Shareholders to bankroll YBR's acquisitions
Yellow Brick Road will raise around A$42 million in equity capital to pay the cash component of its acquisitions of mortgage manager Resi Mortgage Corp and aggregator Vow Financial.YBR's two big shareholders, Macquarie Group and Pink Platypus (a subsidiary of Nine Entertainment Co), have each subscribed for 17.1 million shares of the 60 million shares being issued. At December 31 the company had 194.7 million shares on issue.YBR will pay cash of $28 million for Resi, plus $5.5 million of YBR shares and a further cash payment of $2.5 million at the first anniversary of the settlement, subject to earn-out conditions being met.Resi is a loan originator relying on a franchised network of 40 branches for distribution.YBR executive chairman Mark Bouris said in a statement: "The acquisition of Resi will provide YBR with enhanced scale and a national presence in its mortgage distribution channel. A complementary business model in mortgage origination and management and opportunities for growth of YBR's suite of financial services through the Resi network."Resi managing director Peter James said in a statement that the business would continue as a separate brand and maintain its current management structure.In May, YBR announced that it had entered into an implementation deed with Vow Financial and made offers to each of its 24 shareholders. The consideration was not disclosed. Vow provides services to more than 700 mortgage brokers and administers a portfolio worth about A$18 billion.And last month YBR entered into a new debt facility with Commonwealth Bank. It replaced a $5 million facility (with the CBA) with a $12 million bill facility limit.The new facility also gives it access to $1.8 million, to be used for a new ancillary overdraft, a bank guarantee or corporate credit card facility. The term of the facility is three years.Shareholders and the bank will be expecting YBR to integrate its acquisitions successfully and make the business perform. It lost $3.5 million in the six months to December and its accumulated losses amount to $22.5 million. However, revenue has been growing strongly and the company has forecast that it will deliver a first year of profit in 2014/15.