Transaction Highlights
- Chesswood will enter the Canadian auto finance sector with the
acquisition of Rifco
- $1.28 per Rifco share represents
a premium of approximately 42% to Rifco's closing price on
August 9, 2021 and a premium of
approximately 13% to Rifco's closing price on October 26, 2021
- Special Committee and voting Directors unanimously recommend
the Transaction to Rifco shareholders
- Rifco shareholders may elect to receive the consideration in
either cash or Chesswood shares
- Leaders of MBO group enter into voting support agreements
TORONTO AND RED DEER,
AB, Oct. 27, 2021 /CNW/ -
Rifco Inc. (TSXV: RFC) ("Rifco"), a leading Canadian alternative
auto finance company, and Chesswood Group Limited (TSX: CHW)
("Chesswood"), North America's
only publicly traded commercial equipment finance company focused
on small and medium-sized businesses, today announce that they have
entered into an arrangement agreement (the "Agreement") pursuant to
which Chesswood will acquire all of the issued and outstanding
common shares of Rifco (the "Rifco Shares") by way of a statutory
plan of arrangement under the Business Corporations
Act (Alberta) (the
"Transaction").
Under the terms of the Agreement, each Rifco shareholder will
receive consideration of $1.28 for
each Rifco Share held, to be satisfied either in cash or Chesswood
common shares (with the number of Chesswood common shares to be
determined based on the 10 day volume weighted average price
("VWAP") determined five business days before the special meeting
of Rifco shareholders to approve the Transaction (the "Special
Meeting")) at the election of the Rifco shareholder (the
"Consideration"), representing aggregate consideration of
approximately $28 million on a fully
diluted basis. The Consideration represents an approximately 42%
premium to the closing price of Rifco Shares on August 9, 2021, an approximately 48% premium to
the VWAP of the Rifco Shares over the 20 trading days prior to
August 9, 2021 and an approximately
13% premium to the closing price of the Rifco Shares on
October 26, 2021.
"Our vision is for Chesswood to continue its growth as a leading
and diversified platform for high quality specialty finance
companies," said Ryan Marr,
President & CEO, Chesswood Group. "The acquisition of Rifco
provides Chesswood with a highly attractive and scalable platform
in the Canadian auto finance sector. We are excited to work
with the executive team at Rifco to support their business growth,
including capitalizing on the funding advantages of Rifco being
part of the larger Chesswood Group of companies.
"Rifco's management is highly supportive of the transaction with
Chesswood and the MBO group is no longer pursuing the acquisition
of Rifco," said Roger Saran,
President & COO, Rifco. "Rifco's customers, dealers and other
stakeholders will continue to benefit from Rifco's innovative
products and customer service and now will have access to
additional resources as part of the Chesswood Group."
Special Committee and Board of Directors
Recommendations
A special committee (the "Special Committee") of Rifco's board
of directors (the "Board") was formed under the direction of Board
member Sean Aylward to consider the
August 10, 2021 non-binding
acquisition proposal received by Rifco from certain members
of Rifco's senior management team, and to review any acquisition
proposals subsequently received by Rifco. The Special Committee
retained Raymond James Ltd. ("Raymond James") as financial advisor.
Prior to entering into the Agreement with respect to the
Transaction, the Special Committee engaged in discussions with ten
(10) potential transaction counterparties, including Chesswood, of
which four (4) entered into confidentiality agreements with Rifco
to determine their interest in pursuing a potential transaction for
the acquisition of 100% of the Rifco Shares.
Raymond James has provided a
fairness opinion to the Special Committee (the "Fairness Opinion")
stating that, in its opinion, and based upon and subject to the
assumptions, limitations and qualifications set forth therein, the
Consideration to be received by Rifco shareholders pursuant to the
Transaction is fair, from a financial point of view, to Rifco
shareholders.
The voting members of the Board, after receiving financial and
legal advice, and following receipt of the Fairness Opinion and the
recommendation of the Special Committee, have unanimously
determined that the Transaction is in the best interests of Rifco
and are recommending that Rifco shareholders vote in favour of the
Transaction. In approving the Transaction and making its
recommendation, the Board considered, among other things, the
relative merits of the proposals received from all potential
counterparties, including Chesswood. Of those, the Transaction
presented by Chesswood represented the most attractive option to
Rifco shareholders.
Transaction Details
The Transaction will be implemented by way of a statutory plan
of arrangement under the Business Corporations Act
(Alberta) and is subject to
approval of 66 ⅔% of the votes cast by Rifco shareholders at the
Special Meeting.
The completion of the Transaction will also be subject to
obtaining required court and other approvals, and satisfaction of
closing conditions customary for a transaction of this
nature. The Agreement includes customary deal-protection
provisions. Rifco is subject to non-solicitation provisions,
and in certain circumstances the Board may terminate the Agreement
in favour of an unsolicited superior proposal, subject to the
payment of a termination fee of $1.00
million and subject to a right of Chesswood to match such
superior proposal.
It is anticipated that the management information circular (the
"Circular") for the Special Meeting will be mailed to Rifco
shareholders in the next 30 days and the Special Meeting will be
held in December, 2021. Following closing of the Transaction, the
Rifco Shares would be delisted from the TSX Venture Exchange. The
Transaction is expected to close in late December 2021 or in January 2022.
Advisors and Counsel
Raymond James acted as exclusive
financial advisor to Rifco and provided the Fairness Opinion to the
Special Committee in connection with the Transaction. Miller
Thomson LLP is acting as counsel to the Special Committee and
Rifco.
McCarthy Tétrault LLP is acting as counsel to Chesswood in
connection with the Transaction.
Additional Information about the Transaction
A copy of the written Fairness Opinion, and a description of the
various factors considered by the Board in its determination to
approve the Transaction, as well as other relevant background
information, will be included in the Circular to be sent to Rifco
shareholders in advance of the Special Meeting. The Circular, the
Agreement, including the plan of arrangement, and certain related
documents will be filed with the Canadian securities regulators and
will be available on SEDAR at www.sedar.com.
About Chesswood Group Limited
Through two wholly-owned subsidiaries in the United States and three subsidiaries in
Canada, Chesswood Group Limited is
North America's only publicly
traded commercial equipment finance company focused on small and
medium-sized businesses.
Colorado-based Pawnee Leasing
Corporation, founded in 1982, finances a highly diversified
portfolio of commercial equipment leases and loans through
relationships with over 600 brokers in the United States. Tandem Finance Inc.
provides financing in the U.S. through the equipment vendor
channel. In Canada, Blue Chip
Leasing Corporation has been originating and servicing commercial
equipment leases and loans since 1996, and today operates through a
nationwide network of more than 50 brokers. Vault Credit
Corporation specializes in equipment leases and commercial loans
across Canada, allowing for
customizable financing solutions while catering to a wide spectrum
of credit tiers, equipment types and sectors by offering
industry-leading service levels, experienced underwriters and
account administrators. Vault Home Credit Corporation was
launched in September 2021 and
focuses on providing home improvement and other consumer financing
solutions in Canada.
Chesswood does not currently hold any Rifco Shares.
About Rifco Inc.
Rifco Inc. is focused on being the best alternative auto finance
company through its wholly owned subsidiary Rifco National Auto
Finance Corporation. Its mission is to help deserving Canadians own
automobiles.
Rifco seeks to create sustainable long-term competitive
advantages through personalized partnerships with dealers,
innovative products, the use of industry-leading data and
analytics, and leading collections practices. Rifco's corporate
culture fosters employees that are highly engaged, innovative, and
performance driven.
Caution Regarding Forward-Looking Information
This news release may contain forward-looking statements with
respect to Chesswood, Rifco, their respective products and
operations and the Transaction. These statements generally can be
identified by use of forward looking words such as "may", "will",
"expect", "estimate", "anticipate", "intends", "believe" or
"continue" or the negative thereof or similar variations. The
actual results and performance discussed herein could differ
materially from those expressed or implied by such statements. Such
statements are qualified in their entirety by the inherent risks
and uncertainties surrounding future expectations. Important
factors that could cause actual results to differ materially from
expectations include, among other things, general economic and
market factors, competition, changes in government regulations, and
the factors described under "Risk Factors" in the respective
Management's Discussion and Analysis and Annual Information Forms
of Chesswood and Rifco, which are available at www.sedar.com. The
cautionary statements qualify all forward-looking statements
attributable to Chesswood and Rifco and persons acting on their
behalf. Unless otherwise stated, all forward-looking statements
speak only as of the date of this news release, and neither
Chesswood nor Rifco have any obligation to update such statements,
except as required under applicable securities laws.
This news release is also issued pursuant to National Instrument
62-103 – The Early Warning System and Related Take-Over Bid and
Insider Reporting Issues, which requires a report to be filed
under Rifco's profile on SEDAR containing additional information
with respect to the foregoing matters. A copy of such report
may be obtained by contacting Chesswood at
trajchel@chesswoodgroup.com. The address of Chesswood is 1133
Yonge Street, Suite 603, Toronto,
Ontario, M4T 2Y7.
None of TSX Venture Exchange, Toronto Stock Exchange or their
respective Regulation Services Providers (as that term is defined
in the policies of the relevant exchange) accepts responsibility
for the adequacy or accuracy of this release.
All trade names are the property of their respective owners.
SOURCE Chesswood Group Limited
