DealNet Capital Corp. (CNSX:DLS) says that its One Dealer subsidiary, which offers financing and other services to HVAC dealers and their customers, has managed to secure a proposal for underwriting capital of $12 million from an unnamed Canadian bank for the consumer financial services arm of the business.
The company, which entered the heating, ventilation and air conditioning (HVAC) market last year, has been developing its One Dealer unit to provide a service offering that includes HVAC equipment financing, wholesale product supply, logistical support and marketing services. The plan was to provide a better customer experience by leveraging call centre time through DealNet's business process outsourcing unit.
In the financial services arm of the One Dealer business, the company said Wednesday that the "competitive" underwriting proposal will serve as the detailed basis for an ongoing relationship. The parties are working to finalize the agreement "as soon as practical".
DealNet said the unit, which manages finance contract origination, procurement and ongoing maintenance, is also in talks with "several other interested financiers", and is expecting to provide further updates as it procures additional sources of capital.
The financing arm has also been granted third party biller status with a utility that operates mainly in Ontario, giving the company the ability to invoice finance and lease payments as well as other One Dealer services on the homeowner's utility bill, guaranteeing more than 99 per cent collection on any payments due, according to DealNet's release Wednesday. This, said the company, creates "significant security" in the retail loan book due the ability to disconnect utility services if bills are not paid.
DealNet also updated investors with respect to One Dealer's home services arm, saying it has completed the initial development of the One Dealer Home portal, which is designed to aggregate marketing investments made by HVAC dealers to implement a targeted digital media strategy.
A series of HVAC dealer launch events are expected to start next month for One Dealer, which is working closely with what it confirmed as an "established North American HVAC equipment distributor" under a memorandum of understanding agreement. The events will aim to give dealers an opportunity to sign-up for all One Dealer services en masse.
"We are very pleased to provide this update regarding the considerable progress we have made to date and look forward to the launch of these innovative and complementary service offerings near term," said president Bob Cariglia in the statement.
DealNet is a merchant banking company focused on recurring revenue businesses, having recently geared its investments toward the business process outsourcing and consumer financing markets. It said it is continuing to look for acquisition opportunities in these markets.
Shares are trading at 20 cents on the Canadian National Stock Exchange, giving the company a market cap of just over $11.0 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.