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Davis + Henderson to Acquire Filogix - A Leading Provider of Mortgage and Real Estate Technology in Canada - for Approximately $212.5 Million.

Strategically Aligned Acquisition Provides Davis + Henderson with Meaningful Additional Business Platform

Attention Business Editors:
TORONTO. May 18, 2006/CNW/ - Davis + Henderson, Limited Partnership (“Davis + Henderson”), a wholly-owned business of Davis + Henderson Income Fund (TSX: DHF.UN), today announced it has entered into an agreement to acquire all of the outstanding shares of Filogix Holdings Inc. (“Filogix”) for an aggregate purchase price of approximately $212.5 million. Closing of the acquisition is expected to occur on or about June 15, 2006 subject to the satisfaction of customary closing conditions.
Filogix is the leading provider in Canada of information and transaction technology for the residential mortgages and real estate markets. Its primary customer groups are mortgage intermediaries such as mortgage brokers and mortgage lenders’ in-house sales forces (collectively, “Intermediaries”), residential mortgage lenders, and real estate agents and boards. Its mortgage networks enable Intermediaries to electronically manage customer data and to submit mortgage application information to lenders and for lenders to receive application information and to reply back to the mortgage intermediaries. Further, Filogix provides additional technology solutions for mortgage lenders to facilitate the underwriting and processing of mortgages. Additionally, Filogix delivers services to real estate boards and their agents through provision of dedicated access to multiple listing data and other related services. Its electronic platforms also connect with many other parties involved in the real estate and mortgage markets. In the mortgage sector, most of the sales generated by Filogix represent fees from lenders for origination and underwriting services based on a percentage of the funded mortgage amount.

Acquisition Rationale

  • The acquisition builds on Davis + Henderson’s strategy of being a leading service provider to the financial services marketplace. With this acquisition, we deepen our relationships with current customers while also adding important new relationships.
  • The Filogix business is well positioned to serve growing segments of a growing mortgage market.
  • The acquisition adds a meaningful additional platform to Davis + Henderson’s overall business, providing additional revenue diversification.
  • Approximately half of all residential mortgage funding in Canada is originated within the Filogix network.
  • Filogix has an experienced and proven management team that has agreed to continue in their leadership roles within the business.
  • The addition of Filogix is expected to be accretive to cash flows available for distribution per unit in its first full financial year as part of Davis + Henderson.
  • The Fund expects to continue its conservative distribution policy and maintain its monthly distributions at the current rate of $0.1250 per unit per month ($1.50 annualized) with the ongoing objective of delivering stable and growing distributions per unit.
  • The Fund’s financial leverage is expected to remain low with a Debt to EBITDA(1) ratio of approximately 1.35 times.

Said Bob Cronin, CEO of Davis + Henderson: “The acquisition of Filogix is well aligned to our objective of being a leading service provider in the financial services marketplace in Canada. Filogix is a leading company in a growing market and their team has done an outstanding job in building the business and delivering value to their customers. We are very pleased that this experienced team will continue to lead Filogix in the next phase of its evolution.”

Said Yousry Bissada, CEO of Filogix, “We are delighted that Davis + Henderson has embraced our vision for the business as we seek to expand the value of the services we offer and further grow our operation. As the business transitions from its present financial owner, we are pleased that our new partner shares our culture of commitment to market leadership, serving customers and valuing employees.”

Headquartered in Toronto with offices in Calgary, London, Montreal and Vancouver, Filogix has 250 employees and its systems operate across Canada.

Related to mortgage lending services, Filogix provides:

  • an electronic service used by approximately 7,000 mortgage brokers and 2,500 members of lenders’ in-house sales forces to originate and manage mortgage related data;
  • network access to more than 70 mortgage lenders to electronically receive and reply to mortgage application transaction detail from mortgage intermediaries;
  • an electronic underwriting platform for a growing number of mortgage lenders as a means of automating the workflow associated with the mortgage process including activities relating to adjudication, underwriting, closing and funding; and
  • professional services related to the integration and customization of mortgage technology.

For real estate boards and real estate agents, Filogix provides network and system access used by approximately 12,500 real estate agents from approximately 35 real estate boards or associations. Services include provision of online information related to multiple listings within Canada and including forms and other services to help real estate agents better service their customers. The Filogix systems are deployed in more bureaus in Canada than is the case for any other system provider.

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