ECN Capital Corp. and Skyline Champion Corporation announced they have entered into a share subscription agreement pursuant to which Skyline Champion has agreed to make an approximately $138 million equity investment in ECN Capital on a private placement basis in exchange for 33,550,000 common shares of ECN Capital and 27,450,000 mandatory convertible preferred shares, Series E of ECN Capital. Upon closing of the Private Placement, Skyline Champion is expected to beneficially own an approximately 19.9 percent interest in ECN Capital (assuming the conversion of all Convertible Preferred Shares).
In connection with the Private Placement, ECN Capital and Skyline Champion will form a captive finance company that will be 51 percent owned by Skyline Champion and 49 percent owned by Triad Financial Services, Inc. (Triad), a wholly owned subsidiary of ECN Capital. The captive finance company will provide a tailored retail finance loan program for customers and a new branded floorplan offering for Skyline Champion and its affiliates in the manufactured home finance space and will operate with services provided by Triad.
The captive finance company is expected to enable both companies to work more closely together to grow their respective businesses and create value for their stakeholders. Among other things, the captive finance company is expected to:
drive greater demand for product by providing broader and more attractive financing options and services for Skyline Champion’s customers;
enhance Skyline Champion’s turn-key homebuying solutions while magnifying the benefits of their digital and direct-to-consumer strategic investments; and
generate increased retail loan originations and floorplan balances, driving growth and scale efficiencies for Triad.
"We are pleased to announce this new and expanded partnership with Skyline Champion, a leading participant in the North American manufactured housing sector,” said Steven Hudson, Chief Executive Officer of ECN Capital. “This transaction represents the culmination of the strategic review process that we commenced earlier this year, and we are very excited by the significant growth opportunities that the establishment of the new captive finance company will bring to Triad. The concurrent equity and preferred share investments in ECN Capital also represent a strong endorsement of ECN Capital’s business model and the value of our platform.”
“We are excited to announce this new strategic collaboration with one of our long-standing business partners,” said Mark Yost, Skyline Champion’s President and Chief Executive Officer. “The partnership with Triad will help streamline the homebuying experience for our channel partners as well as the consumers of our homes. This will allow us to expand our ability to offer affordable housing solutions more efficiently while driving company-wide growth. The asset-light model of these financing solutions combined with the strength of our balance sheet allow us to partner with ECN Capital while continuing our investments in our longer-term commercial and operational initiatives. We are excited about the future and the benefits this investment will bring to both companies’ stakeholders.”
See the full release here.