Non-Standard Finance plc

('Non-Standard Finance', 'NSF' or the 'Company')

Update on Proposed Recapitalisation: Proposed Release of Debt and Directorate Change

14 April 2023: Further to its announcement dated 17 March 2023 regarding the launch of the Scheme and Proposed Recapitalisation, Non-Standard Finance announces that it has agreed with its secured lenders (the "Lenders") the provisional terms of a release of debt through a conversion into equity, as part of the Proposed Recapitalisation which is conditional on the successful completion of the Scheme.

In connection with the Proposed Recapitalisation, the Lenders have provisionally agreed, subject to finalising detailed terms and formalising requisite documentation, to release £71 million of secured debt in exchange for new ordinary shares in NSF. As a result, it is anticipated the Lenders would hold approximately 20% of NSF's enlarged issued share capital if the proposed capital raise is successful. As at 31 December 2022, the Company had total gross debt of £255 million. 

As previously announced, the Proposed Recapitalisation also involves the maturity date under the Group's secured debt facilities being extended from August 2023 to June 2027. In addition, the facilities are expected to be amended to have a reduced fixed interest rate of 5% with an additional payment in kind element of 3% in 2025 and 4% from 2026 onwards, payable at maturity. 

The Board welcomes the indicative proposal from its Lenders which would substantially improve the Company's balance sheet following a successful capital raise, underpinning the prospects for strong growth in NSF's ongoing branch-branched lending business and a return to Group profitability.

Further to its announcement dated 13 February 2023, trading in the Group's remaining operating division, Everyday Loans (branch-based lending) which sits under Everyday Lending Limited ("ELL"), remains encouraging. The full year 2022 audit is underway and results will be announced later in April. The following figures are therefore all unaudited. As previously reported, ELL's net loan book grew 6.2% during the year to £167m as at 31st December 2022, driven by a c20% increase in lending. Revenue grew broadly in line with the loan book. Customer numbers increased slightly year-on-year to 66,500. The collections performance of the business remains ahead of expectation and delinquency performance has returned to historically normal levels. The nature of IFRS 9 accounting means that the increase in lending has led to a corresponding increase in impairment, alongside a further macroeconomic overlay increase to reflect the anticipated future impact of the cost of living crisis. As a result, impairment rates are gradually seeing a reversal of the recent low levels, though remain below expectations.

Although the Proposed Recapitalisation will ensure the future of the Group and the Everyday Loans business, it will materially dilute the interests of NSF's existing equity holders, most likely to negligible value, unless they choose to participate in the equity raise.

The Group reminds Shareholders that if the Scheme is sanctioned but the Proposed Recapitalisation is unsuccessful, then the Alternative Transaction will be pursued involving a transfer of the ownership of the Group's business to the Lenders in exchange for the release of a portion of their secured debt and the provision of a new lending facility, resulting in no return for current shareholders. In the event that the Scheme is not sanctioned by the Court, or the Scheme is sanctioned but the Proposed Recapitalisation and Alternative Transaction both fail, then the Group would remain insolvent and the most likely outcome would be a Group-wide insolvency (most likely administration), also resulting in no return for current shareholders.

Directorate Change

Non-Standard Finance announces that, having served on the Board for over 8 years, non-executive chairman Charles Gregson has decided not to stand for re-election at the Company's 2023 Annual General Meeting (the "AGM"). Charles will stand down from the Board following the AGM. At the AGM, Niall Booker will stand for election as non-executive chairman to replace Charles.

Unless otherwise defined, capitalised terms within this announcement shall have the same meaning as those contained within the Company's announcement dated 17 March 2023, released at 7:39 am under RNS number 3475T.

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. The person responsible for arranging the release of this announcement on behalf of Non-Standard Finance plc is Sarah Day, Chief ESG Officer and Group Company Secretary.