REG - Non-Standard Fin - Proposed Release of Debt and Directorate Change

Non-Standard FinanceAnnouncement

14/04/2023 07:00

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RNS Number : 1918W  Non-Standard Finance PLC  14 April 2023

Non-Standard Finance plc

('Non-Standard Finance', 'NSF' or the 'Company')

Update on Proposed Recapitalisation: Proposed Release of Debt and Directorate
Change

14 April 2023: Further to its announcement dated 17 March 2023 regarding the
launch of the Scheme and Proposed Recapitalisation, Non-Standard Finance
announces that it has agreed with its secured lenders (the "Lenders") the
provisional terms of a release of debt through a conversion into equity, as
part of the Proposed Recapitalisation which is conditional on the successful
completion of the Scheme.

In connection with the Proposed Recapitalisation, the Lenders have
provisionally agreed, subject to finalising detailed terms and formalising
requisite documentation, to release £71 million of secured debt in exchange
for new ordinary shares in NSF. As a result, it is anticipated the Lenders
would hold approximately 20% of NSF's enlarged issued share capital if the
proposed capital raise is successful. As at 31 December 2022, the Company had
total gross debt of £255 million.

As previously announced, the Proposed Recapitalisation also involves the
maturity date under the Group's secured debt facilities being extended from
August 2023 to June 2027. In addition, the facilities are expected to be
amended to have a reduced fixed interest rate of 5% with an additional payment
in kind element of 3% in 2025 and 4% from 2026 onwards, payable at maturity.

The Board welcomes the indicative proposal from its Lenders which would
substantially improve the Company's balance sheet following a successful
capital raise, underpinning the prospects for strong growth in NSF's ongoing
branch-branched lending business and a return to Group profitability.

Further to its announcement dated 13 February 2023, trading in the Group's
remaining operating division, Everyday Loans (branch-based lending) which sits
under Everyday Lending Limited ("ELL"), remains encouraging. The full year
2022 audit is underway and results will be announced later in April. The
following figures are therefore all unaudited. As previously reported, ELL's
net loan book grew 6.2% during the year to £167m as at 31st December 2022,
driven by a c20% increase in lending. Revenue grew broadly in line with the
loan book. Customer numbers increased slightly year-on-year to 66,500. The
collections performance of the business remains ahead of expectation and
delinquency performance has returned to historically normal levels. The
nature of IFRS 9 accounting means that the increase in lending has led to a
corresponding increase in impairment, alongside a further macroeconomic
overlay increase to reflect the anticipated future impact of the cost of
living crisis. As a result, impairment rates are gradually seeing a reversal
of the recent low levels, though remain below expectations.

Although the Proposed Recapitalisation will ensure the future of the Group and
the Everyday Loans business, it will materially dilute the interests of NSF's
existing equity holders, most likely to negligible value, unless they choose
to participate in the equity raise.

The Group reminds Shareholders that if the Scheme is sanctioned but the
Proposed Recapitalisation is unsuccessful, then the Alternative Transaction
will be pursued involving a transfer of the ownership of the Group's business
to the Lenders in exchange for the release of a portion of their secured debt
and the provision of a new lending facility, resulting in no return for
current shareholders. In the event that the Scheme is not sanctioned by the
Court, or the Scheme is sanctioned but the Proposed Recapitalisation and
Alternative Transaction both fail, then the Group would remain insolvent and
the most likely outcome would be a Group-wide insolvency (most likely
administration), also resulting in no return for current shareholders.

Directorate Change

Non-Standard Finance announces that, having served on the Board for over 8
years, non-executive chairman Charles Gregson has decided not to stand for
re-election at the Company's 2023 Annual General Meeting (the "AGM"). Charles
will stand down from the Board following the AGM. At the AGM, Niall Booker
will stand for election as non-executive chairman to replace Charles.

Unless otherwise defined, capitalised terms within this announcement shall
have the same meaning as those contained within the Company's announcement
dated 17 March 2023, released at 7:39 am under RNS number 3475T.

This announcement contains inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018. The person responsible for
arranging the release of this announcement on behalf of Non-Standard Finance
plc is Sarah Day, Chief ESG Officer and Group Company Secretary.

 For more information:

 Non-Standard Finance plc                             +44 203 869 9020

 Jono Gillespie, Group Chief Executive Officer

 Sarah Day, Chief ESG Officer and Company Secretary
 Cenkos Securities plc                                +44 207 397 8900

 Nicholas Wells

 Ben Jeynes

 Callum Davidson
 H/Advisors Maitland                                  +44 207 379 5151
 Neil Bennett                                         +44 7900 000777
 Finlay Donaldson                                     +44 7341 788066

 

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