Callidus Capital Corporation Reports Update Regarding Business Growth

TORONTO, Dec. 4, 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 status of its business.

Portfolio Growth

We are pleased to report that as at December 1, 2014, our gross loan commitments totalled $913 million. From those loan commitments, a total of $752 million has been advanced and remains outstanding. This represents an increase of $68 million (10%) in loan advances from November 4, 2014 and an increase of $371 million (97%) from December 31, 2013. We are making this disclosure because during our quarterly public teleconference call on November 7, 2014, we stated that it was our intention to inform the market when the size of the loan portfolio changed by more than 10%. Our intention is to announce changes of approximately 10% in gross loans receivable on a go forward basis.

As disclosed previously, we have hired new originators in Seattle, Washington to cover the Pacific coast, British Columbia, and Alberta, and in Montreal to cover each of the Quebec and Eastern Canadian markets. These new originators have identified a number of opportunities that are beginning to contribute to the growth in the loan portfolio.  The first loan initiated by one of these new originators closed since our last report as at November 4, 2014.

Callidus' deal pipeline has remained relatively stable since last announced on November 7, 2014, with potential loans with a total value of approximately $600 million, of which $170 million represents term sheets that have been signed back by the borrowers.  As previously disclosed, Callidus undertakes extensive due diligence before closing on a loan transaction and has historically closed on approximately 60% to 80% of signed back term sheets.

Catalyst Offers to sell $50 Million of Loans to Callidus

Catalyst Fund Limited Partnership IV has advised Callidus that it intends to sell 100% of its $50 million participation interest in the loan portfolio on or before December 31, 2014 and has offered Callidus the opportunity to acquire that interest in exchange for Callidus common shares at a share price to be determined and approved by the independent directors of Callidus.  Completion of the proposed acquisition is subject to complying with related party and other regulatory requirements and the approval of the Toronto Stock Exchange. The participation agreement between Callidus and Catalyst Fund Limited Partnership IV provides the Company the option to acquire all or part of the interest in the loan portfolio at par plus accrued interest and fees.

As previously disclosed, Catalyst Fund Limited Partnership IV and other investment funds managed by The Catalyst Capital Group Inc. Own approximately 57.5% of the outstanding common shares of Callidus (56.2% on a fully diluted basis) and have provided the Company with a subordinated bridge loan facility, currently in the principal amount of USD $200 million, of which approximately USD $75 million has been advanced to date in order to support growth in the loan portfolio.

Callidus intends to repay the bridge loan at such time as more efficient and less costly forms of capital are available. Callidus is continuing 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, other secured debt, convertible debt and other equity linked forms of financing. However, as previously disclosed, Callidus considers the current market conditions for an equity offering to be unfavourable given the high cost of capital and has therefore determined to continue to explore other options and to avail itself of the bridge loan during such time.

As previously disclosed, the Callidus board has allowed the leverage on Callidus' balance sheet to exceed the targeted leverage ratio of 40% until such time as the Callidus board feels the cost of equity, or equity linked securities is appropriate. Management has determined that, at leverage rates of approximately 62%, the Company would have sufficient capital to finance its current growth plan of doubling the size of its loan portfolio every two to three years without the need to issue equity, or equity linked securities. The present leverage rate of the Company is approximately 43%.

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.

Non-IFRS Measures

This press release contains references to gross loans receivable, which is not a generally accepted accounting measure under International Financial Reporting Standards and therefore the definition used by the Company may differ from the definition of such term used by other entities. The Company defines "gross loans receivable" as the sum of (i) the aggregate amount of loans receivable on the relevant date, (ii) the loan loss allowance on such date, (iii) the book value of assets held for sale as they appear on the balance sheet, and (iv) discounts on loan acquisitions. Management believes that gross loans receivable is a useful supplemental measure that may assist purchasers in assessing the financial performance and the cash anticipated to be generated by the Company's business. Gross loans receivable should not be considered as the sole measure of the Company's performance and should not be considered in isolation from, or as a substitute for, analysis of the Company's financial statements.

Forward Looking Statements

Certain statements made herein contain forward-looking information. Forward-looking statements in this release include those related to expected growth in the loan portfolio, repayment of the bridge loan and sufficiency of sources of liquidity.   Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements of Callidus, or developments in Callidus' business or industry, to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors and assumptions include, but are not limited to, Callidus' inability to successfully originate new loans due to competitive factors or adverse developments in the asset-based loans market; the availability of additional financing on acceptable terms, or at all, being dependent on capital market conditions and the operating performance of Callidus; the continued availability of funding under bridge loan facility provided by Catalyst Funds and Callidus' existing loan facilities; and other factors and assumptions discussed in the section entitled "Risk Factors" in documents filed with the Ontario Securities Commission and other securities commissions across Canada, including Callidus' prospectus dated April 15, 2014. If any such risks actually occur or assumptions prove to be incorrect, Callidus' business, financial condition or results of operations could be materially adversely affected.  Readers are cautioned not to place undue reliance upon any such forward-looking statements, which 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

David Reese, Chief Operating Officer, [phone], [email protected], www.calliduscapital.ca