20:05:55 EDT Thu 28 Mar 2024
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Montfort Capital Corp
Symbol MONT
Shares Issued 91,127,006
Close 2022-10-03 C$ 0.45
Market Cap C$ 41,007,153
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Montfort completes acquisition of 78% Langhaus stake

2022-10-03 10:08 ET - News Release

Mr. Mike Walkinshaw reports

MONTFORT CAPITAL ACQUIRES MAJORITY STAKE IN LEADING INSURANCE LENDER

Montfort Capital Corp. has closed on the acquisition of approximately 78 per cent of Langhaus Financial Partners Inc. Langhaus is the parent company of Langhaus Financial Corp. (LFC), Canada's largest independent provider of insurance policy-backed loans, with a specific focus on high-net-worth individuals and entrepreneurs. The Langhaus acquisition was previously announced on May 12, 2022. The total common share valuation of Langhaus is $12-million and the board, management and vendors of Langhaus are at arm's length to the company.

The acquisition was completed pursuant to a share purchase agreement, by way of a $7.02-million cash payment to the vendors plus contingent payments totalling $2.34-million to be paid upon the achievement of certain financial targets during an earnout period. Montfort has not issued common or preferred shares as part of the purchase price.

Coincident with the acquisition, Langhaus and Montfort have entered into a lock-up agreement with certain holders of non-voting preferred shares of LFC who are also selling shareholders of Langhaus, representing approximately 53 per cent of the outstanding preferred shares of LFC having an aggregate original purchase price of $6.57-million. The lock-up agreement provides for a six-month period postclosing of the acquisition for these holders of existing preferred shares of LFC to exchange their shares for a new series of preferred shares to be issued by LFC that will, subject to certain conditions, be redeemable in cash on Oct. 3, 2024, for the original purchase price of the existing preferred shares of LFC and any accrued and unpaid dividends or, at the option of the holder, exchangeable into a new class or series of preferred shares of the company having substantially similar terms and ranking on an equivalent basis to the outstanding Series A preferred shares of the company, including the option to convert such preferred shares into common shares of the company.

"We would like to welcome the Langhaus team to the family of Montfort private credit companies," said Mike Walkinshaw, chief executive officer of Montfort. "Timia Capital, Pivot Financial, Brightpath Capital and now Langhaus are leaders in their respective private credit verticals and continue to experience growth in 2022. The successful integration of Pivot has provided important experience onboarding private credit companies to the Montfort platform. With the recent close of the Brightpath and Langhaus acquisitions, we look forward to leveraging our financing relationships, back-office platform and technology expertise to make each of these businesses more efficient and more profitable."

For fiscal 2021, Langhaus generated approximately $6.5-million in revenue with an approximate net loss of $954,000. During the first quarter of 2022, Langhaus achieved breakeven and generated approximately $14,000 in net income. Langhaus had approximately $123.4-million in long-term debt at the Dec. 31, 2021, year-end (all figures reflecting consolidated information, including Langhaus's subsidiary LFC).

For the combined entity, which now includes Timia Capital, Pivot Financial, Brightpath Capital and Langhaus, Montfort reports the following financial metrics:

  • Pro forma combined assets of approximately $475-million at the date of close;
  • For the year ended Dec. 31, 2021, key pro forma full-year amounts for the combined entity include:
    • Revenue of approximately $29.7-million, an increase over Montfort's consolidated revenue of $9.7-million for fiscal 2021;
    • Operating expenses of approximately $23.5-million, an increase over Montfort's consolidated operating expenses of $6.7-million for fiscal 2021;
    • Net income after taxes of $4.5-million, an increase over Montfort's consolidated net income of $2.4-million.
  • The acquisition is expected to be accretive for Montfort shareholders during fiscal 2024 based upon forecasted growth and financing costs incurred.

No finder's fees were payable in connection with the proposed transaction.

In addition, the board of directors of Montfort approved the issuance of 1,285,000 stock options and 350,000 restricted and performance share units to members of management and employees of Montfort, Brightpath and Langhaus.

About Montfort Capital Corp.

Montfort manages a diversified family of specialized private credit brands that utilize focused strategies and experienced management teams combined with advanced technology to improve fee-related performance. Montfort facilitates transparency for its investors through public company reporting.

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