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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| | | | | |
| Date of Report (Date of Earliest Event Reported): | October 28, 2024 |
PRA Group, Inc.
_________________________________________
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | | | | |
| Delaware | | 000-50058 | | 75-3078675 |
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| | | | |
| 120 Corporate Boulevard | | | | |
| Norfolk, | Virginia | | | | 23502 |
| (Address of principal executive offices) | | | | (Zip Code) |
| | | | | | | | | | | |
| Registrant’s telephone number, including area code: | | (888) | 772-7326 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.01 par value per share | PRAA | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 1.01 Entry into a Material Definitive Agreement.
Second A&R North American Credit Agreement
On October 28, 2024, PRA Group, Inc. (the “Company”), as a borrower, PRA Group Canada Inc. (“PRA Canada”), as a Canadian borrower, and certain domestic subsidiaries of the Company, as guarantors (the “Guarantors”), entered into the Second Amended and Restated Credit Agreement (the “Second A&R North American Credit Agreement”) with Truist Bank, as the administrative agent (the “North American Agent”), the co-syndication agents, co-senior managing agents, joint lead arrangers and joint bookrunners party thereto, and the other lenders party thereto (collectively, the “North American Lenders”), which modified the Amended and Restated Credit Agreement, dated May 5, 2017 (as amended or otherwise modified prior to the Second A&R North American Credit Agreement, the “First A&R North American Credit Agreement”), among the Company, PRA Canada, the Guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto. Capitalized terms used and not otherwise defined herein have the meanings provided in the Second A&R North American Credit Agreement.
The following sets forth a description of the material modifications made to the terms of the Second A&R North American Credit Agreement:
•The maturity date was extended from July 30, 2026 to October 28, 2029.
•Aggregate revolving and term loan commitments increased by $40 million to $1.548 billion. Aggregate revolving commitments remain at $1.075 billion, with a potential to increase by up to an additional $500 million. U.S. domestic revolving commitments reduced from $1 billion to $950 million and Canadian revolving commitments increased from $75 million to $125 million. The term loan commitment at closing was increased by $40 million to $472.6 million.
•Financial covenants were modified as follows:
◦Positive Income from Operations was replaced by a new Consolidated Fixed Charge Coverage Ratio: (i) Consolidated EBITDA to (ii) scheduled principal payment on Consolidated Funded Indebtedness, plus Consolidated Interest Charges (last four fiscal quarters) to be not less than 2.00 to 1.00.
◦Consolidated Senior Secured Indebtedness was reduced by Qualified Cash when calculating the Consolidated Senior Secured Leverage Ratio and the ratio was increased from 2.25: 1.00 to 2.50: 1.00.
◦The Consolidated Tangible Net Worth covenant was replaced by a Consolidated Total Assets covenant.
◦Consolidated Funded Indebtedness was reduced by Qualified Cash when calculating the Consolidated Total Leverage Ratio.
•Certain negative covenants and related definitions were modified to provide additional flexibility for potential transactions, and a number of permissive baskets were increased.
The Guarantors guarantee all the obligations of the Borrowers and each other Guarantor under the Second A&R North American Credit Agreement and the other loan documents, including any obligations under hedging and treasury management arrangements. The obligations of the Borrowers and the Guarantors under the Second A&R North American Credit Agreement, including the Canadian obligations, are secured by substantially all the Company’s and each Guarantor’s assets. The Canadian obligations are also secured by substantially all of PRA Canada’s assets.
The Second A&R North American Credit Agreement also provides for events of default, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults. The occurrence of an event of default under the Second A&R North American Credit Agreement could result in all loans and other obligations under the Second A&R North American Credit Agreement becoming immediately due and payable and the Second A&R North American Credit Agreement being terminated.
The North American Agent, certain of the North American Lenders and their respective affiliates have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with the Company, its subsidiaries or their affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
The foregoing description of the Second A&R North American Credit Agreement is not complete and is qualified in its entirety by reference to the entire Second A&R North American Credit Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
A&R UK Credit Agreement
On October 30, 2024, PRA Group Europe Holding I S.à r.l. (“PRA Group Europe”), a wholly owned subsidiary of the Company, as borrower, entered into a Deed of Amendment and Restatement (the “A&R UK Credit Agreement”) with PRA Group (UK) Limited (“PRA UK”) and the Company, as guarantors, the lenders party thereto (the “UK Lenders”), and MUFG Bank, Ltd., London Branch, as the administrative agent for the UK Lenders (the “UK Agent”), which modified the Credit Agreement, dated April 1, 2022 (as amended or otherwise modified prior to the A&R UK Credit Agreement, the “UK Credit Agreement”), among PRA Europe, as borrower, the Company and PRA UK, as guarantors, the UK Agent and the other lenders party thereto.
The following sets forth a description of the material modifications made to the terms of the UK Credit Agreement:
•The maturity date was extended from July 30, 2026 to October 30, 2029.
•Aggregate revolving commitments were decreased from $800 million to $725 million, with a potential to increase by up to an additional $200 million.
•The financial covenants, negative covenants and carve-outs, baskets and definitions related thereto were modified to more closely conform to the Second A&R North American Credit Agreement.
The A&R UK Credit Agreement also provides for events of default, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults. The occurrence of an event of default under the A&R UK Credit Agreement could result in all loans and other obligations under the A&R UK Credit Agreement becoming immediately due and payable and the A&R UK Credit Agreement being terminated.
The UK Agent, certain of the UK Lenders and their respective affiliates have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with the Company, its subsidiaries or their affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
The foregoing description of the A&R UK Credit Agreement is not complete and is qualified in its entirety by reference to the entire A&R UK Credit Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
European Credit Agreement
On October 28, 2024, the Company's wholly-owned subsidiary, PRA Group Europe Holding S.a r.l. ("PRA Group Europe Holding"), and its Swiss Branch, PRA Group Europe Holding S.a r.l. ("PRA Group Holding"), Luxembourg, Zug Branch, as borrowers, entered into an amendment of the EUR 730 million European Credit Agreement (the "Letter Amendment") with the lenders party thereto ("EU Lenders") and DNB Bank ASA as facility agent and security agent (the "EU Agent"), to modify the financial covenants to more closely conform to the Second A&R North American Credit Agreement and the A&R UK Credit Agreement, by:
•Increasing the Consolidated Senior Secured Leverage Ratio from a maximum of 2.25: 1 to a maximum of 2.50: 1.
•Replacing the Positive Net Income covenant with a Consolidated Fixed Charge Coverage Ratio (such ratio to be not less than 2.00 to 1.00 as of the end of any fiscal quarter).
The EU Agent, EU Lenders and their respective affiliates have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with the Company, its subsidiaries or their affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
The foregoing description of the Letter Amendment is not complete and is qualified in its entirety by reference to the entire Letter Amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On October 31, 2024, the Company issued a press release announcing its entry into the Second A&R North American Credit Agreement and the A&R UK Credit Agreement. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| PRA Group, Inc. |
| | |
| Date: November 1, 2024 | By: | /s/ Rakesh Sehgal |
| | Rakesh Sehgal |
| | Executive Vice President and Chief Financial Officer |
PRA Group Announces Amendment and Extension of North American and United Kingdom Credit Agreements
NORFOLK, Va., Oct 31, 2024 - PRA Group, Inc. (Nasdaq: PRAA) (the “Company”), a global leader in acquiring and collecting nonperforming loans, announced today that it amended and extended its North American Credit Agreement on October 28, 2024 and its UK Credit Agreement on October 30, 2024. The amendments extended the maturities for both credit facilities, totaling $2.3 billion of aggregate commitment amount, for five years to October 2029. Pricing remains the same as the previous agreements at an interest margin of 2.25% for the North American Credit Agreement and 2.75% for the UK Credit agreement.
"We are pleased to be able to amend and extend our North American and UK credit facilities," said Rakesh Sehgal, executive vice president and chief financial officer. “We are grateful for the support of our existing lenders and are happy to welcome the new lenders to our credit facilities. The continued support from our lenders provides us the financial flexibility as we continue to transform our business and drive future growth. We believe the cash generated from our business, the capital available under our credit facilities, and access to capital markets in both the U.S. and Europe, position us to capitalize on the strong portfolio supply environment.
About PRA Group, Inc.
As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt.
About Forward-Looking Statements
Statements made herein that are not historical in nature, including PRA Group, Inc.’s or its management’s intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management’s current beliefs, estimates, assumptions and expectations of PRA Group, Inc.’s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that the Company’s expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group, Inc.’s filings with the Securities and Exchange Commission, including PRA Group, Inc.’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K,
which are available through PRA Group, Inc.’s website and contain a detailed discussion of PRA Group, Inc.’s business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
Investor Contact:
Najim Mostamand, CFA
Vice President, Investor Relations
(757) 431-7913
IR@PRAGroup.com
News Media Contact:
Elizabeth Kersey
Senior Vice President, Communications and Public Policy
(757) 641-0558
Elizabeth.Kersey@PRAGroup.com
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