- Concurrent acquisitions of leading tax return preparation service provider (Liberty Tax) and
established consumer and small business lender (LoanMe), resulting in over 1.6 million combined
current customers across North America and establishing a
diversified financial services platform with immediate scale for NextPoint's consumer and small
business customers
- Cutting edge digital platforms and approximately 2,700 locations across North
America position NextPoint for an omni-channel roll-out of
small business loans and new products including mortgages
- Pro forma combined total enterprise value of US$643 million; 2021 pro
forma combined revenue of US$317 million; and 2021 pro forma combined
adjusted EBITDA of US$100 million
- US$25 million fully-committed PIPE led by hedge fund veteran Leon Cooperman, with participation by NextPoint's current and
post-closing management
- The acquisitions are fully supported by financing commitments and are expected to close in Q2 2021
TORONTO, Feb. 22, 2021 /CNW/ - NextPoint
Acquisition Corp. (TSX: NAC.U)
(TSX: NAC.WT.U)
("NextPoint"), a publicly traded special purpose acquisition corporation (SPAC), announced
today that it has entered into definitive agreements to acquire Liberty Tax and LoanMe. The combined
business, to be named NextPoint Financial Inc., will be led by industry veterans Brent
Turner, as Chief Executive Officer, and Andy
Neuberger, as Chairman.
Founded in 1997, and with over 1.6 million returns prepared annually, Liberty Tax is the third largest
institutional tax preparation service provider in the United States,
and the second largest provider of such services in Canada. Liberty
Tax's core products include tax preparation for individuals and small businesses, and tax-related
financial products such as prepaid debit cards and refund transfer products. Liberty Tax offers services
at its approximately 2,700 franchised and owned locations as well as through online solutions. Liberty
Tax is currently owned by Franchise Group, Inc. (NASDAQ: FRG), an operator of franchised and
franchisable businesses.
Founded in 2014, LoanMe is a well-established, tech-enabled, consumer and small business lender that has
originated over US$2 billion of loans to more than 340,000 borrowers. Its
current product suite includes consumer installment loan offerings of between US$1,000
and US$20,000, and small business and
merchant cash advance loans up to US$100,000.
The combination of Liberty Tax and LoanMe positions NextPoint to become a leading one-stop financial
services superstore destination for credit-challenged consumers and small businesses, a customer
demographic generally overlooked by traditional financial institutions. The combination of Liberty Tax
and LoanMe provides the anchor for a platform which NextPoint intends to expand with an array of
financial products and services. Through increased financial connectivity with its customer base,
NextPoint expects to strengthen and expand its customer relationships, grow its revenue sources and
drive value to its investors.
"We founded NextPoint to build a financial services platform for those that are underserved by
traditional financial institutions, and we have executed on that plan. The combination of Liberty Tax
and LoanMe, represents the first step, with immediate scale, towards achieving our goal. NextPoint's
founders and the leadership teams at both Liberty Tax and LoanMe are equally committed to fulfilling our
vision of becoming a one-stop financial services destination for our customers, and I am thrilled to
partner with this highly-driven team as we continue to execute on that vision," said Andy Neuberger, Chairman of NextPoint.
"With over 1.6 million combined customers today, our extensive distribution platform will enable us
to service main street consumers and small businesses both digitally and through our 2,700 franchised
and owned locations across North America. We believe our hard-working
customers deserve a personal and frictionless experience when addressing their financial needs, and
access to an appropriate suite of financial products and services. NextPoint intends to provide that
experience and access to help our customers reach the "nextpoint" in their financial goals. I
am tremendously excited, for both our customers and our investors, by the opportunities presented in
bringing together these two dynamic companies and management teams," said Brent
Turner, who will lead NextPoint as its Chief Executive Officer.
Investment Highlights
- Countercyclical business model and resilient year-round operations – diversified fee and
lending revenue: consumer lending (36%); tax preparation (26%); small and medium-sized enterprise
("SME") lending (16%); and other services/new product roll-outs (22%)
- Enormous market of underserved consumers and small business – more than 155 million U.S. tax
filings in 2019, growing consistently at 1.14% per year with 58% of filed returns using paid tax
preparation services; 30 million SMEs in the U.S., generally underserved by traditional financial
institutions
- Massive cross-selling opportunities – immediate impact of access to combined businesses' full
suite of products and services by 1.6 million legacy businesses' combined customer base; built in
customer base for new product and service offerings
- Significant growth potential – anticipated new products and services, built organically or
through acquisitions in a largely fragmented industry, include mortgages, point of sale lending,
lines of credit, mobile app subscription services, auto finance, mobile banking, debt resolution and
financial health services
- Robust and scalable technology platform – combined IT infrastructure investment of over US$21 million by acquired businesses during past two years;
multi-platform accessibility, instant loan funding, real-time processing and analytics, and
fully-integrated datastores, all hosted on premier, cloud-based platforms designed to serve
customers conveniently online, through mobile or in-person
- Strong risk management and compliance focused culture – robust underwriting capabilities to
drive attractive risk-adjusted yields developed through 340,000 loans funded by LoanMe
- Veteran leadership team –Liberty Tax and LoanMe senior management to lead operations and
growth under guidance of NextPoint board steeped in finance, retail and franchising expertise
Transaction Highlights
NextPoint will acquire Liberty Tax (the entirety of its business, which is operated in both the United States and Canada) at an
enterprise value of approximately US$252 million, US$182
million of which is payable in cash and the balance of which is
payable in NextPoint common stock equivalents and subject to adjustment.
NextPoint will acquire LoanMe at an enterprise value of approximately US$102
million, US$18 million of which is payable in cash,
approximately US$49 million of which is payable in NextPoint common stock
equivalents and with the balance of which reflects the assumption of existing corporate net debt at
LoanMe.
The cash portion of the purchase prices payable in the Liberty Tax and LoanMe transactions will be funded
with cash remaining on deposit in the escrow account holding NextPoint's IPO proceeds and, to the extent
necessary, any combination of the proceeds of the fully-committed US$25
million PIPE, and advances against the new, fully-committed US$200
million revolving credit facility, each discussed below.
The acquisitions, which are each subject to customary closing conditions, are expected to close
contemporaneously in the second quarter of 2021. The transactions remain subject to satisfaction or
waiver of certain customary closing conditions including among other things, the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the approval of the Toronto Stock
Exchange recognizing the transactions as NextPoint's qualifying acquisition, and the issuance of a
receipt for a final prospectus on behalf of Canadian securities regulatory authorities.
PIPE Transaction
NextPoint has received commitments to purchase US$25 million of NextPoint
common stock equivalents at a price of US$10 per share. The PIPE issuance
will occur in conjunction with the closing of the Liberty Tax and LoanMe acquisitions but is not a
condition to the closing of such transactions. The PIPE investment is led by hedge fund veteran Leon Cooperman, and includes Andy Neuberger,
Brent Turner and members of NextPoint's board of directors. PIPE proceeds
are available for NextPoint's general corporate purposes, including to fund the Liberty Tax and LoanMe
cash consideration, and to fund potential future acquisitions. The PIPE is subject to the approval of
the Toronto Stock Exchange.
New US$200 million Revolving Credit Facility
NextPoint has obtained a commitment for a new US$200 million revolving
credit facility, advances under which may be used for NextPoint's general corporate purposes, including
to fund the Liberty Tax and LoanMe cash purchase prices, and to fund potential future acquisitions.
Advisors
Jefferies LLC is acting as exclusive financial advisor to NextPoint and Canaccord Genuity Corp. is acting
as NextPoint's capital markets advisor. Brown Rudnick LLP and Blake, Cassels & Graydon LLP are
acting as legal counsel to NextPoint.
Investor Presentation
A replay of the conference call is available beginning February 22, 2021 at
3:00PM ET until March 8, 2021.
|
Replay toll
free:
|
(800) 585-8367
|
|
Replay
international:
|
(416) 621-4642
|
Additional Details
NextPoint has filed today an investor presentation that describes in more detail the transactions and the
business of NextPoint following closing. The presentation is available under NextPoint's profile at www.sedar.com.
Pursuant to the rules of the Toronto Stock Exchange NextPoint will file with the Canadian securities
regulatory authorities in each of the provinces and territories of Canada, except
Quebec, a non-offering
prospectus containing disclosure regarding the transactions and NextPoint assuming completion of the
transactions. The preliminary prospectus is expected to be filed in the first quarter of 2021. Investors
and securityholders may obtain a copy of the definitive agreements for the transactions and the
prospectus when filed under NextPoint's profile on the SEDAR website at www.sedar.com.
About NextPoint
NextPoint Acquisition Corp. is a special purpose acquisition corporation incorporated under the laws of
the Province of British Columbia for the purposes of effecting,
directly or indirectly, a qualifying transaction within a specified period of time.
About Liberty Tax
Founded in 1997, Liberty Tax is a nationwide tax return preparation and related services firm. In 2020,
Liberty Tax serviced over 1.6 million customers online and through approximately 2,700 franchised and
owned locations across the U.S. and Canada. Liberty Tax is currently
owned by Franchise Group, Inc. (NASDAQ: FRG), an operator of franchised and franchisable businesses.
About LoanMe
LoanMe is an established tech-enabled consumer and small business lender that has originated over US$2 billion loans on behalf of over 340,000 borrowers since inception.
Forward-Looking Statements
Some of the statements contained in this press release are forward-looking statements within the meaning
of U.S. securities law and forward-looking information within the meaning of applicable Canadian
securities laws (collectively, "forward-looking statements"). Forward-looking statements are
all statements other than those of historical fact, and generally may be identified by the use of words
such as "anticipate," "believe," "continue," "estimate,"
"expect," "future," "intend," "may," "model,"
"outlook," "plan," "pro forma," "project," "seek,"
"should," "will," "would" or other similar expressions that indicate
future events or trends. These forward-looking statements include, but are not limited to, statements
regarding estimates and forecasts of financial and performance metrics, projections of market
opportunity and market share, business plans and strategies, expansion and acquisition opportunities,
growth prospects and consumer and industry trends. These statements are based on various assumptions,
whether or not identified in this press release, and on the current expectations of NextPoint's
management and are not guarantees of actual performance. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as, and must not be relied on by any
investor as, a guarantee, assurance or definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and may differ materially from those contained in
or implied by such forward-looking statements. These forward-looking statements are subject to a number
of risks and uncertainties, many of which are beyond the control of NextPoint. Factors that could cause
actual results to differ materially from the results expressed or implied by such forward-looking
statements include, among others: the effect of economic conditions on the industries and markets in
which Liberty Tax and LoanMe operate, including financial market conditions, fluctuations in prices,
interest rates and market demand; the ability of the parties to successfully or timely consummate the
transactions, including the risk that any required regulatory approvals are not obtained, are delayed or
are subject to unanticipated conditions that could adversely affect the combined company or the expected
benefits of the transactions; risks associated with completion of the PIPE including investors'
commitment to fund their subscription amount; failure to realize the anticipated benefits of the
transactions; risks relating to the uncertainty of the projected financial information; the effects of
competition on future business; risks related to the organic and inorganic growth of future business and
the timing of expected business milestones; the amount of redemptions, if any, made by NextPoint's
shareholders in connection with the transactions; the potential adverse effects of the ongoing COVID-19
pandemic on business and the U.S. economy; declines or unanticipated changes in consumer demand,
possible departures from the combined company's senior management team; integration risks associated
with acquisitions; changes in applicable laws and regulations and the significant expense of operating
in a highly regulated industry; the combined company's ability to make payments on its indebtedness; and
those factors discussed in documents of NextPoint filed, or to be filed with Canadian securities
regulatory authorities. There may be additional risks that NextPoint does not know or that NextPoint
currently believes are immaterial that could also cause actual results to differ from those expressed in
or implied by these forward-looking statements. In addition, forward-looking statements reflect
NextPoint's expectations, plans or forecasts of future events and views as of the date of this press
release. NextPoint undertakes no obligation to update or revise any forward-looking statements contained
herein, except as may be required by law. Accordingly, undue reliance should not be placed upon these
forward-looking statements.
Non-IFRS Financial Measures
This presentation refers to certain financial measures, such as EBITDA, EBITDA Margin, Adjusted EBITDA,
Adjusted EBITDA Margin, Total Enterprise Value, Adjusted Net Income and Compound Annual Growth Rate
("CAGR") which are not measures recognized under IFRS and do not have a standardized meaning
prescribed by IFRS. As a result, these measures may not be comparable to similar measures reported by
other corporations. These measures are intended to provide additional information to the user and should
not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.
"EBITDA" is defined as net income adjusted to exclude interest, income taxes, depreciation and
amortization. "EBITDA Margin" is defined as EBITDA divided by total revenue. "Adjusted
EBITDA" is defined as net income adjusted to exclude interest, income taxes, depreciation,
amortization and non-cash or non-recurring items. "Adjusted EBITDA Margin" is defined as
Adjusted EBITDA divided by total revenue. "Adjusted Net Income" is defined as Adjusted EBITDA
tax-affected at an assumed tax rate of 25%. "Total Enterprise Value" is defined as market
capitalization plus total debt outstanding less cash on hand. "CAGR" is defined as the
compound annual growth rate in the corporation's revenue during the performance period. See
"Preliminary IFRS Reconciliation".
Certain Other Matters
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any offer or sale of securities in any jurisdiction where such offer,
solicitation or sale would be unlawful prior to registration or qualification under securities laws of
any such jurisdiction. The securities of NextPoint have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "US Securities Act"), or any state
securities laws and may not be offered or sold within the United States
or to, or for the account or benefit of, "U.S. persons," as such term is defined in Regulation
S under the U.S. Securities Act, unless an exemption from such registration is available.
SOURCE NextPoint Acquisition Corp.
For further information: Marc Charbin, [email protected],
416-467-5229