's business. Gross loans receivable should not be
considered as the sole measure of the Company's performance and
should not be considered in isolation from, or as a substitute for,
analysis of the Company's financial statements.
Forward Looking Statements
Certain statements made herein contain forward-looking
information. Forward-looking statements in this release include
those related to expected growth in the loan portfolio, repayment
of the bridge loan and sufficiency of sources of
liquidity. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors and
assumptions that may cause the actual results, performance or
achievements of Callidus, or developments in Callidus' business or
industry, to differ materially from the anticipated results,
performance or achievements or developments expressed or implied by
such forward-looking statements. Such factors and assumptions
include, but are not limited to, Callidus' inability to
successfully originate new loans due to competitive factors or
adverse developments in the asset-based loans market; the
availability of additional financing on acceptable terms, or at
all, being dependent on capital market conditions and the operating
performance of Callidus; the continued availability of funding
under bridge loan facility provided by Catalyst Funds and Callidus'
existing loan facilities; and other factors and assumptions
discussed in the section entitled "Risk Factors" in documents filed
with the Ontario Securities Commission and other securities
commissions across Canada,
including Callidus' prospectus dated April
15, 2014. If any such risks actually occur or assumptions
prove to be incorrect, Callidus' business, financial condition or
results of operations could be materially adversely affected.
Readers are cautioned not to place undue reliance upon any such
forward-looking statements, which 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