Nicholas Financial closes new $ 175 million senior secured credit facility


CLEARWATER, Fla., Nov. 8, 2021 (GLOBE NEWSWIRE) – Nicholas Financial, Inc. (NASDAQ: NICK) – a leading branch-based subprime auto lender focused on meeting the needs of the local independent dealer – announced that On November 5, 2021, the Company entered into a senior secured credit facility under a loan and guarantee agreement with Wells Fargo Bank, NA, as agent, and the lenders party thereto. The prior credit facility under a credit agreement with Ares Agent Services, LP was repaid as part of this credit facility.

Pursuant to the credit agreement, the lenders have agreed to provide Nicholas Financial with a line of credit of up to $ 175,000,000. The availability of funds under the Credit Facility is generally limited to a prepayment rate of between 80% and 85% of the value of the Eligible Receivables, and advances under the Credit Facility will bear interest at a rate of rate equal to the guaranteed overnight rate (SOFR) increased by 2.25%. The term of commitments for advances under the credit facility is three years. In addition, during the quarter ending December 31, 2021, Nicholas Financial expects to record approximately $ 1.9 million in expenses associated with the origination of its previous credit facility. Management believes that the long-term cost benefits of the credit facility with Wells Fargo will outweigh this one-time non-monetary impact.

“We are very grateful for the relationship we have developed with Ares and are grateful for their partnership throughout NFI’s turnaround over the past three years,” said Doug Marohn, President and CEO of Nicholas Financial, Inc. “We are also delighted to be partnering again with Wells Fargo as a senior agent in this new facility. The economics and terms of this agreement represent a significant turning point for Nicholas Financial and reinforce the great strides that our large company has made since 2018. Under this credit facility, we have strengthened our access to capital and the certainty of execution at a cost of funds that reflects the quality of our portfolio and the strength of our business model.

The credit agreement and other loan documents contain customary events of default and negative covenants, including, but not limited to, those governing debts, liens, fundamental changes, investments and sales of ‘assets. If an event of default occurs, lenders could increase borrowing costs, restrict the ability to obtain additional advances under the credit facility, accelerate all overdue amounts under the credit facility, assert their interest on any collateral given under the Credit Facility or enforce such other rights and remedies they have under the loan documents or applicable law as secured lenders.

In connection with the refinancing and as required by GAAP, Nicholas Financial expects to record a non-cash charge of approximately $ 1.9 million during the quarter ending December 31, 2021, representing the unamortized portion of costs of mounting the debt associated with its previous credit facility. Management believes that the long-term cost benefits of the credit facility with Wells Fargo will outweigh this one-time non-monetary impact.

Caution Regarding Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent the Company’s current expectations or beliefs regarding future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate”, “estimate”, “intend”, “plan”, “expect”, “plan”, “believe” , “May”, “”, “” should “,” would “,” could “,” likely “and any variation of the foregoing and similar expressions are forward-looking statements. These forward-looking statements are inherently subject to risk and uncertainties. The actual results and financial condition of the Company may differ materially from those indicated in any forward-looking statements. Therefore, you should not rely on any such forward-looking statements. Important factors that could cause actual results or performance that differ from expectations expressed or implied in these forward-looking statements are: the continued impact of the COVID-19 pandemic and the mitigation efforts being made by the go events and related effects on our financial condition, business operations and liquidity, our customers, our employees and the economy in general; recently adopted, proposed or future legislation and how it is implemented; changes in the US tax code; the nature and scope of regulatory authority, in particular discretionary authority, which may be exercised by regulators, including, but not limited to, the Securities and Exchange Commission (SEC), the Department of Justice, the US Consumer Financial Protection Bureau and individual state regulators with jurisdiction over the Company; the unpredictability of regulatory procedures and litigation; misconduct by employees or by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could significantly and unfavorably affect the published consolidated financial statements of the Company or require delays or significant changes in the publication of the audited consolidated financial statements of the society ; the Company’s assessment of its internal control over financial reporting; changes in interest rates; risks associated with the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net write-offs, loss of key personnel, integration issues or migration, failure to achieve expected synergies, increased service costs, customer records and retention; risks inherent in granting loans, including repayment risks and the value of collateral; cybersecurity threats, including the potential misappropriation of sensitive assets or information, data corruption or operational disruption; our reliance on debt and the potential impact of limitations on the Company’s modified revolving credit facility or other impacts on the Company’s ability to borrow money on favorable terms, or not at all ; the timing and amount of income that may be recognized by the Company; changes in current income and expenditure trends (including trends affecting delinquency and write-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (in particular in the markets served by the Company). All forward-looking statements and cautionary statements included in this document are made as of the date hereof based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statements or caution.

Contact: Irina Nashtatik NASDAQ: NICK
CFO Website: www.nicolasfinancial.com
Phone. (727) -726-0763

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