Following the separation transaction, Element Financial, which will be renamed Element Fleet Management, will be established as an approximately $18.0 billion fleet management company to be led by Bradley Nullmeyer as CEO. In addition, ECN Capital will be established as an approximately $5.9 billion North American commercial finance company to be led by Steven Hudson as CEO.
Both Element Fleet and ECN Capital have received underwriter commitments for the establishment of separate senior credit facilities following completion of the separation transaction.
Element’s existing senior credit facility will be amended and restated so as to provide for an aggregate of $4.0 billion in three-year revolving funding for Element Fleet. Such a facility will provide for advances denominated in U.S., Canadian, Australian and New Zealand dollars and will complement Element Fleet’s established Chesapeake funding programs to fund its current and future finance asset originations.
Commitments have been received in respect of a separate and distinct $2.5 billion three-year revolving senior credit facility in favor of ECN Capital in connection with the separation transaction. Such facility will provide for advances denominated in U.S. and Canadian dollars and will be available to fund its current and future finance assets.
Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, TD Bank and BNP Paribas Securities acted as co-lead arrangers and co-bookrunners for each of the separate credit facilities and Bank of Montreal acted as the administrative agent.
“With this approval by Element’s board of directors and the receipt of these new credit commitments, we now meet two important milestones on our schedule to separate Element into two distinct market-leading public companies,” Hudson said.
“The separation transaction provides shareholders with a ground floor opportunity to participate in the growth of the world’s largest publicly traded fleet management company as well as a North American leader in commercial finance that is transitioning to an asset management business,” Nullmeyer said.
Separately, Element, ECN Capital and 2510204 Ontario, a wholly owned subsidiary of Element, entered into a definitive agreement with INFOR Acquisition whereby ECN Capital will acquire all of the issued and outstanding shares in the capital of IAC following completion of the separation transaction.
Immediately following completion of the IAC acquisition, Neil Selfe (currently CEO of IAC) and William T. Holland (a current director of IAC) will be appointed as directors to the board of ECN Capital. Selfe will also join the ECN Capital management team as executive vice chairman.
“The acquisition of IAC will provide ECN Capital with immediate access to cash of approximately $220 million at market rates that will enable it to accelerate the implementation of its growth strategy,” Hudson said. “As well, the additions of Neil Selfe and Bill Holland to the board provide ECN Capital with proven expertise in the asset management industry to help guide ECN Capital through this important stage of its growth as it transitions to an asset management business.”
The separation transaction will be completed by way of a plan of arrangement under the Business Corporations Act (Ontario) that requires such arrangement be approved by two-thirds of Element shareholders voting at a special meeting to be held on September 20, 201 and by the Ontario Court. Element intends to apply to obtain an interim order from the Ontario Superior Court of Justice in respect to the separation transaction on July 28, 2016.
Along with the separation transaction, the special meeting will be held in order to approve, among other things, the issuance of ECN Capital common shares in connection with the IAC acquisition.
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