cars4U announces the acquisition of Pawnee Leasing and proposed conversion to an income fund.
Toronto, October 24, 2005 – cars4U Ltd. (cars4U) (TSX: CFU) announced today that it has entered into an agreement to acquire Pawnee Leasing Corporation (Pawnee) of Fort Collins, Colorado. For more that 20 years, Pawnee has been a leader on the start-up and near prim finance market throughout the United States. For the year ended June 30, 2005, Pawnee had income before taxes of US$8.9 million.
“Pawnee has had 23 years of consistence growth in its lease portfolio, cash flow and profitability,” said Barry Shafran, President and CEO of cars4U. “Pawnee will be an excellent complement to cars4U's existing leasing and automotive operations, which have also demonstrated ling-term stability, as reflected in our dividend program over the last few years. This acquisition provides a solid foundation for future growth plans.”
cars4U also announced today that its board of directors has approved in principle the reorganization of its capital and the conversion of cars4U into an income fund, intended to be completed prior to carrying out the proposed acquisition of Pawnee. The parties intend to proceed with the various required processes and finalize this transaction as soon as possible, prior to March 31, 2006. And information circular derailing the proposed conversion will be mailed to shareholders, to be followed by a meeting of cars4U's shareholders to consider the conversion and related matters.
“Investment professionals believe that while the trust market may see some fine tuning in the near term, with almost $160 billion of capitalization, it remains vibrant,” added Shafran. “Our businesses, with long term, stable cash flow are ideally suited for an income trust.”
Under the terms of the Pawnee purchase agreement, the purchase price will be US$57.9 millions, of which US$44.4 million is payable in cash at closing with the balance satisfied through the issuance of securities which are directly or indirectly exchangeable for units of the income fund. It is expected that financing for the acquisition will be obtained through an initial public offering of trust units of the proposed income fund, with TD Securities acting as lead underwriter.
Pawnee's senior management team will continue on their roles with Pawnee. In addition, Rob Day and Sam Leeper, Pawnee's Chairman and founder, and CEO respectively, will be among the trustees for the income fund.
“Pawnee's excellent management team, years of consistent performance and commitment to future expansion combine to offer our new income fund and ideal platform from which to grow,” added Shafran. “The retention of management as stewards for Pawnee and as significant unit holders in the new income fund was key for us in taking this exciting step forward.”
“We are thrilled by the opportunity to join cars4U,” said Rob Day, Chairman of Pawnee. We believe that combined operations of cars4U and Pawnee will provide an excellent opportunity for investors, and we are excited to hold a significant retained interest in the new income fund.”
About cars4U Ltd. – cars4U Ltd. Is traded on The Toronto Stock Exchange under the symbol CFU. For more information visit cars4U.com, www.cars4U;ltd.com , or www.PawneeLeasing.com
-30-
Contacts:
Barry Shafran
cars4U Ltd.
416-386-3099
bshafran@cars4U.com
Tina Gladstone (media only)
Environics Communications Inc.
416-969-2752
tgladstone@environicspr.com