DENVER, May 25, 2016 /PRNewswire/ -- SquareTwo Financial Corporation ("SquareTwo" or the "Company"), a leader in the distressed asset purchasing market in the United States and Canada, today announced the early settlement of its previously announced exchange offer (the "Exchange Offer") and the implementation of its comprehensive recapitalization plan.
The early settlement of the Exchange Offer closed on May 24, 2016 following the Company's acceptance for purchase of $224,811,000 aggregate principal amount of the Company's 11.625% Senior Second Lien Notes due 2017 (the "2017 Notes"). At the early settlement, SquareTwo also entered into a supplemental indenture removing certain covenants and events of default from the indenture governing the 2017 Notes.
As part of the recapitalization, the Company also obtained a new $165 million credit facility consisting of a $105 million term loan facility and a $60 million revolving loan facility. In addition, the Company entered into a new $30 million credit facility underwritten by certain holders of the 2017 Notes, of which $15 million was funded upon the early settlement of the Exchange Offer and the remaining $15 million will be available to the Company to fund future portfolio acquisitions, subject to certain conditions.
As of the expiration of the Exchange Offer at 11:59 p.m., New York City time on May 24, 2016, $267,755,000 aggregate principal amount of the 2017 Notes, or 92.33% of the outstanding 2017 Notes, were validly tendered and not validly withdrawn pursuant to the Exchange Offer. Holders who exchange their 2017 Notes in the Exchange Offer receive, for each $1,000 principal amount of 2017 Notes, $650 principal amount of new term loans due 2019, including $30 principal amount relating to the delivery of consents before the consent payment expiration deadline on May 13, 2016, and $350 initial liquidation preference of a new series of preferred stock. The Company anticipates that it will accept for purchase all 2017 Notes that were not exchanged at the early settlement, subject to the participating holders providing certain information to Cortland Capital Markets Services LLC as administrative agent for the new term loans due 2019 on or before the final settlement date. The Company will separately announce the anticipated final settlement date.
"SquareTwo is well positioned with its proprietary operating model in the United States and Canada to continue performing as a leader in the distressed asset purchase and management industry. This recapitalization positions us for intelligent growth," said SquareTwo President and Chief Executive Officer Paul A. Larkins. "We have continued to make significant investments in our operating and compliance platforms, primarily through advanced analytics and technology, which position us for long-term success."
SquareTwo's legal advisor in connection with the recapitalization is Hogan Lovells US LLP and its investment banker is Evercore.
This press release is neither an offer to purchase nor a solicitation to buy any securities, nor is this press release an offer to sell or a solicitation of an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The Exchange Offer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") contained in Section 3(a)(9) of the Securities Act. The Company has not filed, and does not expect to file, a registration statement under the Securities Act or any other federal or state securities laws with respect to the preferred stock.
About SquareTwo Financial
SquareTwo Financial Corporation is a leader in the distressed asset purchasing industry. SquareTwo's primary business is the acquisition, management and collection of charged-off consumer and commercial accounts receivable that are purchased from financial institutions, finance and leasing companies, and other issuers in the United States and Canada. Our business model leverages our analytic expertise, technology platform, and in the United States, a unique combination of SquareTwo-owned call centers operating under the d/b/a name Fresh View Solutions and a network of regional law offices, also referred to as "branch offices," exclusively dedicated to SquareTwo.
This press release contains forward-looking statements within the meaning of the federal securities laws, including the anticipated final settlement of the Exchange Offer for the 2017 Notes and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include factors detailed in the Offering Memorandum and in SquareTwo's most recently filed Annual Report on Form 10-K. These forward-looking statements speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in SquareTwo's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except to the extent required by the federal securities laws.
Ralph Nowicki, CAO & VP of Investor Relations
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SOURCE SquareTwo Financial Corporation