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icate placement of 4,000 10-year Debentures at a premium price of $670 per Debenture for total gross proceeds of $2,680,000 (the “Private Placement”). The Debentures were issued on a private placement basis in each of the provinces of Canada.
The debentures are unsecured with an annual coupon rate of 6.2% that will be paid quarterly in arrears. The annual coupon will be adjusted every five years based on the point at which a five-year Government of Canada bond yield traded at the time of adjustment. The Debentures will also be subject to certain ramp up provisions in order to protect the existing debenture holders during a refinancing or issuance of additional debt.
The proceeds of the Private Placement were used to re-pay certain outstanding debt. The Company intends to use the balance of the proceeds for general corporate purposes and to fund organic growth initiatives.
“We are very pleased with the results of the Private Placement,” said Andrew de Rooy, President & CEO of Axis Auto Finance Inc. “The proceeds from the Private Placement, combined with our strong capital position and commitment to prudent risk management processes will provide us with the resources to capitalize on our growth opportunities. This in turn will enhance our ability to continue to provide our clients with Canada’s best and simplest vehicle financing experience.”
The Private Placement is subject to the approval of the Toronto Stock Exchange (the “TSX”) and the securities issued under the Private Placement will be subject to a four month hold period from the date of issuance, in accordance with applicable Canadian securities laws.
Axis Auto Finance Inc. (“Axis” or the “Company”) is pleased to announce the closing of a private placement (the “Private Placement”) of unsecured subordinated debentures (the “Debentures”). As a financial technology company, Axis is dedicated to making the process of purchasing and financing used vehicles simpler for Canadians. The Private Placement will help the Company finance its vision while also providing greater resources to combat the challenges brought on by macroeconomic factors.
The last 12 months have been difficult with increased inflation, supply chain disruption, and rapidly rising interest rates. These factors have caused defaults which, in turn, have led to higher credit loss rates. This situation has been further exacerbated by availability and affordability issues on vehicles due to the supply chain issues, as well as increased borrowing costs.
In response, Axis has implemented a number of measures to alleviate the impact of these conditions. This involves increasing origination pricing, adjusting underwriting criteria, exiting certain markets, and discontinuing non-performing product lines. Additionally, the Company has drastically cut costs through workforce reductions and executive pay cuts. Axis has also used process automation to help further improve operational efficiencies. Management remains committed to making additional changes, if needed.
The Private Placement was for 4,000 10-year Debentures at a premium price of $670 per Debenture with total gross proceeds of $2,680,000. The annual coupon rate of 6.2% will be adjusted every five years based on a five-year Government of Canada bond yield. The proceeds were used to pay off debt and provide funds for organic growth initiatives.
Axis is committed to providing the best and simplest vehicle financing experience for Canadians. This private placement helps ensure that it is well positioned to withstand macroeconomic difficulties while also allowing it to grow and thrive into the future.
TSX approval is still pending, and the securities issued under the Private Placement will be subject to a four month hold period from the date of issuance, in accordance with applicable Canadian securities laws