DealNet closes acquisition of EcoHome Financial

Dealnet Closes the Acquisition of EcoHome Financial

– Momentum Public Relations – Feb.18


Dealnet Capital Corp. (“Dealnet” or the “Company”) (TSX VENTURE:DLS) today announced that it has closed the previously announced acquisition of EcoHome Financial Inc. (“EcoHome”), a premier non-bank lender in the Canadian heating, ventilation and air conditioning (HVAC) and home improvement segments, from Chesswood Group Limited (the “Acquisition”) for total consideration of approximately $35 million.

Pursuant to an amendment to the share purchase agreement dated February 17, 2016, the consideration paid for the Acquisition consisted of (i) $29 million in cash, (ii) 6,039,689 common shares of Dealnet having an aggregate value of $3.5 million; and (iii) a two-year unsecured convertible vendor take-back note in the principal amount of $2.5 million that bears interest at a rate of 6.0% per annum and is convertible by the holder into common shares of Dealnet at a conversion price of $0.64 per share.

In connection with the Acquisition, the Company previously issued 54,545,700 subscription receipts (the “Subscription Receipts”) at a price of $0.55 per Subscription Receipt for gross proceeds of approximately $30 million (the “Offering”). All of the Subscription Receipts issued pursuant to the Offering have been exchanged for common shares of Dealnet on a one-for-one basis as of today’s date. The net proceeds of the Offering have been released from escrow and were used to pay a portion of the purchase price of the Acquisition.

EcoHome has a seasoned, profitable loan book of over $60 million and a year over year origination growth rate of approximately 40%. The EcoHome portfolio consists of long term finance assets that have historically predictable revenue and cash flows. It operates on the same loan management software as Dealnet, making integration a straightforward process. Key EcoHome underwriters have transferred and/or increased their line capacity with the deal in support of the transaction and continued growth.

“This significant transaction elevates Dealnet’s lending business to a leading competitive position in this sector. The quality of the loan book within the home improvement space is demonstrated by 0.25% loan loss rates net of recoveries which continues to attract low cost underwriting,” said Michael Hilmer, Dealnet’s Chief Executive Officer.

As part of the Acquisition, Dealnet acquires all customer contracts, vendor finance agreements, employees, operating platform, systems, agreements and other assets of EcoHome. Dealnet plans to combine treasury functions, technology, risk and credit management and overall origination capabilities with no job loss due to the considerable growth trajectory demonstrated by EcoHome and Dealnet.

“We are particularly pleased with the strong institutional support from our bankers and underwriters for our aggressive profitable growth strategy as we accelerate our plans to become one of the leading non-bank consumer lenders” said Dr. Steven Small, Dealnet’s Executive Chairman.

About Dealnet Capital Corp.

Dealnet is an engagement enabled consumer finance company that is initially focused on home improvement finance solutions including heating ventilation and air conditioning financing and leasing. Dealnet leverages its large scale customer service and engagement technology platform to attract home improvement dealers by providing front and back office services to dealer origination growth.

 

Leave a Reply

Please wait...

Knowledge is Power

Knowledge is a necessity for all savvy investors. To achieve great CONSISTENT returns, smart investors know they need all the information they can get. We have your information!