The big day is here for PowerBand Solutions (TSXV: PBX) shareholders. The company announced this morning that its leasing division, MUSA Auto Finance, LLC has secured lease financing from a federally chartered financial institution to the tune of an initial US$300 million. The financing agreement enables the company to begin leasing vehicles to US consumers, and thereby allows originations to begin today.
To be clear, PowerBand has stated firmly that “lease originations will begin today,” which is significant news for shareholders that have been waiting for the arrival of this news. With originations beginning, the company can begin earning revenues from the sale of vehicles on its proprietary platform that enables the buy, lease and finance of vehicles from a smartphone or other digital device, as easily as any other online commerce is conducted.
Lease originations by MUSA will begin in Texas and Florida, which are the second and third largest states by population in the US, with a combined population of roughly 50 million people. Originations will begin under what is referred to as the Forward Flow Purchase and Security Agreement with the undisclosed financial institution. Originations are expected to commence in California shortly as well.
PowerBand currently expects that once fully operational, MUSA will “far exceed its past peak performance,” via the addition of further finance and dealer partners. MUSA previously leased between 900 and 1,200 vehicles a month, at an average value of US$60,000 per vehicle.
The agreement is for an initial US$300 million in financing, which will be rolled out in three phases. Phase one commences immediately for $5 million, followed by phase two at $50 million and phase three at $250 million. Conditions are set for each phase included in the financing.
Once fully utilized, credit facilities will be securitized and then replenished to the original $300 million figure. Once nationwide rollout has been completed for the platform, PowerBand expects to securitize the $300 million facility “a number of times a year.”
Discussions with additional financial institutions for further facilities are also currently occurring.
PowerBand Solutions last traded at $0.25 on the TSX Venture.
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