JG Wentworth Co (OTCMKTS:JGWE) Shedding Market Cap by the Minute

JG Wentworth Co (OTCMKTS:JGWE) Shedding Market Cap by the Minute


JG Wentworth Co (OTCMKTS:JGWE) has lost some pounds recently. After declaring bankruptcy, JGWE has lost well more than half its market cap. The filling will be the second in less than nine years as the specialty-finance company continues to struggle with huge debt levels. JGWE has reached an agreement with lenders who hold 87% of its aggregate principal amount outstanding under the company’s $449.5 million senior secured credit facility.

To drill down further, JGWE has shed 90% of its market value since the start of 2017. Now, the company will extinguish loans under the Credit Facility totaling $449.5 million. The company will secure a revolving credit facility of between $65 million and $70 million – to be supplied by one of the lenders.

JG Wentworth Co (OTCMKTS:JGWE) is a diversified financial services company. The Company focuses on providing solutions to consumers in need of cash. The Company conducts its operations through two segments: Structured Settlements and Annuity Purchasing (Structured Settlements), and Home Lending. The Structured Settlements segment provides liquidity to individuals with various financial assets, such as structured settlements, annuities, and lottery winnings, by either purchasing these financial assets for a lump-sum payment, issuing installment obligations payable over time, or serving as a broker to other purchasers of those financial assets. The Home Lending segment is primarily engaged in retail lending, originating primarily Federal Housing Administration (FHA), Veterans Administration (VA) and conventional loans. The Structured Settlements segment operates with various brands, including J.G. Wentworth and Peachtree.

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For a little more color on this, under the terms of the agreement, JGWE will:

  • Fully extinguish the loans under the Credit Facility totaling $449.5 million and obtain a new secured revolving credit facility between $65 million and $70 million, to be supplied by one of the Company’s Lenders;
  • Significantly reduce the Company’s annual debt service from $32 million to less than $5 million;
  • Deleverage the Company’s balance sheet, reducing its net leverage from approximately 12.4x to less than 1.0x; and
  • Reconstitute the Board of Directors to reflect the new ownership of the Company.

The restructuring will be accomplished through a voluntary, pre-packaged, in-court process. The Company’s operating entities – including those serving employees, customers, vendors and suppliers – will not be involved in the in-court process. The restructuring is not expected to impact daily management or operations of the Company.

According to the Chief Executive Officer, Stewart Stockdale, the agreement is the best way to recapitalize JGWE and position it for future growth.

“We are proud to have a strong brand in the market that has proven it can serve as an umbrella to expand our business to additional products. The Company is having promising operational and financial performance so the deleveraging comes at an opportune time,” said Mr. Stockdale. “We do, however, recognize the importance of improving our long-term financial flexibility. After careful consideration and discussion with our Board of Directors and Lenders, we firmly believe this agreement is the best way to recapitalize the Company and position ourselves to better serve the evolving needs of our customers. Looking ahead, we are as confident as ever in the future of the Company, and assured in our ability to execute our business goals.”

JG Wentworth Co (OTCMKTS:JGWE) now owns a market cap of $713,664 with 24.44M shares out. The brand is hurting and the volatility has been high. JGWE is down 14% for the day and they are still seeking bottom here. Sign-up for continuing coverage on shares of $JGWE stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $JGWE, either long or short, and we have not been compensated for this article.

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