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Encore Capital Group Closes Acquisition Of Controlling Stake In Cabot Credit Management

Stocks in this article: ECPG

SAN DIEGO and WEST MALLING, England, July 2, 2013 /PRNewswire/ -- Encore Capital Group, Inc. (NASDAQ: ECPG), a leading U.S. debt management and recovery company, announced today that it has closed its acquisition of 50.1% of the equity interest in Janus Holdings Luxembourg S.a.r.l. ("Janus Holdings"), an indirect holding company of U.K. and Ireland-based Cabot Credit Management Limited ("CCM"). The remaining 49.9% of Janus Holdings is held by a fund advised by J.C. Flowers & Co. LLC (" J.C. Flowers"). The transaction was originally announced on May 30, 2013.

Under the terms of the agreement, Encore acquired its interest in CCM for £115 million (approximately $177 million). The purchase price was reduced by approximately £13 million from £128 million as a result of the agreement to redeem certain bridge preferred equity certificates ("Bridge PECs") by J.C. Flowers. Encore has the option to purchase the remaining interest in Janus Holdings during the period from the fourth anniversary to the sixth anniversary of the closing.

Paul Grinberg, Encore's chief financial officer, said, "The Bridge PECs redemption allows Encore to reduce the amount of capital required to fund the deal, which should improve Encore's IRR and overall return on this transaction."

Encore was able to fund a significant amount of the purchase price through a convertible note offering completed last week that raised $150 million at a cash coupon of 3% for a seven year term. The balance of the purchase price was funded through Encore's revolving credit facility.

The partnership between Encore and CCM is based on a strategy of growth that brings together two market leaders. The acquisition gives Encore the opportunity to deploy capital globally in a market with strong growth potential, as the U.K. is the largest mature debt purchase market in the world after the United States.

"We're very pleased to officially welcome Cabot Credit Management as part of our team," said Encore's President and CEO Ken Vecchione. "This acquisition positions us as a global leader in the consumer debt purchase and recovery industry, and we're looking forward to leveraging our analytic capabilities and efficient operating platform to grow our business in the U.K."

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