Nicholas Financial Enters into a New $175 Million Senior Secured Credit Facility
08 Noviembre 2021 - 7:00AM
Nicholas Financial, Inc. (NASDAQ: NICK) – an industry leading
branch-based subprime auto lender focused on servicing the needs of
the local independent dealer – announced that on November 5, 2021
the company entered into a senior secured credit facility pursuant
to a loan and security agreement with Wells Fargo Bank, N.A., as
agent, and the lenders that are party thereto. The prior credit
facility pursuant to a credit agreement with Ares Agent Services,
L.P. was paid off in connection with entering into this credit
facility.
Pursuant to the credit agreement, the lenders have agreed to
extend to Nicholas Financial a line of credit of up to
$175,000,000. The availability of funds under the credit facility
is generally limited to an advance rate of between 80% and 85% of
the value of eligible receivables, and outstanding advances under
the credit facility will accrue interest at a rate equal to the
Secured Overnight Financing Rate (SOFR) plus 2.25%. The commitment
period for advances under the credit facility is three years.
Additionally, in the quarter ending December 31, 2021, Nicholas
Financial is planning to recognize approximately $1.9 million of
expenses associated with the origination of its prior credit
facility. Management believes that the long-term cost benefits
provided by the credit facility with Wells Fargo will outweigh this
one-time, non-cash impact.
“We are very appreciative of the relationship we have developed
with Ares and are grateful for their partnership throughout the NFI
turnaround over the last three years,” said Doug Marohn, President
and CEO of Nicholas Financial, Inc. “We are equally excited to be
partnering once again with Wells Fargo as the lead agent in this
new facility. The economics and terms of this deal represent a
significant turning point for Nicholas Financial and reinforce the
great strides our great company has made since 2018. Under this
credit facility we have solidified our access to capital and
certainty of execution at a cost of funds that reflects the quality
of our portfolio and soundness of our business model.”
The credit agreement and the other loan documents contain
customary events of default and negative covenants, including but
not limited to those governing indebtedness, liens, fundamental
changes, investments, and sales of assets. If an event of default
occurs, the lenders could increase borrowing costs, restrict the
ability to obtain additional advances under the credit facility,
accelerate all amounts outstanding under the credit facility,
enforce their interest against collateral pledged under the credit
facility or enforce such other rights and remedies as they have
under the loan documents or applicable law as secured lenders.
In connection with the refinancing and as required under GAAP,
Nicholas Financial expects to recognize a non-cash charge of
approximately $1.9 million in the quarter ending December 31, 2021,
representing the unamortized portion of debt origination costs
associated with its prior credit facility. Management believes that
the long-term cost benefits provided by the credit facility with
Wells Fargo will outweigh this one-time, non-cash
impact.
Cautionary Note regarding Forward-Looking
Statements |
This press release may contain various
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, that represent the
Company’s current expectations or beliefs concerning future events.
Statements other than those of historical fact, as well as those
identified by words such as “anticipate,” “estimate,” intend,”
“plan,” “expect,” “project,” “believe,” “may,” “will,” “should,”
“would,” “could,” “probable” and any variation of the foregoing and
similar expressions are forward-looking statements. Such
forward-looking statements are inherently subject to risks and
uncertainties. The Company’s actual results and financial condition
may differ materially from those indicated in the forward-looking
statements. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause
actual results or performance to differ from the expectations
expressed or implied in such forward-looking statements include the
following: the ongoing impact of the COVID-19 pandemic and the
mitigation efforts by governments and related effects on our
financial condition, business operations and liquidity, our
customers, our employees, and the overall economy; recently
enacted, proposed or future legislation and the manner in which it
is implemented; changes in the U.S. tax code; the nature and scope
of regulatory authority, particularly discretionary authority, that
may be exercised by regulators, including, but not limited to, the
Securities and Exchange Commission (SEC), Department of Justice,
U.S. Consumer Financial Protection Bureau, and individual state
regulators having jurisdiction over the Company; the unpredictable
nature of regulatory proceedings and litigation; employee
misconduct or misconduct by third parties; uncertainties associated
with management turnover and the effective succession of senior
management; media and public characterization of consumer
installment loans; labor unrest; the impact of changes in
accounting rules and regulations, or their interpretation or
application, which could materially and adversely affect the
Company’s reported consolidated financial statements or necessitate
material delays or changes in the issuance of the Company’s audited
consolidated financial statements; the Company's assessment of its
internal control over financial reporting; changes in interest
rates; risks relating to the acquisition or sale of assets or
businesses or other strategic initiatives, including increased loan
delinquencies or net charge-offs, the loss of key personnel,
integration or migration issues, the failure to achieve anticipated
synergies, increased costs of servicing, incomplete records, and
retention of customers; risks inherent in making loans, including
repayment risks and value of collateral; cybersecurity threats,
including the potential misappropriation of assets or sensitive
information, corruption of data or operational disruption; our
dependence on debt and the potential impact of limitations in the
Company’s amended revolving credit facility or other impacts on the
Company's ability to borrow money on favorable terms, or at all;
the timing and amount of revenues that may be recognized by the
Company; changes in current revenue and expense trends (including
trends affecting delinquency and charge-offs); the impact of
extreme weather events and natural disasters; changes in the
Company’s markets and general changes in the economy (particularly
in the markets served by the Company). All forward-looking
statements and cautionary statements included in this document are
made as of the date hereof based on information available to the
Company as of the date hereof, and the Company assumes no
obligation to update any forward-looking statement or cautionary
statement.
Contact: |
Irina Nashtatik |
NASDAQ: NICK |
|
CFO |
Web
site: www.nicholasfinancial.com |
|
Ph # (727)-726-0763 |
|
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