CBL Franklin Core ETF Portfolio

TORONTO, Aug. 14, 2014 /CNW/ - Callidus Capital Corporation ("Callidus" or the "Company") (TSX: CBL), a provider of flexible and innovative asset-based loans, announced today an update on the current status of its business and provided its 2014 second quarter financial results, for the three and six-month period ended June 30, 2014¹.

We continue to see exciting growth and opportunities in each of our targeted strategic growth areas. Demand remains robust for our core products in our key markets of Canada and the US, as we continue to complete transactions in both of these important markets. This is evident in the sequential growth of our loan portfolio, which is discussed in further detail below. As previously disclosed, we hired two originators, Steve Parker, a seasoned ABL lender in Seattle Washington to cover the Pacific coast, British Columbia, and Alberta and Sylvain Raymond, a seasoned corporate finance professional, based in Montreal to cover the Quebec and Eastern Canadian markets. We anticipate Steve and Sylvain to accelerate growth in these markets in the coming quarters. Additionally, we are pleased to report growth in the deployment of Callidus Lite as an expansionary loan product. Year-to-date, we have successfully closed two Callidus Lite loans representing $16 million in commitments. We also continue to closely monitor the market for portfolio acquisitions and will pursue these acquisitions opportunistically. In the event that Catalyst Fund IV wishes to sell its $50 million participation interest in the loan portfolio, the participation agreement provides the Company the option to acquire all or part of the interest in the loan portfolio at par plus accrued interest and fees. Callidus expects to complete the acquisition of all of the participation interest before year-end which would eliminate accounting for derecognition.  

In addition to pursuing these strategic growth initiatives, in preparation for future growth, we have added capacity to the underwriting and portfolio management, finance, and collateral monitoring groups. We have also hired a senior IT professional to enhance the development and maintenance of our proprietary systems. Further, we are actively in discussions with certain field examination candidates to internalize this client service function. We will keep you appraised as we continue to make progress on these and other initiatives.

We note that the IPO was successfully completed during the quarter ended June 30, 2014 that is being reported today and consequently includes financial information on a capital structure that was replaced on the IPO. We will include additional non-GAAP financial measures that are customary for financial services companies in upcoming quarters as the financial results from the previous capital structure no longer impact the periods reported.

Current state of the business, as at August 13, 2014²:

• Gross loans receivable of $605 million, with an aggregate committed amount of $755 million
• Pipeline of potential new loans totalling approximately $500 million, for which we have signed back term sheets that we are pursuing of approximately $175 million, recognizing that not all of these potential loans will close
• Cash position of $55 million plus undrawn availability of approximately $73 million, which at 40% leverage would support an additional $213 million of loans outstanding
• Total debt of $195 million, or 32% of gross loans receivable, which we could increase to approximately 44% based on the estimated undrawn availability noted previously
• Management estimates net income of approximately $57 million after derecognition, had the consolidated weighted average Gross Loans Receivable of approximately $605 million been outstanding for a full year ³

From June 30, 2014 to August 13, 2014, one new loan representing US$72.5 million in commitments was extended and a $2 million loan was repaid. Additionally, $6 million in net repayments was received from existing borrowers.

As at August 13, 2014, there were 26 loan commitments, the largest of which was a US$75 million commitment, and the smallest of which was a $3.5 million commitment. The average loan amount funded was $23 million.

Additionally, on August 1, 2014, the Company filed a preliminary shelf prospectus with a number of the regulatory authorities in each of the provinces and territories of Canada for the issuance of up to $600 million in common shares. The Company continues to explore financing sources including but not limited to both the private and public capital markets to ensure adequate and diversified funding sources. These sources include seeking increased availability from Callidus' existing lenders and from Catalyst Funds. Catalyst Funds have approved making facilities available and the Callidus board has approved these Catalyst Fund facilities in principle, subject to complying with applicable related party regulatory requirements.

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¹ Amounts expressed are before derecognition, unless otherwise indicated. For further information about derecognition as it relates to the Company's initial public offering, please refer to the final prospectus filed with the various securities regulatory authorities through Canada on April 15, 2014 ("Final Prospectus").
² Pro-forma a transaction that closed and was funded August 14, 2014.
³ Calculated on a consistent basis as described in Management's Discussion and Analysis for the period ended June 30, 2014 ("MD&A").

Highlights from the second quarter, relative to the first quarter:

• Gross loans receivable increased 29% to $537 million as at June 30, 2014
• Average gross loans receivable of $502 million for the quarter, an increase of 24%
• Gross yield of 20.8% up from 20.4%
• Adjusted EBITDA margin maintained at 79.4%

During the current quarter, 7 new loans totalling $120 million in commitments were extended and one $15 million loan was fully repaid. Additionally, $36 million in net funding was advanced to existing borrowers.

Financial Highlights

Second quarter of 2014

During the current quarter, total revenue increased almost $11 million from the same period in the prior year, as a result of (i) a $266 million increase in the Average Loan Portfolio Outstanding to $502 million in the current quarter, and (ii) a 0.5% increase in the gross yield to 20.8% in the current quarter.

Adjusted EBITDA increased to $18 million from $9 million in the same period last year, and Adjusted EBITDA margin increased to 79.4% from 75.2% as the Company benefitted from operating leverage in the business as a result of growth in the loan portfolio.

Year-to-date June 30, 2014

Year-to-date, total revenue increased approximately $22 million from the same period in the prior year, as a result of (i) a $239 million increase in the Average Loan Portfolio Outstanding to $454 million year-to-date, and (ii) a 0.6% increase in the gross yield to 20.6% year-to-date.

Adjusted EBITDA increased to $35 million from $16 million in the same period last year, and Adjusted EBITDA margin increased to 79.4% from 74.1% as noted above, the Company benefitted from operating leverage in the business as a result of growth in the loan portfolio.

About Callidus Capital Corporation

Established in 2003, Callidus Capital Corporation is a Canadian company that specializes in innovative and creative financing solutions for companies that are unable to obtain adequate financing from conventional lending institutions. Unlike conventional lending institutions who demand a long list of covenants and make credit decisions based on cash flow and projections, Callidus credit facilities have few, if any, covenants and are based on the value of the company's assets, its enterprise value and borrowing needs. Callidus employs a proprietary system of monitoring collateral and exercising control over the cash inflow and outflows of each borrower, enabling Callidus to very effectively manage any risk of loss.

Forward-Looking Statements

Certain statements made herein contain forward-looking information. Although Callidus believes these statements to be reasonable, the assumptions upon which they are based may prove to be incorrect. Furthermore, the forward-looking statements contained in this press release are made as at the date of this press release and Callidus does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

SOURCE Callidus Capital Corporation