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Announcement of Conditional Settlement of Ontario Class Action Suit
4/22/2008 12:00:00 AM
EDMONTON, April 22 /CNW/ - The Cash Store Financial Services Inc. ("Cash Store Financial") (TSX:CSF), formerly Rentcash Inc., announced today that, subject to court approval, it has settled a class action lawsuit commenced in 2004 for the restitution of brokerage fees and interest charged to customers of The Cash Store and Instaloans. The settlement is conditional on the terms of the settlement being approved by the court. The settlement does not constitute any admission of liability by Cash Store Financial.
Under the terms of the proposed settlement, Cash Store Financial is to pay, an aggregate of $1.5 million in cash and $1.5 million in credit vouchers to those customers of The Cash Store and Instaloans, outside of Alberta and British Columbia, who were advanced funds under a loan agreement and who repaid the payday loan plus the brokerage fees and interest in full ("the Class"). The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay brokerage fees and interest which may arise in the future through new loans advanced to the customer. The credit vouchers are fully transferable and have no expiry date. In addition, Cash Store Financial is to pay the legal fees and costs of the Class in an amount approved by the Court.
The class action lawsuit alleges that the brokerage fees, in combination with interest charged by The Cash Store and Instaloans on their customer loans, constituted interest charged in excess of the maximum rate prescribed by the Criminal Code of Canada.
Gordon Reykdal, Chairman and Chief Executive Officer of Cash Store Financial, stated that, "we are of the firm belief that our broker/lender business model complies with existing legislation and that our broker fees do not constitute interest. Nevertheless, we believe it is in the best interests of all of our stakeholders to settle this lawsuit so as to avoid further expenses and management distractions in dealing with the suit."
About The Cash Store Financial Services Inc. (formerly Rentcash Inc.)
Cash Store Financial is the only payday advance broker in Canada publicly traded on the Toronto Stock Exchange (TSX:CSF). Cash Store Financial operates more than 370 branches across Canada under two banners: The Cash Store and Instaloans.
The Cash Store and Instaloans act as brokers to facilitate payday advance services to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides a private-label debit card, The Freedom Card, and other ancillary products.
Cash Store Financial employs more than 1,500 associates and is headquartered in Edmonton, Alberta.
This press release contains forward-looking statements within the meaningof the United States Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities legislation. Generally, these forward-lookingstatements can be identified by the use of forward-looking terminology such as plans, anticipated, expects or does not expect, is expected, budget,scheduled, estimates, forecasts, intends, anticipates or does not anticipate,or believes, or variations of such words and phrases or state that certainactions, events or results may, could, would, might or will be taken, occur or be achieved. The Cash Store Financial Services Inc. (formerly Rentcash Inc.) is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements contained in this release. A description of these risk factors can be found in the Management Information Circular of Rentcash Inc. dated October 30, 2007 and filed on SEDAR (www.sedar.com) under The Cash Store Financial Services Inc.'s profile. The Cash Store Financial Services Inc. cannot assure investors that actual results will be consistent with these forward-looking statements and The Cash Store Financial Services Inc. assumes no obligation to update or revise the forward-looking statements contained in this release to reflect actual events or new circumstances except as required by applicable securities laws.
For further information:
Gordon J. Reykdal, Chairman and Chief Executive Officer, Cash Store Financial, (780) 408-5118; or
Michael J.L. Thompson, Senior Vice President and Corporate Secretary, Cash Store Financial, (780) 408-5595