REG - Non-Standard Fin - Update on Current Status and Regulatory matters

Non-Standard FinanceAnnouncement

28/09/2022 07:16

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RNS Number : 9163A  Non-Standard Finance PLC  28 September 2022

Non-Standard Finance plc

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

Update on Current Status and Regulatory matters

 

28 September 2022

 

·      This update provides a summary of the current status of the
Group. More detailed information is provided in the Unaudited Half Year
Results to 30 June 2022 announcement which is also published today.

·      Despite promising operational performance, the Group continues to
be loss making, and for the March 2022 and June 2022 quarter end covenant
tests, the loan to value ratio was higher than the level permitted under the
covenant. The Group, through negotiations with its lenders, has obtained a
short-term waiver which means the loan to value covenant will not be formally
tested, and therefore no covenant breach or event of default will arise, until
the Group provides its compliance certificates for the March 2022 and June
2022 quarter dates. The date on which the Group is required to supply these
compliance certificates has been extended until 5 October 2022, with a
mechanism for this date to be extended further with lender support.

·      In order to remedy the situation, a capital raise (the 'Capital
Raise') is needed. To enable a Capital Raise, certainty is needed as to the
extent of redress liabilities. The Directors have therefore decided to pursue
the use of a court-based process (the 'Process'), such as a scheme of
arrangement or restructuring plan, in relation to its redress liabilities. A
successful Process will allow the Group to proceed with its planned capital
raise. If successful, the proceeds of the Capital Raise will be used to fund a
cash pot which will be available to finance the payment of redress liabilities
to affected customers and to strengthen the Group's balance sheet and underpin
future growth. Prior to the Capital Raise, further short-term waivers from
lenders will be required and are likely to be dependent on positive progress
of the Process.

·      Although it is not expected that the Process will provide for
redress claims to be paid in full, the Directors believe that the Process is
in the best interests of customers with redress claims. Without the Process,
the Directors believe a Capital Raise would not be successful and therefore
insolvency is the most likely outcome, in which there would likely be no
payment of redress liabilities.

·      A key objective of the Process will be to treat all affected
customers equally.  Although the independent review of the Group's
branch-based lending division carried out in 2021 identified no systemic
issues requiring redress, as the branch-based and guarantor loans divisions
both trade out of the same legal entity, the Process will encompass potential
claims from both divisions in order to ensure equitable treatment of
customers.

·      The Group is actively engaged with the FCA, the FOS, as well as
Alchemy and the Group's lenders, regarding the Process. It has appointed an
independent chairperson to chair a committee of customers with redress claims,
who will review the terms of the Process on behalf of affected customers.

·      Further details of the Process will be announced in due course.
The Process will be subject to satisfying the statutory creditor approval
requirements and the sanction of the Court.

·      We are engaging with the FCA with respect to the business' plan
to rely on DISP 1.6.2R(2), pursuant to which, Everyday Loans is entitled to
place a temporary hold on the processing of customer complaints.

·      Plans for the Capital Raise remain subject to successful
completion of the Process and the continued support of Alchemy and other key
shareholders as well as the Group's lenders.

·      Without the successful completion of the Capital Raise, the Group
remains balance sheet insolvent and the Group's ability to remain a going
concern is subject to material uncertainties.  However, the Directors
continue to believe there is a reasonable prospect of resolving this position
through the Process and the Capital Raise.

·      The Directors of NSF plc are working with key stakeholders on an
alternative transaction to be implemented if the Process is successful, but
the ensuing Capital Raise is unsuccessful which would preserve the
branch-based lending business as a going concern.  In this scenario, it is
expected that the same cash pot would be available to finance the payment of
redress liabilities as if the Capital Raise had completed. However, there
would be a material risk of the Company and certain other members of the Group
entering insolvency and as a result there would be no recovery for the
Company's shareholders.

 

 

28 September 2022

 

 

 

 

 

 

 

For more information:

 Non-Standard Finance plc                               +44 (0) 20 3869 9020

 Jono Gillespie, Group Chief Executive Officer

 Sarah Day, Chief ESG Officer & Company Secretary
 H/Advisors Maitland                                    +44 (0) 20 7379 5151

 Neil Bennett

 Finlay Donaldson

 

 

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