TORONTO, May 25, 2020 /CNW/ - Axis Auto Finance Inc.
("Axis" or the "Company"), (TSXV: AXIS) Canada's fastest growing publicly-traded
sub-prime automotive finance company, is pleased to provide a
shareholder update and announce the closing of a $6.25 million term loan with a Schedule 1
bank.
COVID-19 Response
From the onset of the pandemic and the government mandated
measures to combat the spread of the virus, Axis has supported
borrowers through payment accommodations and/or deferrals. To date,
12.5% of active customer accounts have been impacted. The frequency
of payment deferral requests declined significantly by the end of
April.
Originations
While originations continued through the lockdown period, Axis
adjusted its underwriting approach to account for the difficult
economic environment. With automotive dealership showrooms largely
closed across the country, origination volumes were low through the
last two months. With the re-opening of dealerships in several
provinces, Axis is seeing a significant increase in weekly
application volume since mid-May.
Management actions taken
Axis management implemented necessary precautions to protect the
well being of its employees and customers:
- Switched to a fully remote work model
- Intensified cleaning and hygiene practices
- Suspended all in-person meetings and corporate travel
- Implemented social distancing protocols across the
organization
- Suspended repossessions to not create further financial burden
for affected customers
Additional steps were taken to preserve liquidity, including
cuts and/or deferrals of senior management compensation, employee
lay-offs, suspension of Director fees and vendor supported payment
deferrals. These steps allowed Axis to retain a strong liquidity
position to date and position the company for a smooth return to
normal operations upon the lifting of government restrictions.
Funding facilities and liquidity
Axis' senior secured credit facility, which matured in
March 2020 has been extended through
July 2020 in light of the pandemic,
with the intention to go through an orderly renewal process at that
time. The company is in compliance with all terms and covenants of
that facility as of the date hereof. In addition, Axis has closed
on a $6.25 million term loan as
described below. Together with unused amounts on its securitization
facilities, Axis currently has over $40
million in available growth capital.
$6.25 million term loan under
the Canadian Government Business Credit Availability
Program
Axis has closed on a $6.25 million
term loan ("Loan") with a Canadian Schedule 1 bank ("Bank"). The
Loan is backed by the Canadian Government under the Business Credit
Availability Program ("BCAP"), specifically 80% of the principal of
the Loan is guaranteed by Export Development Canada ("EDC"). The
Loan bears interest at a rate of 4.00% per annum above the Bank's
Prime Lending Rate. Axis will also pay an EDC Guarantee fee of 1.8%
annually of the Loan amount.
The initial term of the Loan is 12 months, but Axis may provide
the Bank with a written request to extend the Loan maturity date by
an additional 12 months no more than 90 days prior to the initial
Loan maturity date.
Under the terms of BCAP, the proceeds of the Loan may not be
used to refinance existing debt obligations, for non-scheduled term
debt repayment, any shareholder contributions, repayment of
shareholder loans, stock buy-backs, executive bonuses or
increase in executive compensation while any balance of the Loan is
outstanding and the EDC Guarantee is in place.
About Axis Auto Finance
Axis Auto Finance is a leading Canadian provider of alternative
used vehicle financing options servicing roughly 30% of Canadians
(Source: Equifax) that have credit scores in the non-prime range.
100% of all Axis auto loans report to the credit bureau, resulting
in a significant improvement of the credit scores for the
overwhelming majority of clients. These clients use Axis as a
stepping-stone in their credit rebuilding journey and we are proud
to be improving the lives of these Canadians. Supported by
state-of-the-art, in-house developed risk analytics, Axis continues
to be Canada's fastest-growing
publicly traded auto-financing company. Further information on the
Company can be found at investors.axisautofinance.ca/.
The TSX Venture Exchange has neither approved nor disapproved
the contents of this press release. Neither the Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the Exchange) accepts responsibility for the adequacy
or accuracy of this release.
SOURCE Axis Auto Finance Inc.