EFN Seeks to Prune Business

Element Fleet Management Corp. has announced:

its intention to segment its financial reporting of core and non-core assets, optimize its capital structure and enhance governance.

Element Fleet is firmly committed to expanding its position as the leading business-services provider focused on fleet management services. Core Fleet operations currently consist of approximately 92% of Element Fleet’s assets and include our global vehicle fleet management services in more than 50 countries around the world through the Element-Arval Global Alliance. The remaining assets are non-core.

Non-core assets represent approximately 8% of Element Fleet assets and include a 49.99% interest in 19th Capital Group LLC and a 32.5% interest in ECAF I Holdings Ltd. that remained with Element Fleet as part of the separation transaction when Element Financial Corp. was reorganized into Element Fleet and ECN Capital on October 3, 2016.

The Company will review and engage in opportunities to optimize the value of its non-core assets and expects to opportunistically use the proceeds from any monetization of such assets in a manner that will best create value for shareholders, including retiring debt and/or share buybacks.

Element Fleet has achieved one of the lowest costs of financing in the fleet industry with the issuance in May 2017 of US$1.2 billion rated term notes through Chesapeake Funding II LLC. The offering marked the largest Asset Backed Security issuance to date in the fleet lease sector. By further refining Element Fleet’s business model to focus exclusively on Core Fleet operations, the Company expects to further lower its overall funding spreads and increase balance sheet efficiency.

So, it appears that there are some changes on the horizon, with an unknown effect on credit quality.

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

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