Although we have never covered JG Wentworth Co. (OTCMKTS:JGWE) here on Street Register, the company is pretty much a household name. For the few who may not know, JG Wentworth is a diversified financial services company focused on providing solutions to consumers in need of cash. The Company conducts its operations through Structured Settlements and Annuity, and Home Lending, and is popularly recognized for its prominent commercials and catchy “877-CASH-NOW” jingle.
In the past week, the company has revealed significant efforts in debt restructuring in an attempt to clean up its books, as well as reported its Q3 financial results. Today we’ll focus primarily on the restructuring, which could be the company first step toward shoring up an ugly situation with its struggling share prices.
JG Wentworth Co. (OTCMKTS:JGWE announced an agreement, with lenders holding over 87% of the aggregate principal amount outstanding under the Company’s $449.5 million senior secured credit facility , to significantly deleverage the Company. The agreement, under which current Lenders have agreed to exchange their claims under the Credit Facility for cash consideration and at least 95.5% of the equity in the newly-restructured Company, will enable the Company to enhance its financial flexibility, fortify its balance sheet and accelerate its long-term growth initiatives.
Under the terms of the agreement, the Company will:
- Fully extinguish the loans under the Credit Facility totaling $449.5 million and obtain a new secured revolving credit facility between $65 million and $70 million, to be supplied by one of the Company’s Lenders;
- Significantly reduce the Company’s annual debt service from $32 million to less than $5 million;
- Deleverage the Company’s balance sheet, reducing its net leverage from approximately 12.4x to less than 1.0x; and
- Reconstitute the Board of Directors to reflect the new ownership of the Company.
The restructuring will be accomplished through a voluntary, pre-packaged, in-court process. The Company’s operating entities – including those serving employees, customers, vendors and suppliers – will not be involved in the in-court process. The restructuring is not expected to impact daily management or operations of the Company.
“We are proud to have a strong brand in the market that has proven it can serve as an umbrella to expand our business to additional products. The Company is having promising operational and financial performance so the deleveraging comes at an opportune time,” said Stewart Stockdale, Chief Executive Officer. “We do, however, recognize the importance of improving our long-term financial flexibility. After careful consideration and discussion with our Board of Directors and Lenders, we firmly believe this agreement is the best way to recapitalize the Company and position ourselves to better serve the evolving needs of our customers. Looking ahead, we are as confident as ever in the future of the Company, and assured in our ability to execute our business goals.” (Source: Business Wire)
In terms of the JGWE chart, the stock has been under consolidation for quite some time. Much of 2017 in fact, and recently got hammered down to new annual lows from which it has been rebounding. The stock is extremely oversold at present, making it just the time of bargain play we’re always on the lookout for. Keep it locked to Street Register for updates, and we’ll deliver those important developments on JGWE to you as they unfold. In the meantime, if you’ve yet to sign up for our 100% free newsletter, do so now! Just enter your active email address into the box below and submit!
Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in JGWE stock, short or long.