easyhome Ltd. Enters into Agreement to Acquire Cash Store Locations
MISSISSAUGA, ONTARIO - (Marketwired - Jan. 18, 2015) - easyhome Ltd. (TSX:EH) ("easyhome"), the Canadian leader in providing goods and financial services to the cash and credit constrained consumer, today announced that its subsidiary, easyfinancial Services Inc. ("easyfinancial" or the "Company"), has entered into a binding agreement (the "Agreement") to purchase the lease rights and obligations for up to 47 retail locations across Canada, together with certain related assets at certain locations (the "Transaction") from The Cash Store Financial Services Inc. ("Cash Store"). Upon completion of the Transaction, these retail locations will be opened as new easyfinancial branches providing consumer loans to Canadian consumers.
easyfinancial submitted its proposal in accordance with Cash Store's secondary sale process conducted under Cash Store's proceeding under the Companies Creditors Arrangement Act (Canada). The Agreement and the completion of the Transaction remain subject to Court approval in Canada and the satisfaction of certain closing conditions customary to transactions of this nature. The Company anticipates closing the Transaction within the first quarter of 2015.
Under the terms of the Agreement, easyfinancial will assume the lease rights and obligations for up to 32 retail locations currently occupied by Cash Store immediately upon closing, subject to, among other conditions, Court approval. Additionally, the Company will also assume the lease rights and obligations for up to a further 15 retail locations currently occupied by Cash Store upon successful negotiation of lease extension or new agreements with the relevant landlords. The purchase price will not be disclosed until the Transaction closes.
"We are excited by the opportunity to acquire additional locations in Canada," said David Ingram, easyhome's President and Chief Executive Officer. "This acquisition will allow us to accelerate our retail footprint at easyfinancial as we were able to carefully select the best locations to match our unfilled targeted geography. The timing aligns very well as consumer demand for an alternative to banks and payday loans has grown significantly over the last 12 months and these branches will provide further access and convenience."
"In addition, the leading macro indicators that influence our customers' financial health are progressively improving," continued Mr. Ingram. "The price of gas has reduced, food and clothing inflation is minimal and employment levels are returning to pre-recession levels."
Impact on earnings
The Company expects the Transaction to be accretive to earnings over the long term, as it accelerates loan book growth and provides further economies of scale. As a result of the Transaction, easyfinancial will increase its 2015 new easyfinancial openings from 40-45 to 60-65 branches and the loan book target for 2015 will increase from $260-$270 million to $280-$295 million. In the short term, the new store drag associated with the incremental 20 store openings is expected to reduce earnings per share in 2015 by approximately $0.10, but increase earnings per share by approximately $0.15 in 2016 and add $0.25 in 2017.
easyhome Ltd. is the Canadian leader in providing goods and financial services to the cash and credit constrained consumer. easyhome Ltd. serves its customers under the master brand goeasy through its two key operating divisions, easyhome Leasing and easyfinancial. easyhome Leasing is Canada's largest merchandise leasing Company, offering top quality, brand-name household furnishings, appliances and home electronic products to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. easyfinancial is a leading provider of consumer loans as an alternative to traditional banks and payday lenders. easyhome Ltd. is listed on the TSX under the symbol 'EH'. For more information, visit www.easyhome.ca.
This news release includes forward-looking statements about easyhome Ltd., including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects', 'anticipates', 'intends', 'plans', 'believes' or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenue, earnings or growth rates), ongoing business strategies (including number of new store openings) or prospects about future events is also a forward-looking statement. Forward- looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors, the industry generally and estimated costs and business opportunities associated with the proposed acquisition and integration of the new locations. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us, due to, but not limited to important factors such as our ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, secure new franchised locations, purchase products which appeal to our customers at a competitive rate, cope with changes in legislation, react to uncertainties related to regulatory actions, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance our system of internal controls. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements, which may not be appropriate for other purposes. We are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements whether as a result of new information, future events or otherwise, unless otherwise required by law.
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