JG Wentworth Co (OTCMKTS:JGWE)
JG Wentworth Co (OTCMKTS:JGWE) shed more than two-thirds of its total market value after announcing it will file for bankruptcy protection. The filling will be the second in less than nine years as the specialty-finance company continues to struggle with huge debt levels. The company has reached an agreement with lenders who hold 87% of its aggregate principal amount outstanding under the company’s $449.5 million senior secured credit facility.
The stock’s underperformance hit new lows after a 77% drop in Friday’s trading session. The stock has shed more than 90% in market value since the start of the year.
JG Wentworth Co (OTCMKTS:JGWE) has since turned to Chapter 11 bankruptcy protection as it looks to enhance its financial flexibility and fortify its balance sheet. The company also remains confident that the bankruptcy protection will accelerate its long-term growth initiatives.
Under the terms of the agreement with lenders, JG Wentworth Co (OTCMKTS:JGWE) is to extinguish loans under the Credit Facility totaling $449.5 million. The company will secure a revolving credit facility of between $65 million and $70 million – to be supplied by one of the lenders.
The agreement will reduce the company’s annual debt from $32 million to less than $5 million. It will also deleverage the balance sheet from approximately 12.4x to less than 1.0x.
According to the Chief Executive Officer, Stewart Stockdale, the agreement is the best way to recapitalize the company and position it for future growth.
“We are proud to have a strong brand in the market that has proven it can serve as an umbrella to expand our business to additional products. The Company is having promising operational and financial performance so the deleveraging comes at an opportune time,” said Mr. Stockdale.
The agreement according to the CEO follows a period of stable operational performance depicted by growth in loan originations. Operational capacity has also improved thanks to various technology and process improvements.
This is not the first time that J.G Wentworth has sought bankruptcy protection as it tries to safeguard its future. In 2009, the company entered into an agreement with its lenders as it sought to reduce its debt load due to the collapse of the asset-backed securities market.
Separately, JG Wentworth Co (OTCMKTS:JGWE) will hold a conference call on November 14, 2017, to report its third quarter financial results.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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