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March 3, 2005
Medallion Announces Sale Of Business Lenders Division
NEW YORK, N.Y., March 3, 2005 -- Medallion Financial Corp. (NASDAQ: TAXI), a specialty finance company with a leading position servicing the taxi industry and targeted niche markets in commercial and consumer finance, announced today that it has signed a purchase and sale agreement to sell its Business Lenders division, one of the largest non bank SBA lenders in the U.S. The purchase price is estimated to be $20,000,000 in cash, which approximates book value and its current carrying cost. The division makes small business loans in more than 35 states across the U.S., and currently manages approximately $120,000,000 in loans.
Andrew Murstein, President of Medallion stated, "We are very happy to announce this transaction. This is the final step for us to sell off our underperforming divisions, and allows Medallion to reallocate the proceeds to higher return investment opportunities, letting us better focus on our core lending in taxi medallions and other niche products. The SBA 7(a) business has become a volume-oriented commodity type industry. Similar to our recent sale of our taxi top division less than 6 months ago, we are focusing on our more profitable lines and ones where we can be market leaders. The cash proceeds we expect to receive is all equity, as we have no debt associated with this division. Thus we can continue to buy back our stock, or invest the proceeds in our bank or other divisions and better leverage that equity to maximize our shareholder value."
The transaction is subject to Connecticut banking department and SBA approval, and is anticipated to close within 90 days.
Medallion Financial Corp. is a specialty finance company with a leading position in the origination and servicing of loans financing the purchase of taxicab medallions and related assets. The Company also originates and services commercial loans financing small businesses in other targeted industries, and provides financing for consumer recreational products. The Company and its subsidiaries have lent over $2 billion to the taxicab industry and other niche industries. As a regulated investment company (RIC), Medallion complies with the RIC requirement to distribute at least 90% of its taxable income to shareholders, and as a consequence, pays no corporate income tax on the amount of income distributed.
Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, costs, sales, operating profit, earnings and growth. Medallion's actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those factors discussed under the heading "Investment Considerations," in Medallion's 2003 Annual Report on Form 10K.
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