Credit Corp Completes Fully Underwritten Institutional Placement; updates on Share Purchase Plan

CCP

Australia’s leading debt buyer and collector, Credit Corp Group Limited (ASX: CCP) has successfully completed its fully underwritten institutional placement which was announced on 1 April 2019.

Along with the institutional placement, the company had announced a non-underwritten Share Purchase Plan (SPP) to retail shareholders in Australia and New Zealand which aims to raise approximately A$10 million. The Proceeds of the offer will be used to enhance the strategic position of the Group. It would also accelerate the execution of the strategic expansion initiatives of the Group and also provide additional flexibility in the balance sheet of the group.

Due to the significant demand from new and existing institutional investors, the size of the Placement was increased from A$100 million to A$125 million. The additional proceeds will be used consistently with Credit Corp’s stated intentions in the initial announcement of 1 April 2019. The additional equity raising will reduce the gearing to around 17%, but the ROE is expected to remain above the 16-18% target range.

As a result of the Placement, the company will be issuing 6,112,470 New Shares at the offer price of A$20.45 per share. The new shares are expected to settle on 4 April 2019 and allotment is expected to occur on 5 April 2019.

As announced on 1 April 2019, the company will offer its eligible existing shareholders in Australia and New Zealand an opportunity to apply for new Credit Corp shares through a non-underwritten Share Purchase Plan (SPP), without paying brokerage fees. The SPP is targeting to raise A$10 million and is not underwritten. The New Shares which will be issued under the SPP will rank equally with existing the shares of the company.

On 1 April 2019, the company announced its market update for FY19, according to which, Credit Corp Group Limited is on its way to deliver strong growth in the earnings along with an increased investment as well as debt capacity positions of the Group for further growth.

Even though in the last two years, the core Aus/NZ debt buying operation reported a reduced investment, still it was able to perform well. The cash collection in FY19 is close to the record levels of FY18. The consumer lending segment has reported a growth in the new customer volumes where the settlements are almost 20% to that of FY2018. At present, the loan book has reached around $208 million, which is an indication that the segment growth outlook is improving in FY2020.

The announcement also highlighted the favourable US market condition. The increase in the investment along with the growth in the productivity capacity, has improved the medium-term outlook or the US debt buying segment. The announcement highlighted that there was an increase in the FY19 investment guidance based on the Purchased Debt Ledger (PDL) acquisitions and net lending.  As per the upgraded FY19 guidance, the company is expecting its PDL acquisitions to be in the range of A$210 – A$215 million and net lending to be in between A$55 – A$60 million.

Upon its request, the company’s securities were put on trading halt on ASX on 1 April 2019, till the time it releases the announcement on capital raising. The securities resumed trading today. At the time of writing, i.e., on 2nd April 2019 AEST 3:10 PM, the stock of the company is trading at a price of A$21.940, down 1.13% during the day’s trade with the market capitalisation of ~A$1.07 Bn.


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