ITEM 2.01 Completion of Acquisition or Disposition of Assets
On February 25, 2019, in accordance with the provisions of the U.K. Insolvency Act 1986 and pursuant to a resolution of the boards of directors of CURO Group Holding Corp.'s (the "Company") U.K. subsidiaries, Curo Transatlantic Limited ("CTL") and SRC Transatlantic Limited (collectively with CTL, “the U.K. Subsidiaries”), insolvency practitioners from KPMG were appointed as administrators (“Administrators”) in respect of both of the U.K. Subsidiaries.
The effect of the U.K. Subsidiaries’ entry into administration was to place the management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. Accordingly, the Company will deconsolidate the U.K. Subsidiaries as of February 25, 2019 and will present the U.K. Subsidiaries as Discontinued Operations in the first quarter of 2019.
Upon deconsolidation of the U.K. Subsidiaries, the Company will recognize an additional non-cash loss in the first quarter of 2019 as remaining assets, liabilities and other comprehensive income are eliminated.
In connection with the aforementioned proceedings, the U.K. Subsidiaries (acting by the Administrators) entered into an agreement with Morses Club PLC to immediately sell the U.K. Subsidiaries’ business and certain assets for $11.3 million. The Company will not receive any of the proceeds from this sale. Pursuant to the terms of this transaction, all of CTL’s current employees transferred automatically to Morses on February 25, 2019, the date of sale.
In accordance with Article 11 of Regulation S-X, required pro forma financial information is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
ITEM 2.02 Results of Operations and Financial Condition
On January 31, 2019, the Company announced its financial results for the year ended December 31, 2018. As a result of not implementing the proposed Scheme of Arrangement (“SOA”) and placing the U.K. Subsidiaries into administration as described in Item 2.01 on this Form 8-K, the Company has revised its unaudited fourth quarter and year end 2018 financial results.
In connection with the proposed SOA that would have allowed the U.K. Subsidiaries to continue operations, the Company previously reported $57.4 million in total U.K. redress and related settlement charges in the fourth quarter of 2018, comprised of (i) $22.5 million of non-cash goodwill impairment charges, (ii) $4.6 million of fourth quarter redress claims and related costs, (iii) a $23.6 million fund to settle historical redress claims and (iv) $6.7 million of advisory and other costs that the Company anticipated would be required to execute the SOA. The Company has subsequently determined the above liability in connection with the proposed SOA did not exist at December 31, 2018 and as result, will not incur the $23.6 million to settle historical redress claims nor incur the $6.7 million advisory and other costs that were expected to be required to execute the SOA. However, the Company recorded an additional non-cash impairment charge in the fourth quarter of 2018 of approximately $5.1 million.
Exhibit 99.2 attached hereto contains the following tables that were included as Exhibit 99.1 in the Company's Current Report on Form 8-K, filed on January 31, 2019 (the “January 8-K”) announcing the Company’s financial results for the year ended December 31, 2018: Consolidated Summary Results, Condensed Consolidated Statements of Income, U.K. Segment Results, Consolidated Balance Sheets, and Fiscal 2019 Outlook Reconciliations (the “Tables”) and updated 2019 earnings guidance. The Tables and updated 2019 earnings guidance has been revised to reflect the impact of the revision above on the unaudited fourth quarter 2018 financial results and projected operating results for 2019. The Tables supersede and replace in their entirety the corresponding tables included in the January 8-K. The updated 2019 earnings guidance supersedes and replaces in its entirety the corresponding 2019 earnings guidance included in the January 8-K. No other tables or information in the January 8-K have changed, and all such other tables and information are incorporated by reference into Exhibit 99.2.
The information contained in this Item 2.02 and in the Exhibit 99.2 shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to this or such filing. The information in this report, including the exhibits hereto, shall be deemed to be “furnished” and therefore shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.