~TIMIA announces letter of intent to acquire a
controlling interest in a second specialty finance company in 2022;
Combined company pro forma assets surpass $450 million~
VANCOUVER, BC, May 12, 2022
/CNW/ - TIMIA Capital Corporation ("TIMIA" or the "Company")
(TSXV: TCA) (OTCQB: TIMCF), a leading innovator in specialty
private credit, is pleased to announce it has agreed to acquire
approximately 77% of a Canadian-based leading provider of specialty
finance lending (the "Target"), for a purchase price of
approximately $9.24 million. The
total common share valuation of the specialty finance company is
$12 million. The vendors of the
Target (the "Vendors") and the Target's board and management are at
arm's length to the Company.
The proposed acquisition is currently subject to a non-binding
letter of intent dated March 24,
2022. Since signing the non-binding letter of intent, the
Company has undertaken due diligence and has recently determined to
proceed with negotiation of definitive transaction agreements. Due
to competitive issues related to the acquisition, the name of the
Target will only be disclosed after closing of the transaction,
which is expected on or around June 30,
2022.
The acquisition will complete by way of $7.7 million cash payment to the Vendors upon
closing, plus a $1.54 million
unsecured promissory note, bearing interest at 5% per annum payable
in 12 months. The Company expects to finance the acquisition
through the issuance of debt, and does not contemplate issuing
common or preferred stock as part of the purchase price.
For fiscal 2021, the Target had approximately $250 million in assets at year end and generated
$6.5 million in revenue with an
approximate net loss of $954,445. The Target has seen 35% revenue
growth during calendar year 2021 and is expecting continued strong
growth over the next 12 months as it moves toward
profitability. During the first quarter of 2022, the Target
achieved breakeven and generated approximately $14,000 in net income. The Target had
approximately $123.4 million in
long-term debt at year-end.
Taking into account the recently announced letter of intent for
Brightpath Capital Corporation and Brightpath Residential Mortgage
LP I ("Brightpath" - see the Company's news release dated
May 5, 2022), highlights of the
combined company and related financial metrics after giving effect
to the contemplated acquisitions include:
- Pro forma combined assets of approximately $450 million
- For the year ended December 31,
2021, key pro forma full year amounts for the combined
entity include:
-
- Revenue of approximately $29.7
million, an increase over TIMIA's consolidated revenue of
$9.7 million for Fiscal 2021
- Operating expenses of approximately $23.5 million, an increase over TIMIA's
consolidated operating expenses of $6.7
million for Fiscal 2021
- Net income after taxes of $4.5
million, an increase over TIMIA's consolidated net income of
$2.4 million.
- The acquisition is expected to be accretive for TIMIA
shareholders within one year of the closing of the transaction
based upon forecasted growth and financing costs incurred.
"We are aggressively growing our business through the
acquisition of specialty finance companies like the Brightpath
acquisition announced last week and this specialty finance company
announced today," said Mike
Walkinshaw, CEO of TIMIA. "Through these acquisitions we
will have materially increased our market size and diversified our
scope while improving profitability. Once completed, we will
have grown to over $450 million of
assets. Our goal is to be the leading provider of specialized
private credit to owners, entrepreneurs and other organizations
throughout North America while
providing unique investment opportunities to Canadian
investors."
Completion of the transaction is subject to the following
conditions;
- Execution of definitive transaction agreements,
- If required, receipt of approval of the TSX Venture Exchange
(the "TSXV") for the transaction,
- Receipt of all necessary third-party consents, and
- Other customary closing conditions.
The transaction is also subject to a break fee of $200,000 payable by TIMIA Capital if the
transaction does not close before June 30,
2022. No finder's fees are payable in connection with the
proposed transaction.
About TIMIA Capital
Corporation
The Company democratizes private credit for investors by
offering a broad range of speciality private credit opportunities
with transparency and efficiency, facilitated by the Company's
proprietary technology platform. These high-yield loan
opportunities are delivered through operating divisions: TIMIA
Capital which offers revenue-based investment to fast growing,
business-to-business Software-as-a-Service (or SaaS) businesses in
North America, and Pivot Financial
which specializes in asset-based private credit targeting
mid-market borrowers in Canada.
The Corporation deploys funds on behalf of limited partnerships,
institutions, retail investors, high net worth individuals, its
management team and shareholders. For more information about TIMIA
and SaaS lending, please visit www.timiacapital.com. For more
information about specialized private credit and Pivot please
visit: www.pivotfinancial.com
Mike Walkinshaw, CEO
TIMIA Capital Corporation
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Forward-Looking
Information
Certain information and statements in this news release contain
and constitute forward-looking information or forward-looking
statements as defined under applicable securities laws
(collectively, "forward-looking statements"). Forward-looking
statements normally contain words like 'believe', 'expect',
'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may',
'will', 'should', 'ongoing' and similar expressions, and within
this news release include any statements (express or implied)
respecting the completion of the transaction, the future
performance of the combined companies, the execution of definitive
transaction documentation, the conditions of closing the
transaction, including the approval of the TSXV, future value
creation for shareholders, the completion of the transaction with
Brightpath and the performance of the combined company, the growth
and future profitability of the Target, the creation of value for
shareholders following completion of the transaction, growth of the
company's investment portfolio and expectations regarding making
further investments in the coming months. Forward-looking
statements are not guarantees of future performance, actions, or
developments and are based on expectations, assumptions and other
factors that management currently believes are relevant, reasonable
and appropriate in the circumstances, including, without
limitation, the following assumptions: that the conditions to the
completion of the proposed transaction will be satisfied, that the
Company will complete its proposed transaction with Brightpath,
that the Company is able to meet its future objectives and
priorities, assumptions concerning general economic growth and the
absence of unforeseen changes in the legislative and regulatory
framework for the Company.
Although management believes that the forward-looking statements
are reasonable, actual results could be substantially different due
to the risks and uncertainties associated with and inherent to
Timia's business. Material risks and uncertainties applicable to
the forward-looking statements set out herein include, but are not
limited to: the conditions of the proposed transaction not being
satisfied; that the proposed transaction with Brightpath will not
be completed; that the Target will not achieve its growth and
profitability objectives; the Company having insufficient financial
resources to achieve complete the proposed transaction and achieve
its objectives; intense competition in all aspects of business;
reliance on limited management resources; general economic risks;
new laws and regulations and risk of litigation. Although Timia has
attempted to identify factors that may cause actual actions, events
or results to differ materially from those disclosed in the
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, predicted,
estimated or intended. Also, many of the factors are beyond the
control of Timia. Accordingly, readers should not place undue
reliance on forward-looking statements. Timia undertakes no
obligation to reissue or update any forward-looking statements as a
result of new information or events after the date hereof except as
may be required by law. All forward-looking statements contained in
this news release are qualified by this cautionary statement.
SOURCE TIMIA Capital Corp.