Earn-A-Car Announces Completion of ZAR25 Million Capital Market Raise

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• Publié par: earn-a-car-inc
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• Langue: English

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Earn-A-Car Announces Completion of ZAR25

Million Capital Market Raise

PR Newswire

JOHANNESBURG, June 5, 2012

JOHANNESBURG

,

June 5, 2012

/PRNewswire/ --

Earn-A-Car Inc. (OTC:BB - ticker symbol EACR), ("Company"), announced today

that it has completed, through its wholly owned South African subsidiary, a

ZAR25 Million

(approximately

US$3million

) 3 year reducing balance capital

market raise in the South African bond market.

The Company intends to use up to

ZAR10 Million

to repay existing revolving

debt facilities, the majority of which is owed to Avis for vehicle purchases. The

balance of

ZAR15 Million

(approximately

US$1.8million

) will be used to

purchase just over 200 vehicles over the next four months. These will be added

to the Company's current fleet of over 450 cars bringing the fleet size to well

over 650 cars.

The AVIS debt repayment of approximately R6.5m (approximately

US$780k

)

will allow this newly increased total revolving facility of R13m (available on an

as and when basis) as announced on

May 10, 2012

, to again be used at a later

date. This should allow for a further 200 cars to be purchased once the capital

market loan is fully utilized.

John Storey, CEO and President of the Company, noted: "We are pleased to

have completed this capital raise on terms that are commercially competitive

and which will allow us to consolidate our debt currently reflected on our

balance sheet. The debt was fully subscribed for, proving the businesses' ability

to raise appropriately priced debt finance. This funding will allow the company

to be adding some 200 vehicles to the current fleet and free up our revolving

facilities for future use. Once the money is fully invested, which we anticipate

happening over the next four months, revenue for the current fiscal year

should improve by roughly

ZAR900,000

per month, or approximately

US$110

,

000 per month. We anticipate our internal ROI to remain constant at around

50% pre-tax.

Further, as soon as the new capital raised is fully invested we intend to utilize

the AVIS revolving credit line so as to continue to add to our fleet. This should

allow for the purchase of a further 200 vehicles in due course and provide

another opportunity to refinance. Should we be able to invest both the capital

raise and the AVIS revolving facility this financial year, our fleet size should

almost double by year end.

While the Company's management is always aware of the potential to over-

leverage, our business model lends itself naturally to financial leverage by

virtue of our operating margins. In any event, the Board has decided to

constrain senior debt to a prudent 60% of total assets and will ensure that

senior debt interest will not exceed 40% of EBIT.

Although there are no guarantees, management is confident that the Company

can access even more significant financing on an ongoing basis, in order to fuel

the growth of our Company which is entirely driven by customer demand. It is

our intention to continue to rapidly and substantially increase the size of our

fleet and our revenue stream, to fulfill the demand for our cars by individuals

who are unable to meet

South Africa's

stringent credit requirements for

traditional car finance. We remain positive that going forward, we can both

meet and significantly improve the quantum of profit the Company already

generates."

About Earn-A-Car Inc.

Earn-A-Car Inc., ("EAC") is the parent company of Earn-A-Car (Pty) Ltd., a South

African company wholly-owned by EAC, which provides mid to low-range

automobiles to individuals in

South Africa

with poor credit on a "rent-to-own"

basis. EAC's business model is structured to take advantage of the gap that

exists in the southern African market, where cars for personal and business use

are in high demand as a result of a lack of public transport infrastructure, but

where traditional bank financing is not an available option for people with low

credit ratings. All EAC's vehicles are all fitted with the latest in anti-theft

technology, as well as tracking and disabling devices which allow for its vehicles

to be retrieved immediately in the event of theft, or non-payment by the

customer. In EAC's recent 8K SEC Filings, EAC reported it had generated net

post-tax income of approx.

US$400,000

for their fiscal year ending

February

2011

, an improvement of 50% year-on-year, on gross sales of

US$2,138,000

.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks,

uncertainties and assumptions that, if they never materialize or if they prove

incorrect, could cause the Company's results to differ materially from those

expressed or implied by such forward-looking statements. All statements other

than statements of historical fact are statements that could be deemed

forward-looking statements, including any projections of earnings, revenue, or

other financial items, any statements of the plans, strategies, and objectives of

management for future operations, any statements concerning proposed new

products, services or developments, any statements regarding future economic

conditions or performance, statements of belief and any statements of

assumptions underlying any of the foregoing. These statements are based on

expectations as of the date of this press release. Actual results may differ

materially from those projected because of a number of risks and

uncertainties, including those detailed from time to time in the Company's

reports filed with the Securities and Exchange Commission. The Company

assumes no obligations and does not intend to update these forward-looking

statements.

Earn-A-Car Inc. is a US public company (OTC:BB - ticker symbol EACR).

For more information about Earn-A-Car (PTY) Ltd., please contact:

Mr. John Storey / Mr. Bruce Dunnington

Tel:

+27 (0) 11 880 0973

Fax:

+27 (0) 86 550 5919

[e-mail]

website:

http://www.earnacar.co.za