Element Financial Raising $2.5B for Acquisition
Toronto-based Element Financial Corp. will raise $2.5 billion Canadian ($2.05 billion) in corporate debt to fund an unidentified acquisition that must be completed by the end of the year.
The move comes less than a year after Element Financial acquired PHH Corp.'s fleet management division for $1.4 billion in July.
Element Financial is using financial instruments known as subscription receipts and extendible convertible debentures that act like commercial paper and convert to common shares once the acquisition has been made final, according to John Sadler, Element Financial senior vice president.
Element Financial expects to close the financing transaction by May 29.
"That puts the money in our jeans," Sadler said. "It allows us to go out and make an acquisition that is consistent with the terms and conditions of which the money was raised. It's dry powder that the company has available to it to fund an acquisition."
Read the full announcements here and here.