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NewStar Acquires Asset-Based Lender

  • Acquired an established middle market, asset-based lender with a national origination franchise
  • Purchase includes loan portfolio with credit commitments totaling approximately $164 million and funded loans of $73 million
  • Talented team of industry veterans led by seasoned executives
  • Added four new regional offices, bolstering existing national direct origination franchise
  • Enhanced funding platform and lending capacity with a $225 million credit facility provided by DZ Bank
  • Consistent with strategy to build franchise of specialized commercial lending businesses
  • Expected to be accretive to earnings per share in 2011 with benefit of cost savings and accretion of discount

BOSTON, Nov. 1, 2010 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) announced today that it has acquired CORE Business Credit LLC ("CORE"), the asset-based lending business of CORE Financial Holdings LLC, a portfolio company of American Capital Strategies. The purchase price was approximately $25 million in cash, or approximately $22 million net of acquired cash. The transaction was structured as a purchase of the membership interests of CORE and will be treated as an asset purchase for tax purposes. The sale proceeds were used to repay $20 million of subordinated debt plus accrued interest and prepayment penalties and acquire the membership interests.    

As a result of the purchase, NewStar has acquired a portfolio comprised principally of revolving asset-based loans with credit commitments totaling approximately $164 million and outstanding balances of approximately $73 million as of closing. NewStar will also retain CORE's origination, underwriting, account management and operations staff to manage and grow the asset-based loan portfolio.

CORE provides asset-based loans to middle market companies nationwide. Asset-based loans are typically structured as revolving lines of credit to fund working capital needs and term loans to fund permanent working capital and long-term assets for businesses operating across a wide range of industries. Advances under the credit facilities are generally governed by a borrowing base that defines eligibility criteria and advance rates for different classes of working capital assets. Lending arrangements also typically include strict controls and reporting requirements, including dominion over borrowers' cash and discretion to amend eligibility and advance rates based on the results of regular field audits and inventory appraisals. 

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