TORONTO, March 29, 2012 /CNW/ - Xceed Mortgage Corporation [TSX: XMC] (the "Company") announced today that Xceed's Board of Directors (the Board) has created a Special Committee consisting of its independent board members, to consider future opportunities for the Company.
Xceed Mortgage Corporation was established in its current form in 2002, to originate, securitize and service, non-prime residential mortgages in Canada. During the period 2002-2007, it met with considerable success. Over that five year period, mortgages and other assets under administration grew from $284 million to $2.7 billion, total revenues grew at a compound rate of 41% per annum from $8.5 million in 2002 to $55.9 million in 2007, return on equity averaged 17% (including the year in which the Company went public and raised an additional $25 million of capital), and at its peak market capitalisation stood at just under $300 million.
The collapse of the third party asset backed commercial paper market and term securitization markets in 2007 destroyed the Company's primary funding sources. Since that date, the Company has focused on two primary objectives:
|i.||Developing its prime lending operations.|
|ii.||Ensuring an orderly repayment and refinancing of the $2.7 billion dollar portfolio of non-prime mortgages, and the consequent repatriation of the $44.4 million of note and other investments the Company made to facilitate the securitization of the aforementioned mortgages in the first place.|
As the Company nears the successful completion of these tasks, the risks attendant to its position as an investor and servicer in and for the various trusts involved has significantly diminished, and it is now less than a year away from finally discharging all of its fiduciary obligations in this regard. As a consequence, the Board has determined that now would be an appropriate time to consider the Company's future.
Examples of options (without limitation) available for consideration are as follows:
- Recommence its application to the Office of The Superintendant of Financial Institutions to become a bank.
- Seek out a sale, merger or other transaction involving the Company and/or its assets.
- Return capital to its shareholders in a tax effective way.
There is no a priori assumption the Board or the Special Committee has made, as to which of these (or any other) options is the preferable one. The objective of the Special Committee will be to consider all of the strategic options that are available to the Company, with a view to maximising shareholder value. There is also no guarantee as to the timing of implementation of any decision. The Special Committee has retained the services of Norton Rose Canada LLP to assist it in its deliberations.
About Xceed Mortgage
Xceed Mortgage Corporation, based in Toronto, is a Canadian provider of residential mortgages that it originates in Canada. The Company has approximately $1.0 billion of mortgages and other assets under administration. The Company's shares are traded on the Toronto Stock Exchange (TSX: XMC).
To find out more about Xceed Mortgage Corporation, visit our website at www.xceedmortgage.com.