Axis Auto Finance , a financial technology company changing the way Canadians purchase and finance used vehicles, is pleased to provide a business update and announce the closing of a private placement (the “Private Placement”) of unsecured subordinated debentures
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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 workforce 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 September 30, 2025 (the “Maturity Date“) and carry an annual interest rate of 12%, accrued and payable quarterly in arrears on each March 31, June 30, September 30 and December 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.
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In addition to the Debentures, the Company has issued to subscribers an aggregate of 12,015,000 common share purchase warrants (the “Warrants“), each of which entitles the holder thereof to purchase one common share of the Company (collectively, the “Warrant Shares“) at an exercise price of $0.16 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 2,700,000 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.
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