How do you view this ? Is it beneficial to ECN shareholders?
Thanks for your insight.
We think it is a good deal for the company and better than what we expected (which was essentially no decision on the review). ECN gets a big cash influx, a new shareholder and Board member, and faster potential growth. The joint venture with Skyline should expand the company's reach into loans for manufactured homes and expand its client base over time. The $$ will provide a sounder financial footing and more flexibility for additional growth initiatives. The equity financing is being done at a 10%+ premium to the market price, and we think investors should respond favourably here. Yes, there is dilution but the deal will help solvency and growth potential. For the 2Q, EBITDA fell 4.7% to $24.5M and missed estimates of $35.3M. New originations rose 1.5% to $622M. Operating expenses declined 8%. EPS was nil vs an expected profit of 4c. Not great results but the strategic JV should override the quarter's importance.