Portfolio Recovery Associates Inc.
) announced a new five-year credit facility worth $600 million,
replacing the current one. The company will use the new facility
to finance its operations and for investing in growth
Portfolio Recovery's new credit facility offers various
alternatives for borrowing rates for the loans taken under it.
These alternatives are similar to those offered under the
company's previous credit facility. However, Portfolio Recovery
plans to mainly take loans based on the LIBOR rate, with a spread
of about 250 basis points.
The new credit facility will substantially increase the
borrowing capacity of the company as Portfolio Recovery had only
$214.5 million as the remaining borrowing availability under its
old credit facility as of Sep 30, 2012. Thus, the new facility
will boost the financial flexibility of the company, thereby
allowing it to increase its expenditure on business investments.
Moreover, the company expects the new facility to bring down its
cost of funds.
Further, the accordion feature of the new credit facility
offers Portfolio Recovery the option to apply for an extension of
the borrowing capacity for an amount up to $250 million. However,
the company intends to keep its borrowings under check, and hence
will cautiously evaluate all investment opportunities to invest
only in those portfolios, businesses or products that offer
Encore Capital Group, Inc.
) also announced the amendment of its old $555.5 million
revolving credit facility in November 2012. The old facility was
set to expire by the end of 2013. The amended facility comprises
a $425 million revolving credit facility valid for 5 years along
with a $100 million term note due in November 2017 and a $50
million term note due in November 2015. Moreover, Encore Capital
has the option of increasing the borrowing limit by $200 million
using the accordion feature of the credit facility.
Portfolio Recovery currently carries a Zacks #3 Rank (Hold).
We maintain a long-term 'Neutral' recommendation on the stock.
Encore Capital also carries the same Zacks Rank.
ENCORE CAP GRP (ECPG): Free Stock Analysis
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
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