Axis Auto Finance finalizes acquisition of Trend Financial

TORONTO - 

To borrow a phrase from vehicle delivery vernacular, the acquisition of Trend Financial by Axis Auto Finance “rolled over the curb” this week.

According to a news release, Axis said its acquisition of all of the issued and outstanding securities of Trend closed on Monday.

“The closing of the Trend acquisition creates a powerhouse in the Canadian subprime auto lending market,” said Ilja Troitschanski, Axis’ founder and president. “We are excited to welcome the Trend team to Axis and look forward to our future together.”

The acquisition was completed pursuant to a share purchase agreement dated March 6 for a total consideration of approximately $29.3 million, comprised of:

— Approximately $20.7 million in cash, inclusive of a $1 million holdback amount paid into escrow and releasable following the completion of the purchase price adjustments under the share purchase agreement.

— The issuance of 3,252,244 common shares in the capital of Axis and 1,918,194 common share purchase warrants.

— The issuance of 2,015,409 common shares and 2,562,933 warrants, paid into escrow and, subject to certain exceptions, releasable no later than the date that is 19 months from the closing date of the acquisition

— The issuance of a contingent 1,684,345 Common Shares and a contingent 2,141,929 Warrants, paid into escrow and payable in accordance with the terms of the Share Purchase Agreement. Each Common Share was issued at a deemed price of $0.70 per Common Share and each Warrant entitles the holder thereof to purchase a Common Share at a price of $0.90 at any time during a period of 36 months following the closing date of the Acquisition.

In addition, as previously disclosed, Axis reiterated that it issued an additional $3 million principal aggregate amount of extendible convertible unsecured subordinated debentures to certain vendors of Trend, who subscribed for such debentures with a portion of the cash entitled to be received by such vendors pursuant to the acquisition.

The company indicated the Debentures are not listed or posted for trading on any exchange and are subject to a statutory four-month and a day hold.

Axis also explained the acquisition was funded in part by a private placement financing of subscription receipts and debentures, which closed on March 22, through a syndicate of underwriters co-led by Canaccord Genuity Corp. and INFOR Financial Inc. and including PI Financial Corp. and Raymond James Ltd.

Pursuant to the offering, Axis issued 10,440,784 subscription receipts at a price of $0.70 per subscription receipt for gross proceeds of approximately $7.3 million and $14.55 million aggregate principal amount of debentures.

In accordance with the terms of the subscription receipts, each subscription receipt was exchanged upon the closing of the acquisition for one common share and the proceeds from the sale of the subscription receipts were released from escrow. Holders of subscription receipts are not required to take any action in order to receive their common shares, according to the company.

INFOR Financial acted as financial adviser to Axis in connection with the acquisition and Dentons Canada acted as legal counsel to Axis.

In connection with the closing of the acquisition, Axis said it will pay INFOR:

— A cash advisory fee in connection with Axis’ prior acquisition of Cars on Credit Financial

— An advisory fee in connection with the acquisition, satisfied in part by payment in cash and in part through the issuance of 321,428 Axis units at a price of $0.70 per unit.

Each unit is comprised of one common share and one half of a warrant, with each warrant entitling the holder thereof to purchase a common share at a price of $0.90 at any time during a period of 36 months following the closing date of the acquisition.

“I want to commend the Axis deal team, the management at Trend, as well as our advisers for successfully getting this transaction closed,” Axis chief executive officer Todd Hudson said. “We have become a clear leader in the Canadian subprime auto finance space and we intend to continue to grow Axis from coast to coast. The Trend deal puts us one step closer to that goal."

Further information on the company can be found at www.axisautofinance.ca.

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