No More in Storage, Crossroads Acquired Capital Plus Financial

Crossroads Systems, Inc., an IP licensing company, closed the acquisition of Capital Plus Financial, LLC (CPF), provider of affordable housing and mortgage financing to underserved communities in Texas.

Capital Plus Financial is a certified Community Development Financial Institution (CDFI) and Certified B Corp whose mission is to support Hispanic homeownership in Texas. Over 85% of its mortgages have been made to low to moderate income and first-time homebuyers. With a track record of having injected over $250 million into underserved communities and populations in Texas, the company plans to grow its loan portfolio over the next decade as traditional portfolio lending institutions continue to exit the single family residential lending market.

As part of the transaction, CPF stockholders received $30.8 million in cash and an aggregate of 2,955,028 newly issued shares of Crossroads stock, representing 49.5% of Crossroads’ outstanding shares after giving effect to the closing. Crossroads’ fully diluted post-acquisition share count is 5,969,754. 

The cash portion of the purchase price is being funded with $24.2 million of new Crossroads debt plus $6.6 million of CPF cash on hand.

As of October 31, 2017, CPF held approximately $92 million in consumer mortgage notes receivables and had generated $3.4 million in 2017 pretax earnings.

Crossroads intends to report consolidated fiscal first quarter financial results in March 2018.

CPF will continue to be led by its existing management team and operate as a wholly-owned subsidiary of Crossroads.

CPF’s CEO, Eric Donnelly, and CFO, Farzana Giga, have replaced Richard K. Coleman, Jr. and Robert G. Pearse on Crossroads’ board of directors. Eric Donnelly has also been appointed Crossroads’ CEO.

Coleman, Jr., principal executive officer, Crossroads, said: “We are thrilled to announce the acquisition of CPF and I am excited to turn over the reins to our new CEO. Eric Donnelly and his team have built a profitable and growing social enterprise providing affordable housing and mortgage financing to low income and well deserving borrowers. The acquisition delivers on our commitment to create long-term shareholder value while delivering impact to underserved communities.”