2015-03-12 – News Release – DealNet Capital Corp.‘s (DLS:CSE) consumer financing subsidiary, One Dealer Financial Services Inc., has closed the first tranche of the senior secured debenture offering previously announced on Dec. 12, 2014. The funds will be available immediately to One Dealer Financial, and are to be used exclusively to finance consumer leases for HVAC (heating, ventilation and air conditioning) equipment.
The first closing consisted of a single subscription for $3-million by the wealth management arm of one of Canada’s largest life and health insurance companies. The investor has the option to invest up to $50-million under the offering.
The senior secured debentures mature on March 12, 2018, and bear interest at the rate of the three-month Canadian dealer offered rate (CDOR) plus 10 per cent, or 12 per cent, per annum, whichever is greater. One Dealer Financial, the investor and the company (acting as a guarantor for the senior secured debentures) entered into a trust indenture with Computershare Trust Company of Canada, acting as trustee. One Dealer Financial is able to securitize or refinance its consumer leases through term debt at a lower cost of financing at any time. DealNet will be required to maintain a minimum cash balance in One Dealer Financial equal to 10 per cent of the outstanding senior secured debentures during the term of the debentures.
The current financing will replace One Dealer Financial’s existing $2-million revolving loan facility. A portion of the funds received ($250,000) will be used immediately to repay the amount outstanding on the revolving loan facility. One Dealer Financial will also pay a prepayment fee of $75,000 to the lender to terminate the facility 14 months prior to maturity.
“After extensive due diligence, One Dealer Financial has demonstrated to the investor the quality of our consumer lease portfolio, our lending practices and the management supporting the business,” says Michael Hilmer, chief operating officer of One Dealer Financial. “The consumer leasing space is a lucrative and secure business model, and we expect to attract additional institutional support throughout 2015, which will allow us to continue to deploy capital and grow our lease portfolio.”
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