PrefBlog

Element Financial Corporation has announced:

that the previously announced separation transaction (the “Separation Transaction”), to be implemented by way of plan of arrangement (the “Arrangement”) has received the requisite shareholder approval at Element’s special meeting of shareholders held on September 20, 2016 (the “Meeting”). As a result of the Separation Transaction, shareholders will hold one new common share of Element Fleet Management Corp. and one common share of ECN Capital Corp. (“ECN Capital”) for each common share of Element held. The results of the ballot were 313,993,690 common shares (99.52%) voted at the meeting in favour of the resolution.

According to the Management Information Circular:

On February 16, 2016, we announced that our Board of Directors unanimously approved in principle the reorganization of Element into two separate publicly-traded companies (the “Spin-Out Transaction”) that Element believes will be better able to pursue independent strategies and opportunities for growth and ultimately enhance long-term value for shareholders. If implemented, the reorganization would result in Element (which will be renamed “Element Fleet Management Corp.”) continuing as a fleet management company focused on generating revenue and earnings based on the continued service to Element’s existing fleet management business. The reorganization would also result in the creation of a new commercial finance company (to be named “ECN Capital Corp.”) with a broad origination platform in the commercial and vendor, rail and aircraft sectors, which will transition into an asset management business.
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Each of Element’s outstanding series of preferred shares will remain outstanding obligations of Element Fleet following the Element Arrangement.

Element’s Debentures will also remain outstanding obligations of Element Fleet following the Element Arrangement, and the Board has determined to adjust the conversion prices of the Debentures after the Element Effective Date in a manner equitable in the circumstances so as to reflect the effect of the Element Arrangement. Such adjustment will be subject to the approval of the TSX.
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While Element expects that the credit rating of Element Fleet following the Element Arrangement will improve in relation to Element’s current credit rating, there can be no assurance that its credit rating will improve or be maintained. In any case, the credit ratings assigned to Element are not a recommendation to buy, hold or sell securities of Element. A rating is not a comment on the market price of a security nor is it an assessment of ownership given various investment objectives. There can be no assurance that the credit ratings assigned to Element will remain in effect for any given period of time and ratings may be upgraded, downgraded, placed under review, confirmed and discontinued by an applicable credit ratings agency at any time. Real or anticipated changes in credit ratings may affect the ma rket value of securities of Element Fleet. In addition, real or anticipated changes in credit ratings may affect Element Fleet’s ability to obtain short -term and long-term financing and the cost at which Element Fleet can access the capital markets.

DBRS has had the company on Review-Positive since the announcement of intention in February, as previously reported. There has not yet been any announcement from the Credit Rating Agencies regarding changes in rating now that shareholder approval of the split has been obtained.

Affected issues are EFN.PR.A, EFN.PR.C, EFN.PR.E and EFN.PR.G.

This entry was posted on Tuesday, September 20th, 2016 at 11:40 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.