VANCOUVER, Feb. 28, 2020 /PRNewswire/ - Mogo
Inc. (TSX:MOGO) (NASDAQ:MOGO) ("Mogo" or the "Company"), one
of Canada's leading financial
technology companies, today announced a three-year lending
partnership with goeasy Ltd. (TSX:GSY) ("goeasy"), as well as the
sale of the majority of its MogoLiquid loan portfolio ("MogoLiquid
Portfolio") to goeasy, consistent with Mogo's strategic plan to
reduce its on balance sheet lending and focus on leveraging its
proprietary digital lending platform to originate loans for key
partners.
The lending partnership builds on a successful pilot program
with goeasy, which commenced in October
2019. Through Mogo's digital platform, consumers can quickly
download the Mogo app, get a no-obligation pre-approval (for up to
$35,000 with terms of up to 5 years),
customize their loan, and complete the loan agreement all in
minutes. Once approved, certain Mogo members will have their loan
funded by goeasy's operating division, easyfinancial, a leading
provider of unsecured and secured non-prime consumer loans. Loan
customers will continue to manage their loan through the Mogo app.
Mogo will receive compensation from easyfinancial for any loans
funded by easyfinancial, while easyfinancial will have ownership of
these loans. The partnership allows Mogo to generate additional
fee-based subscription & services revenue.
In addition to the lending partnership, the companies announced
that goeasy has acquired the MogoLiquid Portfolio for total gross
consideration of $31.9 million. Mogo
will also be eligible for an additional performance-based payment
of up to $1.5 million over the term
of the agreement upon achieving certain agreed-upon annual
origination amounts under the lending partnership.
The proceeds of the sale will be used to repay one of Mogo's
credit facilities which has an outstanding balance of approximately
$28.7 million with the remaining
proceeds used to further strengthen Mogo's balance sheet and
support its growth initiatives.
"On the back of a very successful initial implementation, we're
pleased to solidify a longer-term relationship with goeasy, which
we view as the ideal non-prime partner for us given their deep
experience in the consumer lending space and strong financial
resources," said David Feller,
Mogo's Founder and CEO. "In addition to convenient mobile access to
smarter credit solutions, we offer our lending partners and
consumers access to Mogo's broader financial health solution,
including free credit score monitoring, in-app educational tools,
and our MoneyUp program built around the 4 habits of financial
health."
Greg Feller, President & CFO,
added: "The sale of our MogoLiquid Portfolio significantly
strengthens our financial position, providing additional cash while
reducing our leverage, funding interest expense, and credit risk
exposure. Through our lending partner model, we are generating new
recurring fee-based revenue, with no capital investment or risk.
This relationship – as well as others we expect to enter for the
prime segment – allows us to more fully monetize the valuable
proprietary lending platform we have built over the past 10
years."
For the three-month period ended September 30, 2019, the MogoLiquid Portfolio
generated approximately $3.0 million
in total revenue, including amounts for loan protection that are
recognized in subscription and services revenue. For the same
period, after accounting for expenses related to the loan portfolio
including funding interest expense, the liquid portfolio was
approximately breakeven on a net income basis.
Mogo will continue to offer its MogoMini loan products under the
MogoMoney brand and is in active discussions to bring on a prime
lender to its digital lending platform.
With more than 400 locations across Canada, goeasy offers a full suite of
unsecured and secured personal lending products through its
consumer lending division, easyfinancial, to the 9.4 million
Canadians with non-prime credit. The company has originated more
than $3.9 billion in loans
and has a consumer loan portfolio of more than $1.1 billion.
Mogo has also agreed to issue 306,842 common shares (the
"Prepayment Shares") to the lender as part of a prepayment cost
payable under the credit agreement. The Prepayment Shares are being
issued at a price of $3.259 per
Prepayment Share, being the five-day volume-weighted average
trading price of Mogo's common shares as of the close of trading on
February 27, 2020. The Prepayment
Shares are being qualified by a prospectus supplement (the
"Supplement") to Mogo's short form base shelf prospectus (the
"Shelf Prospectus") dated December 5,
2019 and corresponding registration statement on Form F-10
(the "Registration Statement"), which is being filed today with the
applicable securities regulatory authorities in Canada and the SEC as part of the Registration
Statement under the US-Canada Multijurisdictional Disclosure
System. Copies of the Supplement and the Shelf Prospectus will be
available on SEDAR at www.sedar.com and copies of the
Supplement and the Registration Statement will be available on
EDGAR at www.sec.gov.
About Mogo
Mogo — a financial technology company —
offers a finance app that empowers consumers with simple solutions
to help them get in control of their financial wellness. Financial
wellness continues to be the #1 source of stress across all
demographics and highest among millennials. At Mogo, users can sign
up for a free account in only three minutes and begin to learn the
4 habits of financial health and get convenient access to products
that can help them achieve their financial goals. The Mogo platform
has been purpose-built to deliver a best-in-class digital
experience, with best-in-class products all through one account.
With more than 925,000 members and a marketing partnership with
Canada's largest news media
company, Mogo continues to execute on its vision of becoming the
go-to financial app for the next generation of Canadians. To learn
more, please visit mogo.ca or download the mobile app
(iOS or Android).
Forward-Looking Statements
This news release may
contain "forward-looking statements" within the meaning of
applicable securities legislation, including statements regarding
the performance-based payment and its discussions with potential
prime lenders. Forward-looking statements are necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual financial
results, performance or achievements to be materially different
from the estimated future results, performance or achievements
expressed or implied by those forward-looking statements and the
forward-looking statements are not guarantees of future
performance. For a description of the risks associated with Mogo's
business please refer to the "Risk Factors" section of Mogo's
current annual information form, which is available at
www.sedar.com and www.sec.gov. Except
as required by law, Mogo disclaims any obligation to update or
revise any forward-looking statements, whether as a result of new
information, events or otherwise.
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SOURCE Mogo Inc.
