CURO Group Holdings Corp. Enters Forbearance Agreements and Waiver to Allow for Continued Constructive Discussions with Lenders and Stakeholders

Rhea-AI Summary

CURO Group Holdings Corp. (NYSE: CURO) announces forbearance agreements with majority note holders and a waiver of default events, providing financial relief until March 18, 2024. The agreements aim to strengthen the company's balance sheet and enhance long-term growth prospects.

Insights

Financial Analyst

The entry into forbearance agreements by CURO Group Holdings Corp. with a significant majority of its note holders and obtaining a waiver for certain defaults is a strategic financial maneuver that provides the company with immediate short-term relief from potential liquidity crises. This indicates that CURO may be facing challenges in meeting its debt obligations, which can be a red flag for its financial health and stability. The forbearance period until March 18, 2024, offers a window for the company to restructure its debts, potentially negotiate better terms, or find alternative financing solutions.

For investors, the implications are twofold. On one hand, the agreements suggest that lenders still have enough confidence in CURO's business model and future prospects to grant a reprieve rather than pushing for immediate repayment or collateral seizure. On the other hand, the need for forbearance points to underlying financial distress, which could impact the company's creditworthiness and stock valuation. Investors should closely monitor CURO's forthcoming financial statements and any strategic announcements for signs of improvement or further distress.

Debt Restructuring Advisor

CURO's engagement in forbearance agreements and the receipt of a waiver from certain defaults is a critical step in debt restructuring. This approach typically indicates that a company is taking proactive measures to avoid bankruptcy or default. The terms '1.5 Lien' and '2.0 Lien' refer to the priority of debt repayment in the event of liquidation, with 1.5 Lien being a hybrid tier that sits between first and second lien in terms of repayment priority. The '1.0 Lien Credit Agreement' represents the most senior debt, which has the first claim on any assets in case of default.

By negotiating these terms, CURO is effectively buying time to realign its financial strategy without the immediate threat of enforcement actions from creditors. The extended forbearance period suggests that the company's creditors are willing to negotiate, which is a positive sign for the company's ability to reach a comprehensive restructuring plan. Stakeholders should be aware that while this alleviates short-term pressure, it does not resolve the underlying debt obligations. The success of this strategy hinges on CURO's ability to improve its operational efficiency and cash flow to meet its renegotiated obligations post-forbearance.

Market Research Analyst

The consumer finance sector, in which CURO operates, is highly sensitive to economic cycles and consumer credit health. CURO's need to enter into forbearance agreements may reflect broader market challenges such as increased default rates, tightening credit conditions, or competitive pressures. The company's focus on omni-channel consumer finance indicates a diversified approach to customer engagement, which can be a strength in adapting to changing consumer behaviors and preferences.

However, the market will likely react to these developments with caution. While forbearance agreements provide breathing room, they do not address potential systemic issues within the company or the market at large. Investors and analysts will be watching for CURO's next steps, particularly how it plans to use the forbearance period to strategically invest in growth and operational improvements. Success in these areas could reposition the company favorably in the eyes of the market, but failure to do so could lead to further negative sentiment and potential long-term repercussions for its stock performance and market share.

CHICAGO--(BUSINESS WIRE)-- CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), an omni-channel consumer finance company serving consumers in the United States and Canada, today announced that it entered into forbearance agreements (the “Forbearance Agreements”) with the holders of approximately 84% of the outstanding aggregate principal amount of the Company’s 7.500% Senior 1.5 Lien Secured Notes due 2028 (the “1.5L Noteholders”) and the holders of approximately 74% of the outstanding aggregate principal amount of the Company’s 7.500% Senior Secured Notes due 2028 (the “2.0L Noteholders”) and that it obtained a waiver (the “Waiver”) of certain events of default from lenders holding more than 80% in amount of term loans the Company’s 1.0 Lien Credit Agreement (together with the 1.5L Noteholders and the 2.0L Noteholders, the “Lenders”).

Under the terms of the Forbearance Agreements and the Waiver, the Lenders have agreed not to exercise any remedies against the Company and its affiliates until March 18, 2024, subject to certain terms and conditions.

“Today’s agreements will allow us to continue constructive discussions with our lenders and other stakeholders as we work to strengthen our balance sheet and better position CURO for the long term,” said Doug Clark, CURO’s Chief Executive Officer. “We look forward to achieving the financial flexibility we need to invest in our growth as we continue to execute with excellence and build on our foundation. We appreciate the support of our team and our business partners as we move forward.”

Additional details regarding the Forbearance Agreements and the Waiver are set forth in the Form 8-K filed by the Company with the SEC today, which includes the full text of the agreements. The Form 8-K is available on the SEC’s Edgar website as well as the Company’s website.

About CURO

CURO Group Holdings Corp. (NYSE: CURO) is a leading consumer credit lender serving U.S. and Canadian customers for over 25 years. Our roots in the consumer finance market run deep. We’ve worked diligently to provide customers a variety of convenient, easily accessible financial services. Our decades of diversified data power a hard-to-replicate underwriting and scoring engine, mitigating risk across the full spectrum of credit products. We operate under a number of brands including Cash Money®, LendDirect®, Heights Finance, Southern Finance, Covington Credit, Quick Credit and First Heritage Credit.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include assumptions about various matters, such as the Company’s continued discussions with certain of its lenders and other stakeholders and the outcome or timing of such process. In addition, words such as “estimate,” “believe,” “forecast,” “step,” “plan,” “predict,” “focused,” “project,” “is likely,” “guidance,” “expect,” “anticipate,” “intend,” “should,” “will,” “confident,” variations of such words and similar expressions are intended to identify forward-looking statements. The Company’s ability to achieve these forward-looking statements is based on certain assumptions, judgments and other factors, both within and outside of the Company’s control, that could cause actual results to differ materially from those in the forward-looking statements, including the risk that the Company will be unable to execute on a comprehensive financial restructuring and the risk that the Company’s discussions with its lenders and other stakeholders will be unduly delayed or unsuccessful, as well as other factors discussed in the Company’s filings with the Securities and Exchange Commission. These projections, estimates and assumptions may prove to be inaccurate in the future. These forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. There may be additional risks that the Company does not presently know or currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual future results. The Company undertakes no obligation to update, amend or clarify any forward-looking statement for any reason.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240301621058/en/

Investor Relations:

Email: IR@curo.com

Source: CURO Group Holdings Corp.

FAQ

What is the ticker symbol for CURO Group Holdings Corp.?

The ticker symbol for CURO Group Holdings Corp. is CURO.

What agreements did CURO Group Holdings Corp. enter into?

CURO entered into forbearance agreements with 1.5L Noteholders and 2.0L Noteholders, as well as obtained a waiver of certain default events from lenders.

Until when are the remedies against CURO Group Holdings Corp. and its affiliates suspended?

The remedies against CURO and its affiliates are suspended until March 18, 2024, under the terms of the Forbearance Agreements and the Waiver.

Where can more details about the Forbearance Agreements and the Waiver be found?

Additional details about the agreements can be found in the Form 8-K filed by CURO Group Holdings Corp. with the SEC, available on the SEC's Edgar website and the company's website.