CURO Group Holdings Corp. to Reduce Debt and Strengthen Financial Position Through Restructuring Support Agreement; Implements Prepackaged Restructuring Plan by Commencing Voluntary Chapter 11 Reorganization
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Insights
The announcement of CURO Group Holdings Corp's entry into a Restructuring Support Agreement (RSA) and subsequent Chapter 11 filing is a significant development that warrants a close examination of the company's financial health and the implications for its future operations. The expected reduction of debt by approximately $1 billion and the annual cash interest savings of around $75 million suggest a substantial alleviation of financial stress. This restructuring could potentially improve CURO's cash flow and provide a more stable platform for future growth.
However, the process of restructuring under Chapter 11 is complex and not without risks. While the company has secured $70 million in Debtor-in-Possession financing, which is a positive sign for liquidity in the short term, it is important to monitor how the restructuring will affect the company's long-term operational capabilities and market position. Investors should keep an eye on the speed and effectiveness of the restructuring process, as well as the company's ability to maintain its customer base and operational continuity during this period.
CURO's decision to file for voluntary relief under Chapter 11 of the United States Bankruptcy Code indicates a strategic move to facilitate a financial overhaul while continuing to operate its business. The support of more than 74% of creditors across various debt classes is indicative of a consensual restructuring effort, which is often preferable to contentious bankruptcy proceedings. It is important to note that the legal process will involve court approval for the Plan of Reorganization, which can impact the timeline and outcome of the restructuring.
The impact on CURO's common stockholders will also be a point of interest, as equity often faces dilution or devaluation in restructuring scenarios. The legal intricacies of the recognition proceedings in Canada under the Companies' Creditors Arrangement Act will also play a role in the international aspects of CURO's restructuring, potentially affecting cross-border operations and stakeholders.
The financial services industry, in which CURO operates, is highly competitive and sensitive to consumer confidence and regulatory changes. The company's ability to maintain its operational status and customer loans during the restructuring process is a positive signal to the market, potentially mitigating customer attrition and reputational damage often associated with bankruptcy filings. Moreover, the planned debt reduction and interest savings could provide CURO with a competitive edge by freeing up resources for investment in long-term growth initiatives, such as digital transformation or expansion of service offerings.
However, the success of these initiatives will largely depend on the company's post-restructuring strategy and how well it can adapt to the evolving financial landscape. Keeping abreast of CURO's strategic direction post-emergence from Chapter 11 will be essential for understanding its future market position and growth prospects.
RSA Supported by More Than
Filed Voluntary Chapter 11 Petitions to Implement Financial Restructuring Plan
Restructuring Plan Expected to Reduce Debt by
All CURO Branches Are Open and Operating As Usual; Customer Loans Unaffected
Secures
To implement the terms of the RSA, CURO and certain subsidiaries have filed for voluntary relief under Chapter 11 (the “Chapter 11 Cases”) of the United States Bankruptcy Code in the
The RSA sets forth terms for a consensual restructuring plan that is expected to reduce the Company’s debt by approximately
“Implementing this restructuring through a court-supervised process is the most efficient path to enable us to make changes to our capital structure that will allow us to continue to grow responsibly, execute with excellence and solidify the foundation of the Company,” said Doug Clark, Chief Executive Officer at CURO. “The significant support we have received from our lenders and stakeholders will allow us to move forward expeditiously as we continue to provide our customers with a variety of convenient, easily accessible financial services. We are confident in our ability to successfully exit this process as a stronger company with significantly less debt and we will be better positioned to achieve long-term profitable growth.
“We are grateful for the ongoing support of our vendors, landlords and business partners. With the changes that will result from this process, our future is bright.”
A steering committee comprised of funds managed by Oaktree Capital Management, LP. (“Oaktree”), Caspian Capital LP, and Empyrean Capital Partners (the “Ad Hoc Group”) led negotiation of the RSA on behalf of creditors. “I want to express my gratitude to the CURO team, both in the
CURO has filed a number of customary motions with the Bankruptcy Court to ensure that its operations continue uninterrupted while its balance sheet is restructured.
CURO has also received a commitment of up to
Given the broad support of lenders, CURO expects to receive Bankruptcy Court approval of a Plan of Reorganization and Disclosure Statement expeditiously and it expects to emerge from the restructuring process in no later than 120 days.
In connection with the Chapter 11 Cases, the applicable non-debtor subsidiaries of the Company also entered into waivers and amendments with the lenders under the Company’s existing loan receivables securitization programs. These accommodations ensure that such securitization programs remain in effect notwithstanding the filing of the Chapter 11 Cases and are able to continue, with certain negotiated modifications, following the Company’s emergence from Chapter 11.
Additional information regarding the Company's court-supervised process is available at CURO's restructuring website, https://dm.epiq11.com/Curo.
Court filings and other information related to the proceedings are available on a separate website administered by the Company’s claims agent, Epiq, at https://dm.epiq11.com/Curo, by calling Epiq toll-free at (877) 354-3909 (or (971) 290-1442 for calls originating outside of the
Akin Gump Strauss Hauer & Feld LLP is serving as legal counsel to the Company, Cassels Brock & Blackwell LLP is serving as Canadian legal counsel to the Company, and Oppenheimer & Co. Inc., is serving as investment banker to the Company. Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP are serving as legal counsel to the Ad Hoc Group, and Houlihan Lokey Capital, Inc. is serving as financial advisor to the Ad Hoc Group.
About CURO
CURO Group Holdings Corp. (OTC: CURO) is a leading consumer credit lender serving
Forward-Looking Statements
This press release contains forward-looking statements. 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 RSA may be terminated by certain of its parties if specified milestones are not achieved, amended or waived, or if certain other events occur, the ability to obtain relief from the Bankruptcy Court to facilitate the smooth operation of the Company’s businesses during the Chapter 11 Cases and other risks and uncertainties relating to the contemplated Chapter 11 Cases, including but not limited to, the Company’s ability to obtain approval of the Bankruptcy Court with respect to motions, the effects of the Chapter 11 Cases on the Company and on the interests of various constituencies, Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general, the length of time the Company will operate under the Chapter 11 Cases, risks associated with third-party motions in the Chapter 11 Cases, regulatory approvals required to emerge from chapter 11, the potential adverse effects of the Chapter 11 Cases on the Company’s liquidity or results of operations and increased legal and other professional costs in connection with the Chapter 11 Cases, as well as other factors discussed in the Company’s filings with the
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Investors:
Email: IR@curo.com
Media:
Jude
Email: CURO-CS@collectedstrategies.com
Source: CURO Group Holdings Corp.
FAQ
What is the Restructuring Support Agreement (RSA) announced by CURO?
How much debt is the restructuring plan expected to reduce for CURO?
How much cash interest is CURO expected to save annually through the restructuring plan?
How much debtor-in-possession financing did CURO secure?