4finance Memo 260321
- Understand 4finance’s prospects of achieving a straight refinancing of its SUNs maturities in 2022 or an amend and extend (A&E) transaction to address these
- Understand whether use of Qualified Securitisation Financing as a Permitted Lien would be attractive to shareholders to expropriate value from SUNs
- Understand how 4finance compares against its nearest multi-country competitors, Ferratum and International Personal Finance (IPF), on key metrics, business model and competitive position, and why we should analyse 4finance not just on a consolidated basis but also excluding TBI
- Understand how well covered each of 4finance’s, IPF’s and Ferratum’s SUNs are in hypothetical run-off scenarios as well as in a base case
- Detailed evaluation of straight refinancing, A&E, Qualified Securitisation Financing and restructuring scenarios and SUNs valuation in each
- Financial projections and FCFE DCF valuations for each of 4finance, IPF and Ferratum
- Hypothetical run-off SUNs recoveries for each of 4finance, IPF and Ferratum
- How could an amend and extend transaction to address 4finance’s SUNs maturities be structured and with what carrots and sticks to incentivise acceptance?
- What challenges to a straight refinancing of the SUNs could there be and how could these potentially be overcome?
- What would 4finance’s SUNs (and those of IPF and Ferratum) recover in a hypothetical run-off or restructuring?
- What is the maximum value shareholders could potentially expropriate from SUNs using Qualified Securitisation Financing as a Permitted Lien and would it make sense for them to attempt this?
- What scenario probabilities do we estimate?
- What is TBI Bank worth?
- Which consumer unsecured subprime lender has the most resilient business model?
- Does 4finance generate positive “steady state” FCF (adjusting for the effects of customer loan book changes)?
- Why do 4finance’s $ SUNs trade at so much lower a cash price and higher yield than its € SUNs?
- How did each of 4finance, Ferratum and IPF trade through COVID and who is best positioned to benefit from an improved competitive environment?