Wednesday, 4 September 2013

Carfinco Makes Strategic Entry Into The U.S. Market

TSX: CFN
Shares Outstanding: 26.4 million
Shares Fully Diluted: 26.4 million
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In late March of this year, Carfinco had investors speculating as to why the Company would raise $22 million through a bought deal common share financing when it was mentioned in the news release that the proceeds of the Treasury Offering could be used for potential future acquisitions.

Today, things became clearer as Carfinco announced its expansion into the U.S. market through the acquisition of Persian Acceptance Corp. (PAC).  PAC was founded in 1998, is headquartered in Wakefield, Massachusetts, and is also doing business throughout New Hampshire, Maine, Connecticut and Vermont, with 362 automobile dealers and $42.7 million (USD) in finance receivables.

The deal, which was based on PAC’s book value and past earnings, was for $9.5 million (USD).  This was broken down to payments of $9 million cash and 500,000 in Carfinco common shares priced at $9.45 (CDN) or 55,223 shares.  There is the potential for PAC to earn up to $2 million (USD) if it reaches performance targets over the next two years.  Key members of management, including Founder and President, Peter Miller, will stay in place.

In speaking with management, Carfinco believes PAC is an excellent target and provides the company with a solid beachhead into the U.S. market. Tracy Graf, CEO of Carfinco, stated in today’s news that, “We believe the acquisition adds value to our shareholders. Importantly, PAC’s growth strategy mirrors Carfinco’s, by increasing loan originations and earnings in a controlled and structured manner.”

To view today’s news release, please click here.