Non-Standard Finance PLC Update on Current Status and Regulatory matters (9163A)
September 28 2022 - 2:05AM
UK Regulatory
TIDMNSF
RNS Number : 9163A
Non-Standard Finance PLC
28 September 2022
Non-Standard Finance plc
('Non-Standard Finance', 'NSF', the 'Company' or the
'Group')
Update on Current Status and Regulatory matters
28 September 2022
-- This update provides a summary of the current status of the
Group. More detailed information is provided in the Unaudited Half
Year Results to 30 June 2022 announcement which is also published
today.
-- Despite promising operational performance, the Group
continues to be loss making, and for the March 2022 and June 2022
quarter end covenant tests, the loan to value ratio was higher than
the level permitted under the covenant. The Group, through
negotiations with its lenders, has obtained a short-term waiver
which means the loan to value covenant will not be formally tested,
and therefore no covenant breach or event of default will arise,
until the Group provides its compliance certificates for the March
2022 and June 2022 quarter dates. The date on which the Group is
required to supply these compliance certificates has been extended
until 5 October 2022, with a mechanism for this date to be extended
further with lender support.
-- In order to remedy the situation, a capital raise (the
'Capital Raise') is needed. To enable a Capital Raise, certainty is
needed as to the extent of redress liabilities. The Directors have
therefore decided to pursue the use of a court-based process (the
'Process'), such as a scheme of arrangement or restructuring plan,
in relation to its redress liabilities. A successful Process will
allow the Group to proceed with its planned capital raise. If
successful, the proceeds of the Capital Raise will be used to fund
a cash pot which will be available to finance the payment of
redress liabilities to affected customers and to strengthen the
Group's balance sheet and underpin future growth. Prior to the
Capital Raise, further short-term waivers from lenders will be
required and are likely to be dependent on positive progress of the
Process.
-- Although it is not expected that the Process will provide for
redress claims to be paid in full, the Directors believe that the
Process is in the best interests of customers with redress claims.
Without the Process, the Directors believe a Capital Raise would
not be successful and therefore insolvency is the most likely
outcome, in which there would likely be no payment of redress
liabilities.
-- A key objective of the Process will be to treat all affected
customers equally. Although the independent review of the Group's
branch-based lending division carried out in 2021 identified no
systemic issues requiring redress, as the branch-based and
guarantor loans divisions both trade out of the same legal entity,
the Process will encompass potential claims from both divisions in
order to ensure equitable treatment of customers.
-- The Group is actively engaged with the FCA, the FOS, as well
as Alchemy and the Group's lenders, regarding the Process. It has
appointed an independent chairperson to chair a committee of
customers with redress claims, who will review the terms of the
Process on behalf of affected customers.
-- Further details of the Process will be announced in due
course. The Process will be subject to satisfying the statutory
creditor approval requirements and the sanction of the Court.
-- We are engaging with the FCA with respect to the business'
plan to rely on DISP 1.6.2R(2), pursuant to which, Everyday Loans
is entitled to place a temporary hold on the processing of customer
complaints.
-- Plans for the Capital Raise remain subject to successful
completion of the Process and the continued support of Alchemy and
other key shareholders as well as the Group's lenders.
-- Without the successful completion of the Capital Raise, the
Group remains balance sheet insolvent and the Group's ability to
remain a going concern is subject to material uncertainties.
However, the Directors continue to believe there is a reasonable
prospect of resolving this position through the Process and the
Capital Raise.
-- The Directors of NSF plc are working with key stakeholders on
an alternative transaction to be implemented if the Process is
successful, but the ensuing Capital Raise is unsuccessful which
would preserve the branch-based lending business as a going
concern. In this scenario, it is expected that the same cash pot
would be available to finance the payment of redress liabilities as
if the Capital Raise had completed. However, there would be a
material risk of the Company and certain other members of the Group
entering insolvency and as a result there would be no recovery for
the Company's shareholders.
28 September 2022
For more information:
Non-Standard Finance plc
Jono Gillespie, Group Chief Executive Officer +44 (0) 20 3869
Sarah Day, Chief ESG Officer & Company Secretary 9020
H/Advisors Maitland
Neil Bennett +44 (0) 20 7379
Finlay Donaldson 5151
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