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Chesswood’s Blue Chip Leasing to Merge with Vault Credit

April 08, 2021, 07:25 AM
Filed Under: Mergers & Acquisitions

Chesswood Group Limited, a North American commercial equipment finance provider for small and medium-sized businesses, announced it has entered into a definitive agreement to merge its subsidiary Blue Chip Leasing Corporation with Vault Credit Corporation (Vault Group of Companies’ leasing division), increasing the scale of its equipment finance business in Canada. The combined entity will be managed by Daniel Wittlin and Vault’s senior management team.

The merger will result in Chesswood holding a controlling 51 percent ownership interest in a newly created corporation which wholly owns each of Blue Chip and Vault.

“The merger of Blue Chip and Vault is immediately accretive to earnings and increases Chesswood’s net receivables portfolio in Canada to an estimated $270 million. This combination will leverage our fixed cost base for new originations and allow us to better serve our customers and origination partners with technology to grow in the Canadian marketplace.” said Ryan Marr, Chesswood President and CEO.

Vault’s CEO Daniel Wittlin said, “I am excited to be working with Chesswood again to continue the expansion of its Canadian equipment leasing operations. We began six years ago with the Blue Chip brand and have further enhanced the operating model with Vault. Partnering with Chesswood combines Vault’s origination capability with Chesswood’s strong balance sheet.”

The proposed Vault merger is expected to close early in the second quarter and is subject to final consent from Chesswood’s syndicate of lenders. In addition to Vault’s beneficial shareholders receiving 49 percent ownership in the newly formed holding company, they will also be granted 1,600,000 special warrants that are exchangeable into Chesswood common shares, vesting quarterly over three years.

The proposed merger was unanimously approved by Chesswood’s directors (each of whom is unrelated to Vault and its beneficial shareholders).

Under the merger, the shares of Blue Chip and the shares of the corporation which owns Vault will be acquired by the new holding corporation. Closing of the proposed merger is subject to approval of the Toronto Stock Exchange for the granting of the special warrants and the settlement of definitive amendments with Chesswood’s lenders.

Vault is a financial services company dedicated to delivering a variety of credit products to meet the diverse needs of its originator partners and borrowers. Vault, which is one of the companies in the Vault Group of Companies, specializes in equipment leases and commercial loans allowing for customizable financing solutions. Vault serves small to medium businesses across Canada and caters to a wide spectrum of credit tiers, equipment types and industries.

Chesswood Group Limited is North America’s only publicly traded commercial equipment finance company focused on small and medium-sized businesses. Its Colorado-based Pawnee Leasing Corporation, founded in 1982, finances a highly diversified portfolio of commercial equipment leases and loans through relationships with over 600 independent brokers in the U.S. In Canada, Blue Chip Leasing Corporation has been originating and servicing commercial equipment leases and loans since 1996, and today operates through a nationwide network of more than 50 independent brokers. Located in Houston, TX, Tandem Finance Inc. provides equipment financing to small and medium-sized businesses in the U.S.

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