Encore Capital Group, Inc. Announces Pricing of Upsized Senior Secured Floating Rate Notes Offering

Rhea-AI Summary

Encore Capital Group (Nasdaq: ECPG) announced the pricing of €415 million in senior secured floating rate notes due 2028, up from an initial €275 million offering. The notes will accrue interest at a rate tied to the three-month EURIBOR plus 4.250%. Proceeds will be used to redeem €400 million of existing notes due 2024 and cover related transaction costs. The company anticipates approximately $11 million in after-tax charges in Q4 2020. The offering remains unregistered in the U.S., thus not available to the general public.

Positive

• Upsized offering from €275 million to €415 million, indicating strong demand.
• Interest rate on new notes is lower compared to the existing 6.375%.

Negative

• Expected charges of approximately $11 million after tax in Q4 2020.
• Existing notes being redeemed have a higher coupon, indicating cost issues.

SAN DIEGO, Dec. 08, 2020 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (Nasdaq: ECPG) (the “Company”) today announced the pricing of its offering of €415.0 million aggregate principal amount of senior secured floating rate notes due 2028 (the “notes”) with a coupon of three-month EURIBOR (subject to a 0% floor) plus 4.250%, which was upsized by €140.0 million from €275.0 million, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to non-U.S. persons (within the meaning of Regulation S under the Securities Act).

The notes will be senior secured obligations of the Company, and will be fully and unconditionally guaranteed on a senior secured basis by substantially all material subsidiaries of the Company. The obligations of the Company and the guarantors will be secured, together with the Company’s other senior secured indebtedness, by substantially all of the assets of the Company and the guarantors. The notes will accrue interest at a rate equal to the sum of (i) three-month EURIBOR (subject to a 0% floor) plus (ii) 4.250% per annum, reset quarterly, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, beginning on April 15, 2021. The notes will mature on January 15, 2028 unless earlier repurchased or redeemed by the Company.

The Company intends to use the proceeds from this offering, together with cash on hand, to redeem in full the outstanding €400.0 million senior secured floating rate notes due 2024 that have a coupon of three-month EURIBOR (subject to a 0% floor) plus 6.375%, issued by Cabot Financial (Luxembourg) II S.A., a wholly owned subsidiary of the Company, and to pay certain transaction fees and expenses incurred in connection with the offering of the notes.

Upon completion of the offering and the use of proceeds in connection therewith, the Company expects to record related charges in the fourth quarter of 2020 totaling approximately $11 million after tax.

The offer and sale of the notes have not been, and will not be, registered under the Securities Act, and the notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes nor will there be any sale of the notes in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer of the securities will be made only by means of a private offering memorandum.

Forward-Looking Statements
This press release includes forward-looking statements, including statements regarding the completion, timing and size of the proposed offering, the intended use of the proceeds and the terms of the notes being offered. Forward-looking statements represent Encore’s current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, including market interest rates, the trading price and volatility of Encore’s common stock and risks relating to Encore’s business, including those described in periodic reports that Encore files from time to time with the U.S. Securities and Exchange Commission. Encore may not consummate the proposed offering described in this press release and, if the proposed offering is consummated, cannot provide any assurances regarding the final terms of the notes or its ability to effectively apply the net proceeds as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and Encore does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.

Contact Information

Bruce Thomas, Investor Relations
(858) 309-6442
bruce.thomas@encorecapital.com

FCA/ICMA Stabilization.

MiFID II professionals/ECPs-only – Manufacturer target market (MIFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID) has been prepared as not available to retail in EEA or the United Kingdom.

FAQ

What is the total amount raised by Encore Capital Group in its recent note offering?

Encore Capital Group raised €415 million in its recent senior secured note offering.

What is the interest rate of the new notes issued by Encore Capital Group?

The new notes will have an interest rate of three-month EURIBOR plus 4.250%.

How will Encore Capital Group use the proceeds from the note offering?

The proceeds will be used to redeem existing €400 million senior secured notes due 2024 and to pay transaction fees.

When do the new notes issued by Encore Capital Group mature?

The new notes will mature on January 15, 2028.

What charges does Encore Capital Group expect to incur from the note offering?

The company expects to incur approximately $11 million in after-tax charges in the fourth quarter of 2020.