HOMEQ Corporation Subsidiary Concludes Sale of Subordinated Medium Term Notes

Published in Business and Finance on Friday, October 23rd 2009 at 12:34 GMT by Market Wire
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TORONTO, Oct. 23 /CNW/ - HOMEQ Corporation (TSX: HEQ) ("HOMEQ") today announced that its subsidiary, HomEquity Bank, has concluded the sale of CDN$10,000,000 Subordinated Medium Term Notes (the "Notes") due October 31, 2014. The proceeds of the Notes have been used to satisfy an equivalent amount of Series 2007-1B Subordinated Medium Term Notes issued by HomEquity Bank's wholly owned subsidiary, CHIP Mortgage Trust, in 2007.

The Notes constitute subordinated indebtedness within the meaning of the Bank Act (Canada). They have a coupon of 9.71%, are unrated and qualify as Tier 2 B Capital of HomEquity Bank. The sale was conducted on a private basis advised by Scotia Capital Inc.

"We are extremely happy with the economics of this transaction", said Gary Krikler, Senior Vice President and Chief Financial Officer. "As a result of the transaction, HomEquity Bank has been able to increase its regulatory capital without either diluting its existing capital structure or increasing it's aggregate outstanding debt on a consolidated basis". HOMEQ estimates that the pro-forma Total Capital Ratio of HomEquity Bank at June 30, 2009, including the impact of the Notes, would have been in excess of 17%.

Forward Looking Statements

HOMEQ Corporation from time to time makes written and verbal forward-looking statements about business objectives, operations, performance, and financial condition, including the likelihood of HOMEQ's success in developing and expanding its business. These may be included in HOMEQ's and its predecessor's annual reports, regulatory filings, reports to shareholders, press releases, presentations and other communications. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of HOMEQ. Actual results may differ materially from those expressed or implied by such forward-looking statements. HOMEQ does not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time.

About HOMEQ Corporation

HOMEQ's wholly owned subsidiary HomEquity Bank is Canada's newest Schedule 1 bank. HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 60 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand. As of June 30, 2009, the mortgage portfolio comprised approximately 7,000 reverse mortgages with an accrued value of $833 million, secured by residential properties across Canada worth approximately $2.3 billion. HomEquity Bank's predecessor, Canadian Home Income Plan Corporation, has been the main underwriter of reverse mortgages in Canada since pioneering the concept in 1986.

HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ. Additional information on HOMEQ, including annual and quarterly reports can be viewed at [ www.homeq.ca ].

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HOMEQ Corporation Subsidiary Concludes Sale of Subordinated Medium Term Notes