Hampton Financial Corporation to Acquire Oxygen Working Capital Corp.

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TORONTO, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Hampton Financial Corporation (“Hampton” or the “Company”, TSXV:HFC) today announced that it has entered into a non-binding letter of intent, dated as of October 31, 2023, to acquire Oxygen Working Capital Corp.(“OCC”), representing its first foray into the Commercial Lending sector. OCC is a specialized lender focused on the Commercial Factoring business with clients across Canada and prospects for continued growth. The transaction will be subject to various regulatory approvals and certain commercial conditions including remaining due diligence and the approval of Hampton’s Board.

In the transaction’s current format Hampton will acquire from the limited partners of Terra Cotta Strategic Capital - Income Limited Partnership (“Oxygen LP”) all of the issued and outstanding limited partnership units of Oxygen LP (having an aggregate value of $3,460,000 million), along with outstanding debt of OCC in the amount of $4,767,287 in exchange for approximately 14,200,000 subordinate voting shares of Hampton. The number of shares ultimately issued will be determined by a number of factors including the market price of Hampton shares at closing, and satisfactory completion of due diligence. Hampton will assume ownership of assets including loan receivables of approximately $15,657,622 and commercial liabilities of $8,798,118.

Subsequent to closing on the acquisition of the OCC business operations, Hampton will transfer all assets, liabilities, and operations to a newly formed subsidiary (“Newco”), in exchange for 14,184,978 Newco common shares. The former limited partners of Oxygen LP, the Lenders and certain others shall subscribe for 5,146,244 common shares of Newco at an issue price of $0.01 per share, leaving Hampton with a fully diluted 73.3% stake in the subsidiary company.

OCC has been a profitable and growing business since it was established in 2015. Under the leadership of its current management, which is expected to remain in place after closing, and as part of the broader Hampton business platform, the business is expected to contribute to the growth of Hampton’s consolidated revenues and earnings while benefiting from Hampton’s existing Capital Markets capabilities.

“This is a big step for Hampton as we begin the next phase of the Company’s development into a broader financial services group. We expect this transaction to be accretive to fully diluted earnings in the coming year,” said Hampton Executive Chairman & CEO, Peter Deeb.