ECN Capital Sells its Service Finance Business to Truist Bank for $2B

ECN Capital entered into a definitive agreement with Truist Bank to sell all of the issued and outstanding equity interests in each of Service Finance Company and Service Finance Holdings, each wholly-owned, indirect subsidiaries of ECN Capital, for cash proceeds of $2 billion.

Following the closing of the transaction, ECN Capital intends to pay a special dividend of C$7.50 ($5.98) per common share or approximately $1.5 billion from the net proceeds (after estimated taxes and transaction costs based on ECN Capital’s current issued and outstanding common shares as of Aug. 10) to its common shareholders.

“ECN’s primary strategic directive has been to manage and maximize investor capital in the specialty finance sector. Today’s announcement to sell SFC for $2 billion marks another milestone on the road to that goal,” Steven Hudson, CEO of ECN Capital, said. “Service Finance has performed spectacularly since ECN’s investment in September 2017 and I want to thank Mark Berch and his entire team for their remarkable contributions. Truist has been a long-time partner of SFC and is best positioned to build on the successes we’ve had over the last several years. We believe this transaction maximizes value for ECN shareholders and puts SFC in the best position to succeed in its next phase of growth.

“Going forward, ECN is well positioned to continue its success with two fantastic businesses in Triad and KG. As with Service Finance, ECN has been able to work with both companies to meaningfully expand product menus and improve operational excellence, which will drive significant opportunities to continue to maximize shareholder value in the future.”

The transaction is subject to standard licensing and regulatory approvals and the satisfaction of customary closing conditions and is expected to close late in Q4/21.

As a result of the transaction agreement entered into with Truist Bank, ECN Capital received fully underwritten agreements from its senior lenders for the amendment of its existing senior credit facility following the closing of the transaction. ECN Capital’s existing senior credit facility will be amended and restated so as to provide for an aggregate of $700 million in revolving funding for a period of four years from the closing date of the transaction. Canadian Imperial Bank of Commerce will act as administrative agent and syndication agent and Bank of Montreal will act as collateral agent for the facility.

ECN Capital’s board of directors, in consultation with its financial and legal advisors, unanimously determined that the transaction is in the best interests of the company and fair to ECN Capital.

CIBC Capital Markets provided a fairness opinion to ECN Capital’s board of directors that, as of the date of the opinion and based upon and subject to the assumptions and limitations described in its opinion, the consideration to be received by ECN Capital pursuant to the transaction is fair from a financial point of view.

CIBC Capital Markets acted as financial advisor and Cravath, Swaine & Moore and Blake, Cassels & Graydon acted as legal counsel to ECN Capital in connection with the transaction.

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