Element Financial expanded the company’s existing senior credit facility to $1.6 billion with the addition of a further $100 million commitment from a U.S.-based bank. The company’s senior banking facility is led by Bank of Montreal and now includes 9 Canadian and U.S. banks.
This provides Element with 3-year term funding capacity at a cost of capital that is currently below rates that are available to BBB+ rated issuers. This funding platform provides the company with the means to increase its leverage and to fund expected growth through 2015 and beyond in each of its four business verticals – fleet management, railcar finance, vendor & commercial finance and aviation finance. At the same time, as market spreads have widened for all issuers, the company has elected not to proceed with an unsecured private placement program at this time and will continue to use its lower cost credit facility already in place.
“The expanded senior credit facility will add leverage to our balance sheet and improve the efficiency of our capital structure as we continue to grow our asset base through 2015 and beyond,” said Steven K. Hudson, chairman and CEO of Element Financial. “We will continue to monitor debt market conditions. When they stabilize and become more favorable for the company, we plan to use our investment grade rating to further diversify our funding sources and reduce our cost of capital. In the meantime, we will continue to move towards lower overall cost of funding, including consolidating our fleet securitization program which is underway.”
Element’s total sources of liquidity amount to more than $10 billion provided to the company through term funding agreements, various private and public securitization conduits and unsecured convertible debt with Canadian and US-based banks and life insurance companies. The Company currently has a BBB+ investment grade issuer and senior unsecured rating from Kroll Bond Rating Agency (KBRA).
Element Financial is one of North America’s leading equipment finance companies.