Cash Converters is claiming a solid balance sheet after it extended a $150 million securitisation facility, following a turbulent time for the payday lender.
The Perth-based business said the securitisation facility with Fortress Investment Group would have expired at the ended of 2020, but the term will now end in December 2022.
The finance facility was signed in 2016 and is against Cash Converters International’s small and medium contract loan books and auto loan book.
Chief executive Sam Budiselik said it was significant in the current economic environment.
It comes after a tumultuous period in Cash Converters’ executive suite.
In February, Brendan White resigned as chief executive officer, with the company saying in an ASX announcement it was due to family commitments.
That came just more than a year after Mr White was picked for the role, in late 2018.
Mr Budiselik was promoted from the role of chief operating officer, where he had served since 2017.
In March, chief financial officer Michael Murphy was revealed to be leaving the organisation in September.
The announcement came only four months after his appointment, in November 2019.
Business News understands he has already departed.
Mr Murphy was replaced by Leslie Crockett.
The company posted a $19.4 million loss for the six months to December 2019, more than triple the loss for the prior corresponding period.
The securitisation deal would help keep the company’s balance sheet strong, Mr Budiselik said today.
The company also said data from the National Credit Providers Association showed short term credit applications approved in the first four months of the year had fallen 24 per cent compared to the same period in 2019.
“While early signs of recovery are visible, the ultimate impact of COVID‐19 is yet to be fully realised by Australia’s economy,” Mr Budiselik said .
“The scale of support provided by the government has been unprecedented and we have seen its impact in the softening of demand in our personal finance products.
“However, as Australia’s economy startsto emerge from ‘lock‐down’ we have seen the beginning of a recovery in lending volumes, and while we enter the new financial year with smaller loan books, we operate from a position of balance sheet strength.
“We anticipate that, as Government stimulus continues through the first half of this financial year, lending volumes will increase only moderately, and our loan book levels will therefore remain subdued.
“Looking further ahead to financial year 2022, we are confident that both lending volumes and our loan books will return in line with a wider market recovery.
“Our balance sheet, bolstered by the renewal of our Facility, and the prudent measures we have taken in recent months ensures that Cash Converters is ideally positioned now and into the future.”