With reverse mortgage volume continuing to grow in Canada, HOMEQ Corporation announced its looking to raise capital to support its growing business.
HOMEQ has filed a short form base shelf prospectus with the securities regulatory authorities of Canada to issue up to a total of $150 million of common shares, preferred shares and convertible securities, from time to time over the next 25 months.
Additionally, its wholly-owned subsidiary, CHIP Mortgage Trust, has filed a short form base shelf prospectus with the securities regulatory authorities of Canada to issue up to a total of $750 million of medium term notes from time to time over the next 25 months. The notes will be unconditionally guaranteed by HOMEQ.
“We are experiencing strong growth in our portfolio of reverse mortgages, and as our business continues to grow we will require access to a variety of sources of capital. The base shelf prospectus system allows us to cost effectively raise equity and debt as required”, said Gary Krikler, Senior Vice President and Chief Financial Officer of HOMEQ.
HOMEQ’s wholly owned subsidiary HomEquity Bank is Canada’s only national provider of reverse mortgages to homeowners aged 60 and over. As of March 31, 2010, the mortgage portfolio comprised approximately 7,400 reverse mortgages with an accrued value of $905 million, secured by residential properties across Canada worth approximately $2.5 billion. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.
Update: The WSJ reported yesterday CHIP Mortgage Trust raised $125 million from an issue of bonds that have a legal maturity date of August 2035, but are expected to mature August 2015.