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Axis Auto Finance Inc
Symbol AXIS
Shares Issued 120,840,974
Close 2023-09-11 C$ 0.10
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Axis Auto Finance closes $2.6-million private placement

2023-09-11 17:15 ET - News Release

Mr. Todd Hudson reports

AXIS PROVIDES BUSINESS UPDATE AND ANNOUNCES CLOSING OF $2.67 MILLION PRIVATE PLACEMENT OF UNSECURED SUBORDINATED DEBENTURES

Axis Auto Finance Inc. has provided a business update and has closed a private placement of unsecured subordinated debentures.

Business update

Over the last 12 months, elevated inflation levels, supply chain disruption and rapidly rising interest rates have created challenges in the non-prime auto finance market. Inflation resulted in more borrower defaults leading to higher credit loss rates, supply chain issues affected vehicle availability, as well as affordability and rising interest rates increased borrowing costs.

Axis has responded to these challenges implementing certain initiatives, including, but not limited to:

  • Increased pricing on new originations to compensate for the increase in the cost of borrowing;
  • Adjust underwriting criteria to reflect elevated credit risks due to inflation;
  • Streamline operations by exiting certain markets and discontinuing non-performing product lines;
  • Cut costs through work force reductions and decreases to executive pay;
  • Continue to improve operational efficiencies through process automation.

Management of Axis is continuously monitoring portfolio and company performance and is committed to additional changes, if required. This process ensures that Axis is well positioned to withstand current macroeconomic challenges and thrive in the future.

Closing of $2.67-million private placement of unsecured subordinated debentures

The company also announced today that it has completed a private placement financing of $2.67-million principal amount of debentures. The debentures mature on Sept. 30, 2025, and carry an annual interest rate of 12 per cent, accrued and payable quarterly in arrears on each March 31, June 30, Sept. 30 and Dec. 31, in cash. Subject to certain conditions, the company will have the right to prepay any or part of the debentures at any time prior to the maturity date by paying the principal amount and accrued and unpaid interest. The principal amount of the debentures is not convertible into common shares or any other securities of the company.

In addition to the debentures, the company has issued to subscribers an aggregate of 12,015,000 common share purchase warrants, each of which entitles the holder thereof to purchase one common share of the company at an exercise price of 16 cents per share for a period of three years from the date of issuance.

The debentures, warrants and warrant shares are subject to a four-month statutory hold period commencing on the date of their issuance. An aggregate of $600,000 principal amount of the debentures and 2.7 million warrants were purchased by officers and directors of the company and are exempt from the formal valuation and minority approval provisions of National Instrument 61-101 -- Protection of Minority Security Holder in Special Transactions.

The company intends to use the net proceeds from the private placement to refinance existing indebtedness.

About Axis Auto Finance Inc.

Axis is a financial technology company changing the way Canadians buy and finance used vehicles. Through its direct-to-consumer portal, DriveAxis.ca, customers can choose their next used vehicle, arrange financing, and get the car delivered to their home. In addition, the company continues to grow B2B (business-to-business) non-prime auto loan originations by delivering innovative technology solutions and superior service to its dealer partner network. All Axis auto loans report to Equifax, resulting in over 70 per cent of customers seeing a significant improvement of their credit scores.

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