Yellow Brick Road has increased its debt facility with Commonwealth Bank from $5 million to $12 million to help fund its acquisition of Vow Financial.
YBR will also have access to $1.8 million for a new ancillary overdraft, a bank guarantee and corporate credit card facility. The term of the facility is three years.
The expanding financial services company announced on the ASX yesterday that the increased facility will assist in funding two intended acquisitions, including that of Vow Financial, announced last month.
YBR announced on 6 May it had made an offer to buy 100% of Vow’s shares – valued at $17.6 million – and on 7 May 40% of shareholders had accepted.
Vow will add $18.5 billion worth of mortgages to YBR’s $2.7 billion loans under management – a boost of nearly 700%.
debt facility increases will also likely fund further acquisitions, as YBR executive chairman Mark Bouris
has said previously the company is in "exclusive talks" with a consumer product comparison website and lead generation group and a mortgage manager.
YBR also announced on the ASX it has signed a five-year strategic marketing agreement with Nine Entertainment, which lets the financial services company access Nine’s platforms – such as free-to-air TV stations, and Ticketek and ninemsn websites – for discounted rates.
The agreement means YBR’s affiliates – licensees, franchisees and brokers – can also access the cut-rate advertising with Nine, a YBR shareholder.
The deal is dependent on a successful Vow Financial takeover – due to be completed by 31 July – and does not affect YBR’s incumbent agreement with NEC, of which YBR still has around $4.2 million of pre-paid advertising to use.
Chairman Bouris said the advertising deal represents the company’s intention to build a leading non-bank financial services group.
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