Medallion Financial Corp. Announces Completion of Amended and Restated Private Placement of $17.5 Million of Senior Notes

Rhea-AI Summary

Medallion Financial Corp. (NASDAQ: MFIN) has completed an amended and restated private placement of $17.5 million in senior unsecured notes to an institutional investor. This transaction increases the principal amount by $5 million, extends the maturity date from December 30, 2033, to June 30, 2039, and lowers the fixed interest rate from 9.00% to 8.875% per year. The notes have an investment grade rating of A- by Egan-Jones and will be used for general corporate purposes. The company emphasizes that these changes improve their balance sheet and capital structure, contributing to long-term shareholder value.

Positive

• Completed a private placement of $17.5 million senior unsecured notes.
• Increased the principal amount by $5.0 million.
• Extended the maturity date from December 30, 2033, to June 30, 2039.
• Reduced the fixed interest rate from 9.00% to 8.875% per year.
• Notes received an investment grade rating of A- by Egan-Jones.

Negative

• None.

Insights

Financial Analyst

Medallion Financial Corp.'s recent announcement regarding its private placement of $17.5 million in senior unsecured notes is intriguing for several reasons. Firstly, the extension of the maturity date from 2033 to 2039 indicates a strategic move to lengthen debt obligations, giving the company more time to manage repayments and potentially reinvest the capital into growth opportunities. Extending the maturity date can provide stability, especially in volatile markets.

Secondly, the reduction in the interest rate from 9.00% to 8.875% is a positive indicator of the company's improving creditworthiness. This is further evidenced by the investment grade rating of A- by Egan-Jones, which should help in lowering future borrowing costs. A lower interest rate translates to reduced interest expenses, providing a financial benefit that can enhance profit margins.

The incremental notes of $5.0 million suggest that the company possibly sees new investment opportunities or needs more liquidity for general corporate purposes. For investors, this move indicates the management’s proactive approach in managing debt and capital structure, which is vital for long-term financial health. Overall, these changes reflect a prudent financial strategy, likely enhancing the company’s financial flexibility and sustainability in the long run.

Market Research Analyst

This transaction speaks volumes about Medallion Financial Corp.'s current and future positioning in the market. By successfully securing a substantial investment while lowering the interest rate, the company demonstrates its solid standing and trust among institutional investors. The A- rating from Egan-Jones suggests confidence in Medallion's ability to honor its debt obligations, boosting its credibility.

The increase in principal amount also implies that there is an anticipated need for additional capital, which could be associated with business expansion or strategic investments. From an investor’s perspective, this implies potential growth and expansion. It’s essential to monitor how Medallion plans to utilize these funds and whether they can translate this added financial flexibility into tangible growth and profitability.

Furthermore, the commitment to lowering the interest rate while extending the maturity period suggests a favorable outlook on the part of investors regarding Medallion's long-term prospects. These moves not only provide immediate financial relief but also signify a more robust capital structure, which can be seen as a positive development for both short-term and long-term stakeholders.

Includes $5.0 Million of Incremental Notes, Extends Maturity, and Lowers Interest Rate

NEW YORK, June 25, 2024 (GLOBE NEWSWIRE) -- Medallion Financial Corp. (NASDAQ: MFIN, “Medallion” or the “Company”), a specialty finance company that originates and services loans in various consumer and commercial industries, along with offering loan origination services to fintech strategic partners, announced today that it has completed a private placement of $17.5 million aggregate principal amount of senior unsecured notes to a certain institutional investor, by amending and restating its existing 9.00% senior notes due 2033. The notes now mature on June 30, 2039, and bear a fixed interest rate of 8.875% per year, paid semi-annually commencing June 30, 2024. The notes received an investment grade rating of A- by Egan-Jones.

As disclosed via a Current Report on Form 8-K filed on December 28, 2023, the Company initially completed a private placement of $12.5 million aggregate principal amount of senior unsecured notes to a certain institutional investor. At that time, the notes were to mature on December 30, 2033, and bear a fixed interest rate of 9.00% per year, paid semi-annually, with the initial payment expected on June 30, 2024. On June 24, 2024, the Company completed a private placement amending and restating such 9.00% senior notes due 2033 with the same institutional investor. The primary changes were to increase the principal amount from $12.5 million to $17.5 million, or an increase of $5.0 million, extend the maturity date from December 30, 2033 to June 30, 2039, and decrease the fixed interest rate from 9.00% to 8.875%. The net proceeds will be used for general corporate purposes.

“We are pleased with the closing of our expanded private placement with an investment grade rating, which is another strong sign of the quality of our assets. We continue to build on the strength of our Company, improved balance sheet, and flexibility of our capital structure,” stated Andrew Murstein, President and COO of Medallion. “We achieved our three primary objectives – we increased the amount, extended the term, and lowered the rate. That is a great combination and will help us continue to deliver long-term shareholder value.”

About Medallion Financial Corp.

Medallion Financial Corp. (NASDAQ:MFIN) and its subsidiaries originate and service a growing portfolio of consumer loans and mezzanine loans in various industries. Key industries served include recreation (towable RVs and marine) and home improvement (replacement roofs, swimming pools, and windows). Medallion Financial Corp. is headquartered in New York City, NY, and its largest subsidiary, Medallion Bank, is headquartered in Salt Lake City, Utah. For more information, please visit www.medallion.com.

Forward-Looking Statements
Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and our growth strategy. These statements are often, but not always, made using words or phrases such as “will” and “continue” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These statements relate to future public announcements of our earnings, the impact of the pending SEC litigation, expectations regarding our loan portfolio, including collections on our medallion loans, the potential for future asset growth, and market share opportunities. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. For example, statements about the effects of the current economy, whether inflation or the risk of recession, operations, financial performance and prospects constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond Medallion’s control.  In addition to risks relating to the current economy, for a description of certain risks to which Medallion is or may be subject, including risks related to the pending SEC litigation, please refer to the factors discussed under the heading “Risk Factors” in Medallion’s 2023 Annual Report on Form 10-K.

Company Contact:
Investor Relations
212-328-2176
InvestorRelations@medallion.com

FAQ

What did Medallion Financial Corp. announce on June 25, 2024?

Medallion Financial Corp. announced the completion of an amended and restated private placement of $17.5 million in senior unsecured notes.

How much did Medallion Financial Corp. increase the principal amount by?

Medallion Financial Corp. increased the principal amount by $5.0 million.

What is the new maturity date for Medallion Financial Corp.'s senior unsecured notes?

The new maturity date for Medallion Financial Corp.'s senior unsecured notes is June 30, 2039.

What is the new fixed interest rate for Medallion Financial Corp.'s senior notes?

The new fixed interest rate for Medallion Financial Corp.'s senior notes is 8.875% per year.

What rating did the senior notes receive from Egan-Jones?

The senior notes received an investment grade rating of A- by Egan-Jones.