TORONTO, Dec. 23, 2014 /CNW/ – Callidus Capital Corporation (“Callidus” or the “Company“) (TSX: CBL) today provided an update on the following.

Finalization of Terms of Bridge Facility

Callidus announced the finalization of the terms of the previously announced USD $200 million unsecured subordinated bridge facility extended by funds managed by The Catalyst Capital Group Inc. (the “Catalyst Funds”). As previously disclosed, the terms of that facility were subject to the approval of the independent directors of the Company. The independent directors have agreed with the Catalyst Funds that the facility will carry an interest rate of 8% per annum. In addition, the Catalyst Funds will be entitled to an annual fee equal to 1.5% of the maximum amount available under the facility and a standby fee equal to 1% per annum of undrawn amounts. The bridge facility will have a term of 29 months and will be pre-payable by Callidus at any time without penalty. The facility will be unsecured and will be subordinated to the Company’s other debt facilities. Approximately US$75 million had been drawn under the facility as of December 19, 2014.

In accordance with the Company’s policy, the independent directors have reviewed the terms of the bridge facility and concluded that they are consistent with the terms applicable between arm’s length parties for similar unsecured, subordinated credit facilities

Purchase of Participation Interest

Callidus also announced that it intends to purchase the $50 million participation of Catalyst Fund Limited Partnership IV in Callidus’ loan portfolio for a purchase price of $50 million, being the book value of the participation interest. In connection with the acquisition, Catalyst Fund Limited Partnership IV has agreed to provide a principal guarantee related to the sale of the participation interest as disclosed in the prospectus filed in connection with the Company’s initial public offering. Also as disclosed in the prospectus, the Catalyst Funds provided a principal guarantee with respect to the loans in existence at that time and have agreed to provide a similar guarantee in connection with any future sales of participation interests to Callidus in accordance with the participation agreement between the companies.

Callidus has determined to exercise its right to acquire the participation interest. The acquisition will result in approximately $81 million of loans that are currently derecognized coming on to Callidus’ balance sheet and management has determined that the acquisition of the participation interest will be accretive to earnings per share. Further, management has determined that acquiring the participation interest is the most cost effective way to increase the size of the loan portfolio as well as the lowest risk option given the principal guarantee from the Catalyst Funds and Callidus’ involvement in originating the loans.

The purchase price will be satisfied by Callidus issuing 2,335,357 common shares to Catalyst Fund Limited Partnership IV at an issue price of $21.41 per common share, being the closing price of the Company’s common shares on the Toronto Stock Exchange on December 3, 2014, the last trading day before the date on which it was first announced that the Catalyst Funds had offered to sell the participation interest to Callidus for shares. This price represents a premium of in excess of 27% over the closing price of the Company’s common shares on the Toronto Stock Exchange on Friday, December 19, 2014.

The transaction is subject to receipt of all required regulatory approvals.

The Catalyst Funds are “related parties” of the Company for the purposes of applicable securities laws as they beneficially own, control or direct approximately 57.5% of the Company’s issued and outstanding common shares and approximately 56.5% of the common shares on a fully diluted basis. Following completion of the acquisition of the participation interest, the Catalyst Funds will beneficially own, control or direct approximately 59.5% of the Company’s issued and outstanding common shares and approximately 58.4% of the common shares on a fully diluted basis.

Also in accordance with the Company’s policy, the independent directors of Callidus have approved the issuance of shares by the Company as consideration for the acquisition of the participation interest and the price at which the common shares will be issued to Catalyst Fund Limited Partnership IV.

About Callidus Capital Corporation

Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the company’s assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflow and outflows of each borrower, enabling Callidus to very effectively manage any risk of loss.

Forward Looking Statements

Certain statements made herein contain forward-looking information. Forward-looking statements in this release include those related to expected growth in the loan portfolio, repayment of the bridge loan and sufficiency of sources of liquidity. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements of Callidus, or developments in Callidus’ business or industry, to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors and assumptions include, but are not limited to, Callidus’ inability to successfully originate new loans due to competitive factors or adverse developments in the asset-based loans market; the availability of additional financing on acceptable terms, or at all, being dependent on capital market conditions and the operating performance of Callidus; the continued availability of funding under bridge loan facility provided by Catalyst Funds and Callidus’ existing loan facilities; and other factors and assumptions discussed in the section entitled “Risk Factors” in documents filed with the Ontario Securities Commission and other securities commissions across Canada, including Callidus’ prospectus dated April 15, 2014. If any such risks actually occur or assumptions prove to be incorrect, Callidus’ business, financial condition or results of operations could be materially adversely affected. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

SOURCE Callidus Capital Corporation