Managing the Financial Side of Commercial Fleets

Element Financial Closes $4.8B in Funding

December 23, 2015

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Toronto-based Element Financial Corp. has closed $4.8 billion in rated asset-backed security funding that will fuel the company's aggressive move into the U.S. fleet management business.

In addition to establishing the Chesapeake Funding II conduit, Element Financial has issued $1.5 billion in variable funding notes and is expected to close an addiitonal $1.8 billion in term notes by Dec. 31, the company has announced.

Following these issuances, Element will have $1.5 billion from Chesapeake Funding II to fund future growth in fleet assets. Interest rate spreads for these notes were in line with previously funded fleet ABS transactions. Proceeds from the notes will be used to repay a portion of Element's three-year term senior secured credit facility.

"By gaining early access to our new rated Chesapeake ABS conduit to permanently fund the U.S. fleet assets that we recently acquired from GE, we are ahead of schedule in bringing the funding costs attributable to these assets in line with the $90 million to $95 million in integration cost savings that we had earmarked for the GE fleet acquisition," said Steve Hudson, Element’s chief executive.

Chesapeake Funding II was established on the same structuring principles as Element's initial fleet ABS conduit Chesapeake Funding that has closed more than 17 offerings in the term market since 1999 and has issued more than $7.7 billion in ABS securities to private and public investors since 2003, including four offerings of more than $2.2 billion in 2009 in the wake of the financial crisis.

JP Morgan Securities acted as the sole structuring agent and lead arranger for these transactions with a syndicate of 14 lenders.

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