Chesswood Group has sold all of its interests in Vault Credit and Vault Home Credit, representing the entirety of Chesswood’s Canadian equipment leasing and consumer financing business segment, to an affiliate of HB Leaseco pursuant to the terms of a share purchase agreement, and provides an update on its previously announced evaluation of the strategic direction of Chesswood being supervised by a special committee of the board of directors of Chesswood.
Pursuant to the terms of the purchase agreement, the Vault purchaser has acquired the company’s 51% majority interest in Vault for an amount equal to C$60 million, the proceeds of which have been used to reduce the company’s outstanding indebtedness.
The completion of the transaction marks a first step towards the company’s execution of its previously announced credit facility action plan to remedy its existing non-compliance with the borrowing base covenants under the credit facility, as required under the extended waiver provided by the lending syndicate under the credit facility. As previously announced, the waiver required the company to, among other things, complete the sale of its interests in Vault during the waiver period expiring on Sept. 16, 2024.
The committee and the board of directors considered, and continues to consider, a variety of financial restructuring options available to the company and, following their respective review of the terms of the transaction, unanimously determined that the Transaction was the only reasonable and current option available to the company capable of satisfying the applicable condition under the waiver, while materially reducing the company’s indebtedness under the credit facility and allowing future borrowings under the credit facility to fund continued operations. The committee retained RBC Capital Markets as financial advisor and the company engaged Alvarez & Marsal to provide certain financial and restructuring advisory services.
