By Ian Walker
Shares in Non-Standard Finance PLC fell as much as 46% on Friday after the company warned that it could go into insolvency if a planned capital raising doesn’t go ahead, or takes too long to execute.
Shares at 1502 GMT were down 1.10 pence at 1.28 pence.
The U.K. provider of consumer finance–which is working with the U.K. Financial Conduct Authority over a redress plan related to its guarantor-loans division–said it has the support of its largest shareholder for a “substantial” capital raise which it hopes to complete as soon as possible.
Non-Standard Finance said its “Loans at Home” business is no longer viable and that it has applied to the FCA to appoint administrators to the business. Any administration process will have a minimal impact on the overall group, the company said.
Any funds raised will be used to fund customer redress and strengthen the company’s balance sheet, underpinning the future growth of its lending operations, Non-Standard Finance said.
Alchemy Special Opportunities Fund IV L.P.–the company’s largest shareholder owning 30% of its issued share capital, according to FactSet–has agreed to support the planned fund raising upon an acceptable deal between the company and its lenders. Its support is also dependent upon Alchemy’s own analysis of the outcome of talks between Non-Standard Finance and the FCA, as well as greater levels of certainty around redress and claims.
Non-Standard Finance said that should the fund raising not take place, or take too long, it would breach certain covenants and be unable to access further funding requiring extra waivers from its lenders which would put it at risk of insolvency. However, the directors said that there is a “reasonable prospect of resolving this position.”
Write to Ian Walker at ian.walker@wsj.com
