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TORONTO, Nov. 27, 2013 /CNW/ - MCAN Mortgage Corporation
("MCAN" or the "Company") announced today that the partners in MCAP
Commercial LP ("MCAP"), other than MCAN, have elected to invest an
additional $100 million in MCAP (the
"Capital Investment") to allow for additional growth and expansion
of operations. The injection of additional capital will
dilute MCAN's investment to 16.5% (before giving effect to the Sale
Transaction discussed below).
In conjunction with the Capital Investment, MCAN
also announced the entering into of an agreement to sell
approximately 1.7% of the equity it holds in MCAP to another
partner in MCAP for approximately $5.7
million (the "Sale Transaction"), approximately $2.8 million to be received immediately and
approximately $2.9 million
anticipated to be received in January, 2014. The Sale
Transaction results in the reduction of MCAN's ownership of MCAP to
14.8% after giving effect to the Capital Investment (reduced from
23.4% as reported as at the end of the third quarter, 2013).
The issue price of the units issued pursuant to
the Capital Investment and the sale price of the units pursuant to
the Sale Transaction is approximately 33% above the carrying value
of the units on MCAN's Consolidated Balance sheet as at the end of
the third quarter, 2013.
The combination of the additional investment and
MCAN's sale noted above will result in both a dilution gain and
gain on sale that will be announced as part of the fourth quarter
results from operations. The announcement of the fourth
quarter results are expected to be finalized and announced in
February 2014.
Mr. Jandrisits, President & CEO commented,
"while the additional investment by our partners in MCAP enables
additional growth in both operations and future projected income,
this transaction also enables MCAN to realize on a portion of its
investment in MCAP. "
Forward-Looking Information
This press release may contain forward-looking
statements, including statements regarding the business and
anticipated financial performance of MCAN and MCAP. These
forward-looking statements can generally be identified as such
because of the context of the statements and often include words
such as MCAN "believes", "anticipates", "expects", "plans",
"estimates" or words of a similar nature. These statements are
based on current expectations, and are subject to a number of risks
and uncertainties that may cause actual results to differ
materially from those contemplated by the forward-looking
statements. Some of the factors that could cause such differences
include legislative or regulatory developments, competition,
technology change, global market activity, interest rates, changes
in government and economic policy and general economic conditions
in geographic areas where MCAN operates. Reference is made to the
risk factors disclosed in MCAN's 2013 Annual Information Form,
which are incorporated herein by reference. These and other factors
should be considered carefully and undue reliance should not be
placed on MCAN's forward-looking statements. Subject to applicable
securities law requirements, MCAN does not undertake to update any
forward-looking statements.
About MCAN
MCAN is a public company listed on the Toronto
Stock Exchange under the symbol MKP and is a reporting issuer in
all provinces and territories in Canada. MCAN also qualifies as a mortgage
investment corporation ("MIC") under the Income Tax Act
(Canada) (the "Tax Act").
MCAN's primary objective is to generate a
reliable stream of income by investing its corporate funds in a
portfolio of mortgages (including single family residential,
residential construction, non-residential construction and
commercial loans), as well as other types of financial investments,
loans and real estate investments. MCAN employs leverage by issuing
term deposits eligible for Canada Deposit Insurance Corporation
("CDIC") deposit insurance up to a maximum of five times capital
(on a non-consolidated tax basis) as permitted by the Tax Act.
The term deposits are sourced through a network
of independent financial agents. As a MIC, MCAN is entitled to
deduct from income for tax purposes 100% of dividends, except for
capital gains dividends, which are deducted at 50%. Such dividends
are received by the shareholders as interest income and capital
gains dividends, respectively.
MCAN's wholly-owned subsidiary, Xceed Mortgage
Corporation ("Xceed"), focuses on the origination and sale to third
party mortgage aggregators of residential first-charge mortgage
products across Canada. As
such, Xceed operates primarily in one industry segment through its
sales team and mortgage brokers.
MCAN also participates in the Canada Mortgage
Bonds program, and other securitizations of insured mortgages.
SOURCE MCAN Mortgage Corporation