Mr. Simon Hitzig reports

ACCORD ANNOUNCES SECOND QUARTER FINANCIAL RESULTS AND APPROVAL OF DEBENTURE AMENDMENTS

Accord Financial Corp. has released its financial results for the second quarter ended June 30, 2023. A series of amendments to its 2018 convertible debentures was also approved at a special meeting of debentureholders this morning. The financial figures presented in this release have been prepared in accordance with international financial reporting standards.

Commenting on the financial results, the company's president and chief executive officer, Simon Hitzig, stated, "After more than a year of navigating tough headwinds, reflected in a flat or slightly declining loan portfolio most quarters, Accord's portfolio turned the corner in the second quarter."

The company's finance receivables and loans grew to $479.3-million at June 30, 2023, up 5.7 per cent year over year.

"As anticipated in this economic environment, new business activity across all our operating companies is building," added Mr. Hitzig.

Supported by generally higher yields, revenue rose slightly year over year to $17.9-million in the second quarter and grew to $36.4-million for the six months to June 30, 2023, up 11.4 per cent over the same period last year. However, rising interest costs, and challenges passing through interest rate costs in certain segments, contributed to a net loss attributable to shareholders of $263,000. Year-to-date net earnings attributable to shareholders were $1.8-million, down from $3.3-million in the same period last year. The second quarter loss per share of three cents brought year-to-date earnings per share to 21 cents, compared with 38 cents in the first six months of 2022. Book value per common share held steady at $11.79, compared with $11.78 at June 30, 2022, and $11.80 at the start of the year.

Mr. Hitzig noted: "It has been a long journey, but the tide is turning. The major banks are clearly starting to restrict their commercial lending appetite, creating a cyclical opportunity to leverage Accord's expertise, and reliance on strong collateral, to finance companies that may no longer meet the banks' criteria. We are seeing stronger deal flow in all our operating companies, in many cases originating with the banks."

Adding to the organic growth, on July 1, Accord launched its latest program with Export Development Canada (EDC), building on its successful risk-sharing partnership, unparalleled in the non-bank small business lending segment. The Accord/EDC trade expansion lending program (TELP) provides financing to companies throughout the export supply chain. EDC's 75-per-cent loan loss guarantee allows Accord to offer faster, simpler approvals, supporting a wider range of small- and medium-sized enterprises. Since 2021, Accord has lent $250-million to more than 1,500 Canadian small businesses, supported by similar EDC programs now replaced by TELP.

Approval of the debenture amendments

The company also announced that at a special meeting of the holders of its 7 per cent convertible unsecured subordinated debentures issued on Dec. 18, 2018, and due Dec. 31, 2023, debentureholders approved an extraordinary resolution amending the terms of the debentures as follows:

• Increasing the interest rate on the debentures from 7 per cent to 10 per cent, effective as of Jan. 2, 2024;
• Extending the maturity date of the debentures from Dec. 31, 2023, to Jan. 31, 2026;
• Removing the conversion right of the debentureholders;
• Removing the company's right to repay the principal amount of the debentures in common shares of the company on the new maturity date or any redemption date;
• Providing that the debentures are not redeemable prior to Feb. 1, 2024, except in the event of a change of control.

Full details of the amendments are set out in the company's management information circular dated June 30, 2023, available under the corporation's profile on SEDAR+, and will be incorporated into a supplemental trust indenture as of Aug. 15, 2023.

Debentureholders owning 80.28 per cent of the outstanding debentures voted as set out in the attached voting results table.

                                      VOTING RESULTS 

Votes in favour                     % in favour                  Votes against   % against

16,338 ($16,338,000 of debentures)        98.55%   240 ($240,000 of debentures)       1.45%

The Toronto Stock Exchange has conditionally approved the amendments; however, they remain subject to the final approval of the TSX. Any debentureholder who voted for the amendments and did not withdraw a valid form of proxy or voting instruction form voting in favour of the amendments on or prior to Aug. 8, 2023, will receive a cash consent fee of $20 per $1,000 principal amount of debentures held by the debentureholder as of June 26, 2023, in accordance with the requirements set out in the circular, provided that the amendments are validly approved by the TSX.

"The extension of $20.65-million of capital represents a vote of confidence from an important stakeholder group and brings clarity to the balance sheet as we prepare for the next phase of growth," commented Irene Eddy, chief financial officer.

Looking ahead, Mr. Hitzig added: "We are grateful for the support shown by Accord's investors and debentureholders through this tough period. Our equity base remains strong at more than $100-million, and we continue to enjoy support from a syndicate of six major banks, combining for ample funding to support the next phase of growth."

About Accord Financial Corp.

Accord is North America's most dynamic commercial finance company, providing fast, versatile financing solutions for companies in transition, including asset-based lending, factoring, equipment leasing, inventory finance, trade finance and film/media finance. By leveraging its unique combination of financial strength, deep experience and independent thinking, it crafts winning financial solutions for small- and medium-sized businesses, simply delivered, so its clients can thrive. For 45 years, Accord has helped businesses manage their cash flows and maximize opportunities.

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