TSX-listed Axis Auto Finance Inc. announced the completion of its previously disclosed sale of auto loan assets and related business operations for $78 million.
The transaction, initially detailed in October, included adjustments for changes in loan composition and fair market value of inventory since December 31, 2023.
A $2.5 million holdback by the buyers reduced the immediate closing payment. Proceeds from the sale were used to fully repay Axis’ outstanding senior debt.
The company also allocated funds to begin redemption payments for its unsecured convertible debentures.
The balance of the debenture redemptions is expected to be covered by the $2.5 million holdback and a forthcoming excise tax refund from the Canada Revenue Agency.
Axis plans to issue further updates as these payments are completed.
The redemption date for the debentures remains December 16, 2024, as announced on December 6, 2024. This redemption plan aligns with the company’s strategy to wind down its financial obligations following the asset sale.
The transaction marks the culmination of Axis’ efforts to restructure its business amid changing market conditions.
The company’s management circular from October 30, 2024, approved during the shareholders’ meeting on November 29, 2024, outlined that no funds are expected to be available for distribution to shareholders after creditor repayments.
The asset sale and subsequent debt repayment leave the company with no active business operations or substantial remaining assets.
With the completion of the sale, Axis has effectively exited the auto finance industry. The Toronto Stock Exchange is anticipated to initiate the delisting process for Axis’ common shares due to the company’s lack of ongoing business activities.
The delisting process will formally conclude Axis’ presence in the public market.
Axis’ decision to divest its auto loan assets reflects broader challenges in the non-prime lending sector, which has faced increasing regulatory pressures and market volatility.
The transaction provides a resolution for creditors but leaves shareholders without any anticipated return on investment.
The company’s management will continue to oversee the winding down process, including the fulfillment of outstanding financial obligations and regulatory requirements.
Further announcements are expected as Axis finalizes the debenture redemptions and other pending transactions.
The conclusion of this sale represents the end of Axis Auto Finance’s business operations and signals a significant shift in the landscape of non-prime auto lending in Canada.
