Financial News

  • 27 February 2014, 21:13

Debt Collector Lowell To Land 100m Jackpot

One of Britain's biggest consumer debt collectors is to pay its backers a 100m windfall in a move which could reignite a debate about the lucrative nature of the industry.

Sky News understands that Lowell Group, which is owned by the private equity firm TDR Capital, is working on a financial restructuring that will amend the terms of its borrowings.

Goldman Sachs and JP Morgan, the Wall Street investment banks, have been appointed to work on the so-called dividend recapitalisation.

The deal will allow Lowell to borrow on more favourable terms, and to pay its shareholders a dividend that is expected to be somewhere in the region of 100m, according to insiders.

Lowell, which was acquired by TDR in September 2011, claims to be "committed to taking a fair, sensitive and ethical approach to debt recovery, and is in full compliance with UK Government guidelines and industry trade and regulatory bodies".

The company is nevertheless likely to face questions about its plans to pay such a substantial dividend to its backers.

On Thursday, the Financial Conduct Authority will set out its final rules for regulating the consumer credit industry amid continuing criticism about the behaviour of some debt collection agencies.

Its divisions include Red Debt Collection Services, a specialist debt recovery department which focuses on telecoms accounts and so-called escalated accounts - or those which relate to persistent non-payers.

A source close to the group said that recent speculation suggesting that it was planning a stock market listing was wide of the mark, although Lowell could decide to pursue such a move towards the end of this year or the beginning of 2015.

When it does examine a listing, sources close to Lowell believe it is likely to be valued at more than 1bn based on the rating attributed to rival Arrow Global, which floated last year and now has a market capitalisation of just over 450m..

The debt collection sector has also seen a substantial amount of other corporate activity.

Earlier this month, Cabot Credit Management, which is jointly-owned by the US debt recovery group Encore and New York-based buyout firm JC Flowers, bought Marlin Financial and its 2bn-worth of loans for 295m including debt.

TDR was unavailable for comment on Thursday.

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