Element Financial to sell $125 million of common stock through syndicate

TORONTO – Equipment leasing company Element Financial Corp. (TSX:EFN) has agreed to sell $125 million worth of its common shares for $7.75 each to a syndicate of underwriters.

That’s a 52-cent or six per cent discount to the Feb. 19 closing price of $8.27 on the Toronto Stock Exchange, which was near a 52-week high established earlier Tuesday.

Element’s stock gave up 39 cents to trade at $7.88 early Wednesday.

The equity sale comes as Element prepares to set up a fund, in partnership with institutional investors, to provide secured equipment financing in transactions ranging from $1.5 million to $25 million.

The Element Equipment Finance Fund will be capitalized with equity from Element and debt from its institutional partners.

The underwriting syndicate will include five of Canada’s six largest banks as well as GMP Securities and Barclays, Cormark Securities and Manulife.

“The additional capital provided by this offering will allow Element to more fully benefit from the robust pipeline of quality financing transactions that we are seeing across our chosen market segments,” said Steven Hudson, Element’s chairman and CEO.

“When this funding vehicle is fully capitalized, its deployment will give Element Capital access to the more profitable transaction economics that are currently available to the mid-ticket transactions originated by Element Finance.”