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Lender NSF shareholders may lose all in sale plan

Published 17/03/2023, 07:35
© Reuters.

(Reuters) - British lender Non-Standard Finance outlined plans to recapitalise itself by raising about 95 million pounds ($115.57 million) through a share sale that would wipe out the interests of existing stockholders.

Shares in the company fell 9.7% to 0.44 pence by 0832 GMT after its unsecured lending unit Everyday Lending on Friday launched a business rescue proposal to enable the capital raise.

The stock has fallen by more than 99% from its all-time high of 108 pence in 2015.

"Whilst this is, in a sense, only the end of the beginning, and significant additional work lies ahead over the coming months, the launch of the scheme is the first key step," CEO Jono Gillespie said.

If the equity raise or an alternative plan to transfer ownership to lenders fall through, NSF said it would have to file for administration.

The lender has spent months elaborating a scheme of arrangement to deal with rising complaints, after it announced plans to close its guarantor loans unit in 2021 and the liquidation of its home credit division a year ago.

The proposal, which has the backing in principle of its largest shareholder and its secured lenders, also involves exploring a cancellation of its stock listing, it said.

Top investor Alchemy Special Opportunities holds 29.9% of NSF, Refinitiv Eikon data shows.

NSF seeks to pay back 14 million pounds to compensate some of is customers under the rescue plan, but existing shareholders would lose what remains of the value of their holdings.

Creditors will vote on the scheme of arrangement on June 12.

Subprime lenders, which provide loans to people mainstream banks turn down, have faced regulatory scrutiny since having contributed to the 2007-8 global financial crisis.

Larger rival Vanquis Banking, formerly known as Provident Financial (LON:VANQ), exited the home credit market in 2021. Another guarantor lender Amigo has been struggling to get investor backing for a new lending business plan.

© Reuters. People walk with skyscrapers in the City of London financial district seen behind in London, Britain, March 16, 2023. REUTERS/Toby Melville/File Photo

($1 = 0.8220 pounds)

(This story has been corrected to remove references to NSF as a doorstep lender. NSF closed its home credit unit in 2022 and is now a branch-based lender.)

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