The proposed acquisition is currently subject to a non-binding letter of intent dated March 24, 2022 . Since signing the non-binding letter of intent, the Company has undertaken due diligence and has recently determined to proceed with negotiation of definitive transaction agreements. Due to competitive issues related to the acquisition, the name of the Target will only be disclosed after closing of the transaction, which is expected on or around June 30, 2022 .
The acquisition will complete by way of $7.7 million cash payment to the Vendors upon closing, plus a $1.54 million unsecured promissory note, bearing interest at 5% per annum payable in 12 months. The Company expects to finance the acquisition through the issuance of debt, and does not contemplate issuing common or preferred stock as part of the purchase price.
For fiscal 2021, the Target had approximately $250 million in assets at year end and generated $6.5 million in revenue with an approximate net loss of $954,445 . The Target has seen 35% revenue growth during calendar year 2021 and is expecting continued strong growth over the next 12 months as it moves toward profitability. During the first quarter of 2022, the Target achieved breakeven and generated approximately $14,000 in net income. The Target had approximately $123.4 million in long-term debt at year-end.
Taking into account the recently announced letter of intent for Brightpath Capital Corporation and Brightpath Residential Mortgage LP I (“Brightpath” – see the Company’s news release dated May 5, 2022 ), highlights of the combined company and related financial metrics after giving effect to the contemplated acquisitions include:
- Pro forma combined assets of approximately $450 million
- For the year ended December 31, 2021 , key pro forma full year amounts for the combined entity include:
- Revenue of approximately $29.7 million , an increase over TIMIA’s consolidated revenue of $9.7 million for Fiscal 2021
- Operating expenses of approximately $23.5 million , an increase over TIMIA’s consolidated operating expenses of $6.7 million for Fiscal 2021
- Net income after taxes of $4.5 million , an increase over TIMIA’s consolidated net income of $2.4 million .
- The acquisition is expected to be accretive for TIMIA shareholders within one year of the closing of the transaction based upon forecasted growth and financing costs incurred.
“We are aggressively growing our business through the acquisition of specialty finance companies like the Brightpath acquisition announced last week and this specialty finance company announced today,” said Mike Walkinshaw , CEO of TIMIA. “Through these acquisitions we will have materially increased our market size and diversified our scope while improving profitability. Once completed, we will have grown to over $450 million of assets. Our goal is to be the leading provider of specialized private credit to owners, entrepreneurs and other organizations throughout North America while providing unique investment opportunities to Canadian investors.”
Completion of the transaction is subject to the following conditions;
- Execution of definitive transaction agreements,
- If required, receipt of approval of the TSX Venture Exchange (the “TSXV”) for the transaction,
- Receipt of all necessary third-party consents, and
- Other customary closing conditions.
The transaction is also subject to a break fee of $200,000 payable by Timia Capital if the transaction does not close before June 30, 2022 . No finder’s fees are payable in connection with the proposed transaction.
The Company democratizes private credit for investors by offering a broad range of speciality private credit opportunities with transparency and efficiency, facilitated by the Company’s proprietary technology platform. These high-yield loan opportunities are delivered through operating divisions: Timia Capital which offers revenue-based investment to fast growing, business-to-business Software-as-a-Service (or SaaS) businesses in North America , and Pivot Financial which specializes in asset-based private credit targeting mid-market borrowers in Canada . The Corporation deploys funds on behalf of limited partnerships, institutions, retail investors, high net worth individuals, its management team and shareholders. For more information about TIMIA and SaaS lending, please visit www.timiacapital.com . For more information about specialized private credit and Pivot please visit: www.pivotfinancial.com
Mike Walkinshaw , CEO
Timia Capital Corporation
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements normally contain words like ‘believe’, ‘expect’, ‘anticipate’, ‘plan’, ‘intend’, ‘continue’, ‘estimate’, ‘may’, ‘will’, ‘should’, ‘ongoing’ and similar expressions, and within this news release include any statements (express or implied) respecting the completion of the transaction, the future performance of the combined companies, the execution of definitive transaction documentation, the conditions of closing the transaction, including the approval of the TSXV, future value creation for shareholders, the completion of the transaction with Brightpath and the performance of the combined company, the growth and future profitability of the Target, the creation of value for shareholders following completion of the transaction, growth of the company’s investment portfolio and expectations regarding making further investments in the coming months. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation, the following assumptions: that the conditions to the completion of the proposed transaction will be satisfied, that the Company will complete its proposed transaction with Brightpath, that the Company is able to meet its future objectives and priorities, assumptions concerning general economic growth and the absence of unforeseen changes in the legislative and regulatory framework for the Company.
Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Timia’s business. Material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to: the conditions of the proposed transaction not being satisfied; that the proposed transaction with Brightpath will not be completed; that the Target will not achieve its growth and profitability objectives; the Company having insufficient financial resources to achieve complete the proposed transaction and achieve its objectives; intense competition in all aspects of business; reliance on limited management resources; general economic risks; new laws and regulations and risk of litigation. Although Timia has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Timia. Accordingly, readers should not place undue reliance on forward-looking statements. Timia undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.
SOURCE Timia Capital Corp.
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