Callidus clarifies status of Bluberi Gaming Technologies
debt
TORONTO, Dec. 8, 2015
/CNW/ - Callidus Capital Corporation ("Callidus" or the
"Company") (TSX: CBL), today updated its September 30, 2015 MD&A disclosure in light
of information requests it has received from shareholders and
others regarding its loan to Bluberi Gaming Technologies Inc. and
its involvement with Esco
Marine.
Bluberi Gaming
Bluberi, a Quebec based gaming
company, has applied for protection under the
Companies' Creditors Arrangement Act.
Under an amended loan agreement dated June 10, 2015, Callidus provided Bluberi with
secured credit facilities, of which approximately $84.1 million was outstanding as at November 12, 2015. Accrued interest and
deferred fees relating to the Bluberi loan were $15.1 million at the end of the last reporting
period, September 30, 2015, comprised
of $12.9 million in accrued interest
and $2.2 million in deferred
fees.
Callidus' Bluberi security ranks ahead of junior creditors and,
in light of that ranking, Callidus is working in conjunction with
the Monitor and our financial advisor to achieve a full recovery
(including all principal, interest and deferred fees) in priority
to junior creditors even if the result is that there are
insufficient assets to satisfy those creditors.
Letter of Intent signed to transfer Esco Marine assets –
Callidus expects full payment of loan obligations
In June 2014, Callidus provided
Esco Marine with a loan of
approximately US $20 million, as part
of a facility of up to US $34
million, to finance its ongoing operations. In
accordance with Callidus' operating practices, the facility was
secured by Esco Marine assets valued
in excess of the loan. Esco
Marine defaulted on its loan with Callidus by circumventing
the blocked account arrangements and, in March 2015, filed for Chapter 11 bankruptcy
protection.
On July 30, 2015, the United
States Bankruptcy Court for the Southern District of Texas (Corpus Christi Division) approved a
credit bid by Callidus that allows Callidus, or its designee, to
acquire substantially all of the assets of Esco Marine, which include machinery and
equipment, supporting rolling stock and spare parts; real property
leasehold interests, including an 88-acre full service marine yard
and recycling operation in Brownsville,
TX; inventory; and assignable licenses and contracts.
Callidus has now signed a Letter of Intent with HRP Brownsville,
LLC which is owned 50-50 by Hilco Redevelopment Partners and MCM
Industrial Services, to effectively acquire, restart and operate
Esco Marine Inc. Under the terms of the agreement, Callidus
expects to ultimately receive full repayment (all principal,
interest and fees) on its defaulted loan to Esco Marine.
Callidus is pleased to establish a business relationship with
the principals of HRP Brownsville, Hilco and MCM. Hilco
provides industrial asset monetization services to help maximize
the value of underperforming and unwanted machinery, equipment and
inventory. MCM is a leading US provider of demolition
services.
As part of the agreement, HRP Brownsville will owe Callidus US
$35 million for the assignment of the
rights to the majority of the assets and Callidus will provide HRP
Brownsville a loan facility. The loan facility and payment
obligations will be a first ranking facility secured by all the
assets of HRP Brownsville. In addition, Callidus will retain
and realize on Esco Marine assets
and claims not included in the sale to HRP Brownsville.
The transaction is expected to close January 15 2016, and is subject to regulatory
approvals.
Callidus operates in the distressed lending
sector
It is not uncommon for Callidus to deal with borrowers where it
is expected that they will undertake some form of financial
restructuring given the nature of their business. As the
Company operates in the distressed lending sector, loans that go
through a formal restructuring process offer an efficient tool for
Callidus to protect its collateral, often while continuing to
collect its contracted rate of return. Callidus uses a
variety of techniques to mitigate potentially challenging
situations, ranging from a cooperatively managed liquidation to a
full court process in order to minimize any risk of loss.
Callidus has demonstrated a history of prudent risk
management
As disclosed in our 2015 Q3 release, since 2006, Callidus has
advanced 100 loans representing total credit facilities of
$2.0 billion of which 60 loans have
been fully repaid or realized. Since 2006 there have been
realized losses of $15 million
(approximately 0.3% annually of commitments, averaged over nine
years). Of the 60 loans, five went through a form of
restructuring and were fully repaid. The balance of the 52
loans was fully repaid, in some cases after informal loan
restructurings. At November 4,
2015, 40 loans were outstanding representing total credit
facilities of approximately $1.4
billion, and six loans were going through a form of
restructuring.
At September 30, 2015, the
estimated collateral value coverage across Callidus' aggregate net
loans receivable was approximately 138% with a range between 100%
and 384% on an individual loan basis.
Callidus provides link to public disclosure filed by
Bluberi and Esco Marine
The following are links to public disclosure made by or in
respect of Bluberi and by Esco
Marine. Callidus does not warrant or accept
responsibility for the accuracy or completeness of that
disclosure:
http://documentcentre.eycan.com/Pages/Main.aspx?SID=355
https://www.pacermonitor.com/public/case/7714041/ESCO_Marine,_Inc
About Callidus Capital Corporation
Established in 2003, Callidus Capital Corporation is a
Canadian company that specializes in innovative and creative
financing solutions for companies that are unable to obtain
adequate financing from conventional lending institutions. Unlike
conventional lending institutions who demand a long list of
covenants and make credit decisions based on cash flow and
projections, Callidus credit facilities have few, if any, covenants
and are based on the value of the company's assets, its enterprise
value and borrowing needs. Callidus employs a proprietary system of
monitoring collateral and exercising control over the cash inflows
and outflows of each borrower, enabling Callidus to very
effectively manage risk of loss.
Forward-Looking Statements
Certain statements made herein contain forward-looking
information. Although Callidus believes these statements to be
reasonable, the assumptions upon which they are based may prove to
be incorrect. Furthermore, the forward-looking statements contained
in this press release are made as at the date of this press release
and Callidus does not undertake any obligation to update publicly
or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by applicable securities law.
SOURCE Callidus Capital Corporation