Accelerates Crown’s plans to redirect capital and focus on strategic initiatives
CALGARY, July 13, 2021 – Crown Capital Partners Inc. (“Crown” or the “Company”) (TSX: CRWN) today announced the closing of the divestment of a majority stake in Crown Private Credit Partners Inc (“CPCP”), its alternative corporate financing business, and a portion of its investment in Crown Partners Fund. This transaction accelerates Crown’s plans to redirect capital toward strategic initiatives that are consistent with the Company’s objectives announced in May 2020. Crown will focus on expanding and scaling its growth platforms in its Network Services and Distributed Power businesses as well as returning capital to shareholders. Crown management will provide a fulsome update on its strategy and operational progress concurrent with its Q2 2021 financial results conference call on August 13, 2021.
- Crown will receive proceeds of approximately $16 million from the sale of a portion of its investment in Crown Partners Fund. The transaction is being completed at 100% of the net asset value of Crown Partners Fund units, which approximates Crown’s carrying value. Crown will retain a 28% ownership interest in Crown Partners Fund, compared with its current ownership interest of 36.5%.
- The ownership group of the purchasing entity, CPCP, reflecting Crown’s divestment of its majority stake, now includes Canadian Western Bank (“CWB”), Concentra Bank (“Concentra”), Mount Logan Capital Inc. (“MLC”) and certain management participants. Crown will retain a 12.5% minority interest in CPCP. CPCP has nominal current value and the transaction will not have a meaningful earnings impact on Crown.
- Crown will retain 100% of the performance fees earned from the Crown Partners Fund, which had an accrued value of $7.2 million as at March 31, 2021.
- Crown’s private lending clients, institutional limited partners and investment professionals will benefit from the continuity of Crown’s participation in CPCP as well as the addition of well-capitalized long-term financial sponsors.
- Brent Hughes, Executive Vice-President, and Tim Oldfield, Senior Vice-President, Chief Investment Officer, will transition to CPCP. Chris Johnson will continue as President and CEO of Crown and will become Chairman of CPCP and will have a minority ownership interest in CPCP, as will other management participants.
- Various operating expenses are in the process of being reduced or eliminated further to align with the Company’s go-forward business plan.
- Crown’s independent directors considered other options to accelerate the reduction of capital deployed in alternative corporate financing and unanimously believe this transaction to be in the best interests of all stakeholders.
“This transaction supports Crown’s transition to a capital-light business model,” said Chris Johnson, President and CEO of Crown. “We have worked with and alongside the new ownership group for many years, and believe this new structure will provide a superior platform for the benefit of our corporate clients, trusted institutional investors and investment professionals. Leveraging the financial strength and capabilities of the CWB, Concentra and Mount Logan teams, the private credit business will be better positioned to expand and capitalize on our team’s leading investment track record.”
Mr. Johnson added: “For Crown, this transaction provides meaningful liquidity to support our strategic initiatives. We have seen particularly robust growth in revenue and operating earnings in our newer lines of business and we expect to augment organic growth with additional acquisitions to add scale, capabilities, and geographic presence. Additionally, we will continue to return capital to shareholders through the previously established Normal Course Issuer Bid as well as the recently announced Substantial Issuer Bid.”
About Crown Capital Partners (TSX:CRWN)
Founded in 2000 within Crown Life Insurance Company, Crown Capital Partners is a leading specialty finance company operating in the distributed power and telecommunications infrastructure markets. We focus on alternative asset classes that require a specialized capital partner, and we aim to create long-term value by acting as both a manager of investment funds for institutional partners and as a direct investor in operating businesses serving these markets. For additional information, please visit crowncapital.ca.
This news release contains certain “forward looking statements” and certain “forward looking information” as defined under applicable Canadian and U.S. securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or similar terminology. Forward-looking statements in this news release include, but are not limited to, statements, management’s beliefs, expectations or intentions regarding its plans to reduce capital allocated to alternative corporate financing and redirect that capital toward strategic growth initiatives, pursue additional acquisitions, and its plan to further reduce operating expenses. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in the Crown’s periodic filings with Canadian securities regulators. See Crown’s most recent annual information form for a detailed discussion of the risk factors affecting Crown. In addition, Crown’s dividend policy will be reviewed from time to time in the context of the Corporation’s earnings, financial requirements for its operations, and other relevant factors and the declaration of a dividend will always be at the discretion of the Board. Crown undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
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