Pioneer Credit Standstill Agreement
The SA provides, inter alia, that, subject to compliance with their conditions, senior financiers will not take any action regarding existing defaults for a standstill period until 14 October 2019, unless they are extended. Trouble is also growing on the other side of Australia. Brisbane-based debt tracking firm Collection House has negotiated a standstill agreement so that lenders Westpac and Commonwealth Bank cannot assert their rights in the event of default. It will continue at least until 30 September this year. The savior of West Australian debt collector Pioneer Credit has threatened to withdraw its support and end its deal to buy the company for $120 million, after claiming the company had missed milestones, broken agreements and failed to disclose information about the sale. Financing has been a key factor in pursuing growth opportunities by facilitating the purchase of PDPs. It was therefore important to consider the future of the company`s capital structure, as domestic availability of credit began to decline with the withdrawal of a number of Big Four banks from sector financing. In this case, companies have two ways to report impaired assets or purchased debt portfolios (PDPs). Prior to the listing, the company had sought expert advice from leading companies, including its public accountant, to decide on the acquisition cost maintained relative to fair value. Among the exits cited by Carlyle Group with Pioneer Credit are “the strategies implemented by the company between March and August 2019”, “the non-compliant disclosure of information to Carlyle before entering into the facility agreement” and “internal governance matters”. Pioneer Credit has entered into a “standstill agreement” with its key financiers at commonwealth bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).
The company, which has worked with Flagstaff Partners and Deloitte, also agreed not to pay dividends during the standstill agreement and to proceed with a “comprehensive recapitalization process.” It marks further turbulence for some players in the sector, with rival Collection House also being forced to negotiate a status quo agreement with the bankers. Pioneer Credit said the parties have ongoing discussions about the standstill time frame and the time it takes to implement Pioneer Credit`s preferred solutions, but during the current SA, no refund or penalty is required. It marks more darkness for a company whose CEO, Anthony Rivas, suddenly left last November. In February, Collection House suspended its shares, did not report financial results and warned that new user-friendly tactics could affect the value of large debt books. In fiscal 2019, the Company reported net profit after tax of $4.3 million compared to $17.6 million the previous year, taking into account the fair value per gain or loss of the previous year. Cash liquidity amounted to $US 118.5 million during this period. At the same time, the company and its Azure advisor had evaluated proposals for a change of control and the provision of financing following a non-binding indicative offer received by the company earlier this year. . .
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