Activist Engaged Capital takes stake in debt collector PRA -sources

PRA

13/12/2023 13:00

By David French
       NEW YORK, Dec 13 (Reuters) - Engaged Capital has built a
more than 5% stake in PRA Group  PRAA.O  and is pushing the debt
collection company to improve its operations, cut costs and add
new experience to its senior leadership, sources familiar with
the matter said on Wednesday.
    Should the company not instigate changes to the activist
investor's satisfaction, Engaged is prepared to nominate new
directors to PRA's board, to be voted on at the annual
shareholder meeting next year, the sources said.
    Norfolk, Virginia-based PRA buys non-performing loans from
banks and other financial institutions and then seeks to collect
on the debt. It has a market value of around $800 million, after
its share price dropped 40% in 2023.
    Engaged, founded by Glenn Welling, would be the fifth
largest shareholder in PRA, LSEG data showed. 
    The sources spoke on condition of anonymity to discuss
confidential information.
    Engaged believes the company's poor stock performance in
recent times can be linked, in part, to a botched leadership
transition after Kevin Stevenson left as chief executive in
March, the sources said.
    Stevenson and current chairman Steve Fredrickson co-founded
PRA in 1996, before taking it public in 2002. Vikram Atal, a
former long-time Citigroup  C.N  banker and board member of PRA
since 2015, took over as CEO after Stevenson's departure.
    Engaged, the sources say, is pushing for the appointment of
a president or chief operating officer who could help oversee
changes including a more disciplined approach to the business.
    This would include improving the efficiency of its
collection practices through greater automation and use of
technology and some outsourcing.
    With a potential uptick in loan defaults, as interest rates
remain elevated after central banks' aggressive hiking programs,
Engaged has argued improving PRA's business now would allow it
to benefit from favorable market conditions, the sources added.

 (Reporting by David French in New York
Editing by Shri Navaratnam)
 ((davidj.french@thomsonreuters.com;))