On September 30, 2015, Element Financial Corporation (TSX: EFN) completed its US$8.6 billion acquisition of GE Capital’s fleet management operations in the United States, Australia, New Zealand and Mexico. Element had previously acquired the Canadian operations of GE Capital’s North American fleet management business in June of 2013. With the completion of the acquisition, Element’s total assets increased to approximately C$22 billion.
The GE fleet acquisition was funded, in part, from Element’s C$2.8 billion prospectus financing in June comprising $2.04 billion of subscription receipts (for underlying common shares), $575 million extendible convertible subordinated debentures and $172.5 million of Series G rate reset preferred shares. The equity financing was the third largest bought deal in Canadian capital markets history. The financing was largely unprecedented in Canada as the subscription receipt offering was a “war chest” financing with no defined use of proceeds, but rather general transaction parameters that needed to be met in order to deploy the proceeds of the offering. The acquisition was also financed through establishment of a new expanded US$8.5 billion senior secured credit facility with Element’s lending syndicate.
The GE Capital fleet acquisition was led by Jim Nikopoulos, Element’s Senior Vice President and General Counsel, with assistance from Blake, Cassels & Graydon LLP and Cravath, Swaine & Moore LLP. The Blakes team comprised David Toswell, Shlomi Feiner, Tom Rowe, Rory ffrench, Andrew Clark, Jordan Knowles and Josh Whitford (M&A/corporate); Stephen Ashbourne and Chris Barker (securitization); Debbie Salzberger (competition); and Chris Van Loan (tax). The Cravath team comprised Erik Tavzel, David Perkins, Len Teti, Edward Reed, Paul Sandler and Fei Xu.
GE was represented by Weil, Gotshal & Manges LLP with a team led by J.P. Bernard. King & Wood Mallesons and Creel, García-Cuéllar, Aiza Y Enriquez, S.C. also advised GE.
Element was advised on European and Australia matters in connection with the acquisition by Herbert Smith Freehills with a team led by Alex Kay. Bell Gully advised Element on the New Zealand assets. Galicia Abogados (Humberto Pérez-Rocha) provided advice in connection with the acquisition of the Mexican assets.
The Blake, Cassels & Graydon LLP team advising Element on the C$2.8 billion prospectus financing comprised David Toswell, Mark Adkins, Shlomi Feiner, Michael Hickey, Stefania Zilinskas, David Colman and Joshua Whitford. The underwriting syndicate was represented by Osler, Hoskin & Harcourt LLP with a team comprising Mark DesLauriers, Desmond Lee, Rummy Basra and Justin Sherman.The Blake, Cassels & Graydon LLP team working on the syndicated credit facility for Element comprised Peter MacGowan, Niki Khatami and Jennifer Hancock. The lenders were represented by Dennis Wiebe of Dentons Canada LLP.