TORONTO, May 25, 2020 /CNW/ – Axis Auto Finance Inc. (“Axis” or the “Company”), (TSXV: AXIS) Canada’s fastest growing publicly-traded sub-prime automotive finance company, is pleased to provide a shareholder update and announce the closing of a $6.25 million term loan with a Schedule 1 bank.
From the onset of the pandemic and the government mandated measures to combat the spread of the virus, Axis has supported borrowers through payment accommodations and/or deferrals. To date, 12.5% of active customer accounts have been impacted. The frequency of payment deferral requests declined significantly by the end of April.
While originations continued through the lockdown period, Axis adjusted its underwriting approach to account for the difficult economic environment. With automotive dealership showrooms largely closed across the country, origination volumes were low through the last two months. With the re-opening of dealerships in several provinces, Axis is seeing a significant increase in weekly application volume since mid-May.
Management actions taken
Axis management implemented necessary precautions to protect the well being of its employees and customers:
- Switched to a fully remote work model
- Intensified cleaning and hygiene practices
- Suspended all in-person meetings and corporate travel
- Implemented social distancing protocols across the organization
- Suspended repossessions to not create further financial burden for affected customers
Additional steps were taken to preserve liquidity, including cuts and/or deferrals of senior management compensation, employee lay-offs, suspension of Director fees and vendor supported payment deferrals. These steps allowed Axis to retain a strong liquidity position to date and position the company for a smooth return to normal operations upon the lifting of government restrictions.
Funding facilities and liquidity
Axis’ senior secured credit facility, which matured in March 2020 has been extended through July 2020 in light of the pandemic, with the intention to go through an orderly renewal process at that time. The company is in compliance with all terms and covenants of that facility as of the date hereof. In addition, Axis has closed on a $6.25 million term loan as described below. Together with unused amounts on its securitization facilities, Axis currently has over $40 million in available growth capital.
$6.25 million term loan under the Canadian Government Business Credit Availability Program
Axis has closed on a $6.25 million term loan (“Loan”) with a Canadian Schedule 1 bank (“Bank”). The Loan is backed by the Canadian Government under the Business Credit Availability Program (“BCAP”), specifically 80% of the principal of the Loan is guaranteed by Export Development Canada (“EDC”). The Loan bears interest at a rate of 4.00% per annum above the Bank’s Prime Lending Rate. Axis will also pay an EDC Guarantee fee of 1.8% annually of the Loan amount.
The initial term of the Loan is 12 months, but Axis may provide the Bank with a written request to extend the Loan maturity date by an additional 12 months no more than 90 days prior to the initial Loan maturity date.
Under the terms of BCAP, the proceeds of the Loan may not be used to refinance existing debt obligations, for non-scheduled term debt repayment, any shareholder contributions, repayment of shareholder loans, stock buy-backs, executive bonuses or increase in executive compensation while any balance of the Loan is outstanding and the EDC Guarantee is in place.
About Axis Auto Finance
Axis Auto Finance is a leading Canadian provider of alternative used vehicle financing options servicing roughly 30% of Canadians (Source: Equifax) that have credit scores in the non-prime range. 100% of all Axis auto loans report to the credit bureau, resulting in a significant improvement of the credit scores for the overwhelming majority of clients. These clients use Axis as a stepping-stone in their credit rebuilding journey and we are proud to be improving the lives of these Canadians. Supported by state-of-the-art, in-house developed risk analytics, Axis continues to be Canada’s fastest-growing publicly traded auto-financing company. Further information on the Company can be found at investors.axisautofinance.ca/.
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