Davis + Henderson Announces Intention to Purchase ASSET Inc.

TORONTO, Dec. 23 /CNW/ - Davis + Henderson, Limited Partnership ("D+H"), a wholly-owned business of Davis + Henderson Income Fund (TSX: DHF.UN), today announced that it has entered into a binding agreement to acquire substantially all the assets of ASSET Inc. ("Asset") for a purchase price of $76 million payable in cash.  The acquisition is expected to close on or about January 18, 2011, subject to satisfaction of customary closing conditions. 

ASSET is Canada's largest provider of technology based asset recovery and insolvency management solutions to the Canadian financial services industry.  ASSET uses web-enabled platforms to manage, on behalf of lenders, the recovery process around loans provided for moveable property such as cars, trucks, boats and recreational vehicles.  ASSET also provides solutions to support real property recovery, unsecured debt recovery, insolvency process management, and personal property lien search and registration services.  Headquartered in Toronto, Ontario, ASSET employs approximately 240 people across the country. Blair Franklin Capital Partners Inc. acted as financial advisor to ASSET Inc. in this transaction.

Total annual revenues from the organization are expected to be less than 10% of D+H's consolidated annualized revenues.  While specific financial terms of the acquisition were not disclosed, the addition of ASSET is expected to provide accretion for D+H shareholders in 2011, on an Adjusted income basis ^{(1), (2)}.

Strategic Rationale

By acquiring ASSET, D+H furthers its strategy of being a leading provider of integrated solutions to the financial services industry.  D+H and ASSET serve substantially the same customers, including all of Canada's leading financial institutions, across different parts of the lending value chain.  Bob Cronin, CEO of D+H said, "Our acquisition of ASSET advances our objective of delivering an increasingly broad range of end-to-end lending solutions to our customers. We currently have several leading offerings related to the lending area, including technology for loan origination and underwriting, as well as certain loan servicing solutions, and with this acquisition we further deepen our capabilities across the broader lending spectrum."

This acquisition also advances D+H's strategic objective of diversifying revenues and cash flows. As well, the addition of ASSET is expected to provide some additional stability to revenue as its business tends to be economically counter-cyclical to certain other D+H service areas where volumes and revenues generally move directionally with the economy.       

Added Gerrard Schmid, President and COO of D+H, "ASSET has a solid reputation as a company that delivers value for its customers and we are very pleased to be adding this strong group of experienced and knowledgeable people to D+H.  Working together, we believe we can grow and enhance these market-leading solutions."

Acquisition Financing

D+H expects to fund the acquisition by drawing upon an extension of its existing credit facilities. D+H has a commitment from its existing lending syndicate to make available additional credit that would be drawn from both a revolving and term component of the extended facility. 

Conference Call

Davis + Henderson will discuss the acquisition of ASSET Inc. via conference call at 10:00 a.m. EST (Toronto time) on December 23, 2010. The number to use for this call is 647-427-7450 for local/International callers or 1-888-231-8191 for U.S./Canada callers. The conference call will be hosted by Bob Cronin, Chief Executive Officer, Gerrard Schmid, Chief Operating Officer and by Brian Kyle, Chief Financial Officer. The conference call will also be available on the web by accessing CNW Group's website www.newswire.ca/webcast/. For anyone unable to listen to the scheduled call, the rebroadcast number will be: 416-849-0833 for Toronto area callers, or 1-800-642-1687 for all other callers, with Encore Password 34034068. The rebroadcast will be available until January 6, 2011. An archive recording of the conference call will also be available at the above noted web address for one month following the call and a text version of the call will be available at www.dhltd.com.

Notes:

(1)

Adjusted income is a non-GAAP measure of internal performance similar to net income but calculated after removing the results of discontinued operations and the non-cash impacts of mark-to-market gains and losses on derivative instruments, amortization of intangibles from acquisitions, and future tax recoveries or expenses.

(2)

The acquisition of ASSET, which is expected to close on January 18, 2011 will be accounted for under International Financial Reporting Standards ("IFRS"), for which there are several differences from Canadian Generally Accepted Accounting Standards ("Canadian GAAP"). In general, the differences between accounting for business combinations under IFRS and Canadian GAAP are described in D+H's quarterly filings, including its third quarter report to unit holders.

About D+H

Davis + Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts, and personal, commercial, and other lending and leasing products. For more information about Davis + Henderson visit http://www.dhltd.com/. 

About ASSET Inc.

ASSET Inc. was founded in 1978 and is a leading Canadian provider of insolvency management and asset recovery solutions.   The company currently supplies various collection-processing technology and infrastructure services to all of Canada's 10 largest banks and financial institutions.  For further information, visit http://www.asset.net.

Caution Concerning Forward-Looking Statements

This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning Davis + Henderson's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the intended dividend policy of the Corporation are forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of Davis + Henderson to meet its revenue targets; general industry and economic conditions; changes in Davis + Henderson's relationship with its customers and suppliers; pricing pressures and other competitive factors. Davis + Henderson has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While Davis + Henderson considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business, or developments in Davis + Henderson's industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.

Risks related to forward-looking statements include, among other things, challenges presented by declines in the use of cheques by consumers; the Corporation's dependence on a limited number of large financial institution customers and dependence on their acceptance of new programs; stability and growth in the real estate, mortgage and lending markets; as well as general market conditions, including economic and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and Davis + Henderson does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.

For further information:

Davis + Henderson contact:

Bob Cronin
CEO
Davis + Henderson
[phone]
[email protected]

Gerrard Schmid
President & COO
Davis + Henderson
[phone]
[email protected]