ECN Capital Announces Sale of 55% of Existing Rail Portfolio and Inventory Reduction
TORONTO, Sept. 24, 2018 (GLOBE NEWSWIRE) -- ECN Capital Corp. (TSX: ECN) (“ECN” or the “Company”), a leading provider of business services to US based banks and credit unions, today announced that it has entered into an agreement to sell railcar assets to affiliates of Trinity Industries Leasing Company for proceeds of $360 million. Including transaction costs, the total after-tax loss will be approximately $29 million, reflecting 0.93x book value of assets. All Railcar Assets to be sold are owned by ECN’s Railcar ABS Vehicle, Element Rail Leasing I LLC (“ERL I”). The transaction is expected to close in the fourth quarter of 2018.
Upon completion of the sale, ECN’s total rail portfolio will be reduced by approximately 55% to less than $350 million of assets and further de-risked through the elimination of more than 80% of owned tank cars and 100% of the unjacketed DOT-111 tank cars.
“The sale of ERL I marks the continued execution of the winddown of our legacy assets and ECN’s transition to a business services company providing origination, management and advisory solutions to U.S. financial institutions. Following the completion of this transaction, we will have reduced legacy assets from approximately $5 billion at year-end 2016 to approximately $750 million, while preserving book value through six separate dispositions at a total premium of 1% to assets and 5% to equity,” said Jim Nikopoulos, ECN Capital’s President. Mr. Nikopoulos added, “This transaction will release approximately $85 million in equity capital for redeployment.”
Separately, ECN leased approximately $38 million of railcars previously in idle inventory during Q3 that are not part of the ERL I sale. This reduced the rail inventory balance to approximately $3 million from $40.9 million as of June 30, 2018. ECN remains committed to the orderly winddown of its remaining legacy assets.
About ECN Capital Corp.
With managed and advised assets of more than US$28 billion, ECN Capital Corp. (TSX: ECN) is a leading provider of prime credit portfolios to more than ninety US financial institutions. ECN Capital originates, manages and advises on prime credit assets offering unsecured and secured consumer portfolio solutions as well as credit card portfolios. These services are offered through three operating businesses: Service Finance, Triad Financial Services and The Kessler Group.
This release includes forward-looking statements regarding ECN Capital and its business. Such statements are based on the current expectations and views of future events of ECN Capital’s management. In some cases the forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “plan”, “anticipate”, “intend”, “potential”, “estimate”, “believe” or the negative of these terms, or other similar expressions intended to identify forward-looking statements. Forward-looking statements in this press release include those relating to the future financial and operating performance of ECN Capital, the strategic advantages, business plans and future opportunities of ECN Capital and the ability of ECN Capital to access adequate funding sources, identify and execute on acquisition opportunities and transition to an asset management business. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting ECN Capital, including risks regarding the equipment finance industry, economic factors, and many other factors beyond the control of ECN Capital. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this outlook can be found in ECN Capital’s June 30, 2018 MD&A and Alternate AIF Disclosure Document dated March 19, 2018 which has been filed on SEDAR and can be accessed at www.sedar.com. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and ECN Capital does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.