trending Market Intelligence /marketintelligence/en/news-insights/trending/pZIaCO2AqRJcwOZTEBV6jQ2 content esgSubNav
In This List

Element Financial board approves split into 2 companies


Banking Essentials Newsletter: January 11th Edition


Banking Essentials Newsletter December 21st Edition


The Road to Basel IV: Navigating the challenge facing European banks


Basel Framework- Utilizing data to analyze the capital position of European banks.

Element Financial board approves split into 2 companies

Element FinancialCorp.'s board has approved the reorganizationof the company into two separate publicly tradedcompanies.

The separation, which is targeted for completion Oct. 3,will see Element Financial being renamed Element Fleet Management Corp.,a fleet management company, and ECN Capital Corp. being established asa North American commercial finance company.

Element Fleet Management will be an C$18.0 billion company headedby Bradley Nullmeyer as CEO, while ECN Capital Corp. will be a C$5.9 billion companyheaded by Steven Hudson as CEO.

Both new companies have received underwriter commitments forcreating separate senior credit facilities after completion of the separation. ElementFinancial's existing senior credit facility will be amended and restated so as toprovide for $4.0 billion in three-year revolving funding for Element Fleet, andECN Capital has received commitments for a separate $2.5 billion three-year revolvingsenior credit facility.

Bank of Montreal, Canadian Imperial Bank of Commerce, NationalBank of Canada, Royal Bank of Canada, Toronto-Dominion Bank and BNP Paribas SecuritiesCorp. acted as co-lead arrangers and co-book runners for each of the separate creditfacilities, and Bank of Montreal acted as the administrative agent.

Completion of the separation is subject to certain conditions,including the approval of the Ontario Superior Court of Justice, the approval ofthe Toronto Stock Exchange and the approval of two-thirds of Element Financial shareholdersvoting at a special meeting Sept. 20. The company plans to apply to obtain an interimorder for the separation from the Ontario Superior Court of Justice on July 28.

In addition, Element Financial; ECN Capital; and 2510204 OntarioInc., a unit of Element Financial, have entered into a definitive agreement withINFORAcquisition Corp., under which ECN Capital will acquire all issued andoutstanding shares in the capital of INFOR Acquisition after the reorganizationis completed.

At the closing of the deal, each outstanding share in the capitalof INFOR Acquisitionwill be acquired in exchange for a specified number of ECN Capitalcommon shares. The exchange ratio will be based on the fair market value of ECNCapital at closing of the separation and the net assets of INFOR Acquisition immediatelybefore the closing of the deal.

The deal is conditional upon INFOR Financial Group having enteredinto an escrow agreement with ECN Capital, on terms acceptable to it, providingfor an escrow of 25% of the ECN Capital common shares that INFOR Financial Groupwill receive under the deal. These shares will not be released from escrow untilthe trading price of the ECN Capital common shares exceeds 130% of the trading priceon the date of the deal closing for 20 consecutive trading days.

Completion of the deal is subject to certain conditions, includingapproval of the Ontario Superior Court of Justice, approval of the Toronto StockExchange, issuance of a receipt from the Ontario Securities Commission for the non-offeringprospectus of INFOR Acquisitionto be filed in connection with the deal, approvalof a majority of Element shareholders voting at the special meeting for the issuanceof ECN Capital common shares in connection with the deal, approval of INFOR Acquisitionshareholders, completion of Element Financial's separation, andholders of less than 25% of the outstanding class A restricted voting shares ofINFOR Acquisition exercising their rights of redemption in connection with the deal.

Neil Selfe, current CEO of INFOR Acquisition, and William Holland,a director of INFOR Acquisition, will be appointed to the board of ECN Capital immediatelyafter completion of the deal. Selfe will also join the ECN Capital management teamas executive vice chairman.

Hudson said the acquisition of INFOR Acquisition will provideECN Capital with immediate access to cash of about C$220 million at market ratesthat will allow it to accelerate the implementation of its growth strategy.

The deal is expected to close by mid-October, subject to timelyregulatory, court and shareholder approval. The reorganization of Element Financialis separate from, and not conditional on, the INFOR Acquisitiondeal.