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Excel Corp. Announces $4.4MMM Hybrid Financing With BlueAcre Ventures

July 08, 2014, 07:13 AM
Filed Under: Specialty Industries
Related: Term Loan

Excel Corporation, a fast growing U.S. merchant services provider announced that it recently completed a $4.4 million financing transaction with BlueAcre Ventures LLC ("BlueAcre"), including the sale of $100,000 of the company's merchant residual portfolio for cash of $2.8 million and performance-based payments of a further $400,000 over the next three years, combined with a $1.2 million, three-year term loan. The comprehensive, multipart transaction provided for the company's wholly-owned subsidiary, Payprotec Oregon LLC dba Securus Payments ("Securus") to repurchase $200,000 of monthly merchant portfolio residuals previously sold to E-Cig Ventures LLC ("E-Cig"), resulting in increased cash and expected net finance cost savings of approximately $0.6 million per year.

On June 30, 2014, the Company entered into a Settlement and Release Agreement with E-Cig, settling all amounts due and exercising its option to repurchase $200,000 of monthly merchant portfolio residuals previously sold under the Residual Purchase Agreement and related Option Agreement executed by Securus and E-Cig on January 28, 2014. Under the terms of the settlement, the Company paid $2.4 million in cash and issued a note to E-Cig for $300,000, payable in twelve equal monthly payments starting on October 1, 2014, at a six percent annual interest rate (the "Note"). Upon final payment of the Note, E-Cig shall surrender 1,000,000 shares of the Company's Common Stock originally issued to E-Cig in connection with the Company's purchase of E-Cig's 10% membership interest in Securus in April 2014.

Simultaneously with the settlement, the Company executed new financing arrangements with BlueAcre whereby Securus sold $100,000 of its monthly residuals for an immediate cash payment of $2.8 million, with the ability to receive additional cash payments totaling $400,000 over the next three years. BlueAcre also loaned $1.2 million to the Company under a promissory note bearing simple interest of 15% per year that may be reduced to as low as 11% per year (the "BAV Note"), such interest rate reductions based on the achievement of certain milestones with respect to signing new merchant customer applications. The BAV Note is secured by current residuals and may be prepaid by the Company anytime during the first twelve months, subject to minimum prepayment penalties. In connection with the sale of the monthly residuals and the issuance of the BAV Note, Securus entered into an ISO agreement whereby it agreed to sign new customers for merchant processing services with an affiliate of BlueAcre. The ability of the Company to receive the additional payments and interest rate reductions are tied to certain minimum performance criteria under the ISO agreement.

Excel Corporation, through its recently acquired wholly-owned subsidiary, Payprotec Oregon, LLC d/b/a Securus Payments is a single source provider for all types of merchant payment processing needs.

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