Atlanticus Closes $60 Million Principal Amount of 9.25% Senior Notes Due 2029 in Add-On Offering

Rhea-AI Summary

Atlanticus Holdings (NASDAQ: ATLC) has successfully closed a $60 million add-on offering of 9.25% Senior Notes due 2029. The offering, which included a $5 million exercise of the underwriters' option, resulted in net proceeds of approximately $56.5 million after deducting underwriting costs. These Additional Notes will trade under the symbol 'ATLCZ' on Nasdaq and are expected to be fungible with the previously issued $57,250,000 Existing Notes.

The company plans to use the proceeds to redeem a portion of Class B preferred units issued by a subsidiary and/or for general corporate purposes. The offering was made through an effective shelf registration statement and was managed by B. Riley Securities, Janney Montgomery Scott, Lucid Capital Markets, and William Blair & Company as book-running managers.

Positive

• Successful closing of $60 million add-on offering of 9.25% Senior Notes
• Net proceeds of approximately $56.5 million after deducting underwriting costs
• Additional Notes expected to be fungible with Existing Notes for U.S. federal income tax purposes
• Potential redemption of Class B preferred units, which could improve capital structure

Negative

• Increased debt load with the issuance of $60 million in Additional Notes
• Higher interest expenses due to 9.25% interest rate on the new notes

Insights

Financial Analyst

Atlanticus Holdings 's successful closure of a $60 million add-on offering of 9.25% Senior Notes due 2029 is a significant development for the company's financial structure. This move demonstrates strong investor confidence and provides Atlanticus with additional capital for strategic initiatives.

The key points to consider are:

• The offering's net proceeds of approximately $56.5 million provide a substantial cash injection for the company.
• The 9.25% interest rate, while relatively high, reflects the current market conditions and the company's risk profile.
• The intended use of proceeds to redeem Class B preferred units issued by a subsidiary could potentially simplify the company's capital structure and reduce overall financing costs.
• The additional notes' fungibility with existing notes for tax purposes and interchangeable trading on Nasdaq (ATLCZ) should enhance liquidity for investors.

From an investor's perspective, this offering presents both opportunities and risks. The high yield may be attractive in the current low-interest-rate environment, but it also indicates a higher level of risk associated with the company. The successful completion of the offering, including the exercise of the underwriters' option, suggests strong market demand for Atlanticus' debt, which is a positive signal.

However, investors should closely monitor how effectively Atlanticus utilizes this capital to drive growth and improve its financial position. The company's ability to generate returns that exceed the 9.25% interest rate will be important for long-term value creation.

Market Research Analyst

Atlanticus' successful $60 million add-on offering of senior notes provides valuable insights into the current market dynamics for fintech companies. This move reflects several important trends:

• Investor Appetite for Yield: In a low-interest-rate environment, the 9.25% yield is attractive to investors seeking higher returns, even with increased risk.
• Growth in Inclusive Financial Services: Atlanticus' focus on enabling partners to offer more inclusive financial services aligns with the growing trend of financial inclusion, which is gaining traction among investors.
• Market Confidence in Fintech: The oversubscription of the offering (including the $5 million underwriters' option) suggests continued investor confidence in the fintech sector, despite recent market volatility.

For retail investors, this offering presents an opportunity to gain exposure to the growing fintech sector through a fixed-income instrument. However, it's important to understand the risks associated with high-yield corporate bonds, especially in a potentially rising interest rate environment.

The involvement of multiple underwriters, including well-known firms like B. Riley Securities and William Blair & Company, adds credibility to the offering. This could potentially attract a broader investor base and improve liquidity for the notes in the secondary market.

Looking ahead, investors should monitor how this capital raise impacts Atlanticus' competitive position in the fintech landscape and its ability to capitalize on the growing demand for inclusive financial services.

ATLANTA, July 26, 2024 (GLOBE NEWSWIRE) -- Atlanticus Holdings Corporation (NASDAQ: ATLC) (“Atlanticus,” “the Company”, “we,” “our” or “us”), a financial technology company that enables its bank, retail and healthcare partners to offer more inclusive financial services to millions of everyday Americans, today announced the closing of its previously-announced underwritten registered public add-on offering of its 9.25% Senior Notes due 2029 (the “Additional Notes”). The Company consummated the issuance and sale of a total of $60 million aggregate principal amount of the Additional Notes (the “Offering”), which included $55 million principal amount offered plus $5 million principal amount upon exercise of the underwriters’ option.

The Offering resulted in net proceeds of approximately $56.5 million after deducting underwriting discounts, commissions, fees and certain expense reimbursements to underwriters, but before deducting other expenses.

The Additional Notes constitute a further issuance of the Company’s 9.25% Senior Notes due 2029, of which $57,250,000 aggregate principal amount was previously issued (the “Existing Notes”). The Additional Notes have the same CUSIP number and trade interchangeably with the Existing Notes. The Company expects the Additional Notes to be fungible for U.S. federal income tax purposes with the Existing Notes.

The Company expects to use the net proceeds of this Offering to redeem a portion of the Class B preferred units issued by one of the Company’s subsidiaries and/or for general corporate purposes.

The Existing Notes trade, and the Additional Notes are expected to trade, on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “ATLCZ.”

B. Riley Securities, Inc., Janney Montgomery Scott LLC, Lucid Capital Markets, LLC, and William Blair & Company, L.L.C. acted as book-running managers for the Offering. A.G.P./Alliance Global Partners and Clear Street LLC acted as co-managers for the Offering.

Troutman Pepper Hamilton Sanders LLP acted as legal counsel to the Company. Duane Morris LLP acted as legal counsel to the underwriters.

The Offering of these Additional Notes was made pursuant to an effective shelf registration statement on Form S-3, which was initially filed with the Securities and Exchange Commission (the “SEC”) on May 10, 2024 and declared effective by the SEC on May 21, 2024. The Offering was made only by means of a prospectus and prospectus supplement. A copy of the prospectus and prospectus supplement relating to these securities may be obtained from the website of the SEC at http://www.sec.gov or by contacting: B. Riley Securities, Inc., 1300 17th Street North, Suite 1300, Arlington, Virginia 22209, Attn: Prospectus Department, Email: prospectuses@brileyfin.com, Telephone: (703) 312-9580.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Atlanticus Holdings Corporation

Empowering Better Financial Outcomes for Everyday Americans

Atlanticus’ technology allows bank, retail, and healthcare partners to offer more inclusive financial services to everyday Americans through the use of proprietary analytics. We apply the experience gained and infrastructure built from servicing over 20 million customers and $40 billion in consumer loans over our more than 25 year operating history to support lenders that originate a range of consumer loan products. These products include retail and healthcare private label credit and general purpose credit cards marketed through our omnichannel platform, including retail point-of-sale, healthcare-point of-care, direct mail solicitation, internet-based marketing, and partnerships with third parties. Additionally, through our CAR subsidiary, Atlanticus serves the individual needs of automotive dealers and automotive non-prime financial organizations with multiple financing and service programs.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You generally can identify these statements by the use of words such as “outlook,” “potential,” “continue,” “may,” “seek,” “approximately,” “predict,” “believe,” “expect,” “plan,” “intend,” “estimate” or “anticipate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include those risks described in the Company’s filings with the Securities and Exchange Commission and include, but are not limited to, risks related to the uncertain economic environment, particularly the impact of inflation, interest rates, labor availability and supply chains; the Company’s ability to retain existing, and attract new, merchant partners and funding sources; increases in loan delinquencies; its ability to operate successfully in a highly regulated industry; the outcome of litigation and regulatory matters; the effect of management changes; cyberattacks and security vulnerabilities in its products and services; and the Company’s ability to compete successfully in highly competitive markets. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, the Company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.

Contact:
Investor Relations
(770) 828-2000
investors@atlanticus.com

FAQ

What was the total amount raised in Atlanticus Holdings 's (ATLC) recent add-on offering?

Atlanticus Holdings (ATLC) raised a total of $60 million in principal amount through its add-on offering of 9.25% Senior Notes due 2029.

What are the net proceeds from Atlanticus Holdings 's (ATLC) recent note offering?

The net proceeds from Atlanticus Holdings 's (ATLC) recent note offering are approximately $56.5 million, after deducting underwriting discounts, commissions, fees, and certain expense reimbursements to underwriters.

How does Atlanticus Holdings (ATLC) plan to use the proceeds from its recent note offering?

Atlanticus Holdings (ATLC) plans to use the net proceeds to redeem a portion of the Class B preferred units issued by one of its subsidiaries and/or for general corporate purposes.

What is the trading symbol for Atlanticus Holdings 's (ATLC) newly issued Senior Notes?

The Additional Notes issued by Atlanticus Holdings (ATLC) are expected to trade on the Nasdaq Global Select Market under the symbol 'ATLCZ'.