First Investors Financial Services Group, Inc. announced that it will extend its warehouse credit facility to August 2012. Under the terms of the renewal, the company plans to reduce its commitment to $300 million from $350 million and said it intends to access the term securitization market on a more frequent basis.
The company also plans to sell 1,666,667 shares of common stock to investors at $7.50 per share. The purchases will occur in two tranches, the first of which closed today and covered 666,667 shares and gross proceeds of $5 million. The second closing is expected to occur in November, 2011 and will cover the remaining 1,000,000 shares for gross proceeds of $7.5 million.
The investors include JAM Special Opportunities Fund II, a private equity fund controlled by Seymour Jacobs, a director of the company and other affiliated investors. Proceeds from the sale will be utilized by the Company to fund growth in its portfolio of automobile receivables and for general corporate purposes. Falconbridge Capital Markets LLC served as an advisor to the Company on the transaction.
“First Investors is pleased to have reached an agreement with our investors to purchase $12.5 million in common stock," said Tommy Moore, Jr., President and CEO of teh company. "We will be utilizing the proceeds from this equity issuance along with our warehouse credit facility and the term securitization market to fund what we expect to be strong growth in our portfolio over the next several years."
Moore said that that the company is focused on accelerating the growth in both its indirect and direct portfolios while also pursuing other opportunities to acquire or originate attractive assets. For the fiscal year ended April 30, 2011, First Investors increased new loan originations by 182%, to $143.2 million, compared to the prior year period.