Payday Loan Industry: Tactics, Strategy, Consolidation & DFC Global

By | Apr 2, 2014

'Hot News' photo (c) 2010, Keith Ramsey - license: https://creativecommons.org/licenses/by-sa/2.0/Damn! No more listening in on DFC earnings conference calls :-(

To: All DFC Employees
From: Jeff Weiss, Chairman and CEO
Date: April 2, 2014
Subject: Exciting News about our Future

Dear Team Members:

I want to let you know about an exciting new chapter in our company’s history.

We have entered into an agreement to be acquired by Lone Star Funds, a global private equity firm based in Texas. This agreement is an important endorsement of our company as a valued investment, and will help us better secure our future as an industry leader in the financial services market.

As a result of the transaction, which we expect to be completed in the third calendar quarter of 2014, we will once again become a private company, and will no longer be traded on the NASDAQ. As you many of you may remember, we were a privately held company prior to going public in 2005.

Lone Star has extensive experience in the financial services and retail sectors, and has an excellent history of working with companies and their management teams to help them achieve outstanding operating and financial objectives. With their commitment, we believe we can accelerate our plans to grow our business, resulting in enhanced opportunities for all of us and our customers.

We are at the early stages of this transaction and there is still a lot of work ahead of us. In particular, over the coming months we will be seeking approvals from both our regulatory agencies and shareholders. In parallel to those efforts, members of DFC will be working alongside representatives of Lone Star to plan our strategy for after we close the transaction. We want to be ready to hit the ground running on day one, and we will provide you with updates on those plans and our future activities as we reach key milestones.

Naturally, you will want to know how today’s announcement impacts you. First, until the transaction closes, we will continue to operate as an independent company. While there will ultimately be a change in the equity ownership of our company, it will have little effect on our business operations or on your day-to-day responsibilities. Lone Star agrees with us that our people are among our most valuable assets and recognizes that each of you have been a driving force behind our success.

I want every one of you to know how much we value and appreciate the important contributions you make every day. It is your diligence that has been the foundation for our achievements over the last 30 years.

I encourage all of you to remain focused on continuing to provide the same convenience, accessibility and high quality service that our global customer base has come to expect from us.

Today’s announcement may lead to increased interest from the media and other third parties. It is crucial that we speak with one voice and that you not directly respond to any external inquiries. Please direct all media or third party inquiries to our external communications partner, ICR, via either Garrett Edson or Phil Denning .

Sincerely,

Jeff Weiss Chairman and Chief Executive Officer

Lone Star Fund VIII (U.S.), L.P. has committed to capitalize Parent, at or prior to the Closing, with an aggregate equity contribution in an amount of $750,000,000 on the terms and subject to the conditions set forth in the equity commitment letter dated April 1, 2014 (the “ Equity Commitment Letter ”).

Pursuant to the debt commitment, Jefferies Finance LLC and jointly, Credit Suisse AG and Credit Suisse Securities (USA) LLC (the “ Lenders ”) have committed to provide, on a several basis, 60% and 40%, respectively, of (i) a $125,000,000 senior secured, asset-based revolving credit facility and (ii) to the extent that all or any portion of the $750,000,000 senior secured notes contemplated by the Debt Commitment Letter are not issued on or prior to the Effective Time, a senior secured bridge facility in an aggregate principal amount of up to $750,000,000, on the terms and subject to the conditions set forth in a debt commitment letter entered into by the Lenders in connection with the Merger (the “ Debt Commitment Letter ”).

Payday loan fans, expect to see a lot more consolidation in our industry! The heat is on, new competitors are entering (often funded by Silicon Valley), and the current regulatory environment is driving this momentum.

Jer@PaydayLoanIndustryBlog.com Here’s a link to the DFC Global SEC Filings

To have these timely Posts delivered to your inbox, sign up below. Spam is for jerks! We are not jerks!!

Enter your email address:Delivered by FeedBurner
Share
2 Comments so far
  1. H April 3, 2014 7:33 pm

    Jer,

    I’m curious to know why you used the term “consolidation” in connection with the DLLR going-private transaction. The buyer does not own any other similar businesses.

  2. Payday Loan Industry April 3, 2014 7:35 pm

    I spoke with one of the guys at the PR firm first (Garrett & Phil). They followed-up with an email. They wouldn’t get specific and it appears they “copy & pasted” their response from the SEC filing. My use of the term “consolidation” is “loose” perhaps. I think it’s extremely interesting that an asset manager such as Lone Star is willing/able to swallow DLLR and hang-on long term for the shakeout taking place world wide in the small dollar loan industry. You know what’s happening in Europe and the U.S.
    Thoughts?
    “Lone Star is very familiar with our industry and the oversight involved. For example, one of Lone Star’s portfolio companies, Caliber Home Loans, is a U.S. based consumer mortgage originator and servicer. Like us, Lone Star Funds and Caliber Home Loans take pride in maintaining compliance with their regulatory requirements.”

Leave a Comment

If you would like to make a comment, please fill out the form below.

Name (required)

Email (required)

Website

Comments

What is 7 + 13 ?
Please leave these two fields as-is:
IMPORTANT! To be able to proceed, you need to solve the following simple math (so we know that you are a human) :-)
© 2009-2019... Payday & Title Lending, - Payday Loan Biz Resources & Courses How to Start Title Loan Business Website Legal Terms Disclosure
Share
Share