EZCORP to acquire majority stake in Crediamigo
AUSTIN, Texas, Jan. 19, 2012 / PRNewswire / – EZCORP, Inc. (Nasdaq: EZPW), a leading provider of specialist consumer financial services, today announced that it has reached a definitive agreement to acquire a 60% stake in Prestaciones Finmart, SA from CV, SOFOM, ENR (“Crediamigo”), a company specializing in consumer credit with its head office in Mexico.
Crediamigo is one of the top three providers of payroll deduction loans in Mexico and one of the fastest growing. The company enters into agreements with various employers that allow it to market unsecured loans to employees. Interest and principal payments are withheld by employers through payroll deductions and returned to Crediamigo. Crediamigo currently has 170 such agreements, primarily with Mexican government agencies and organizations, and has access to over 3.5 million employees. Loan amounts vary from 2,000 MXP to 100,000 MXP (about $ 150 to $ 7,500 USD) and average 16,000 MXP (about 1,200 USD), and loan terms range from one to four years and on average 27 months. Crediamigo’s current loan portfolio totals approximately MXP 1.25 billion (about US $ 92.6 million).
Paul Rothamel, The President and CEO of EZCORP, said: “This significant investment contributes to our strategic initiative to diversify our business. Latin America in general and to enter new lines of business that complement our successful pawn shops in Mexico. This investment in Crediamigo achieves these two objectives, which represents an opportunity with great potential to develop our activities in Mexico to include unsecured loans, which we believe is a growing and underserved segment of the consumer financial services market. There is undoubtedly an overlap between our customer base in Mexico and Crediamigo’s customer base, and we believe there are many opportunities for cross-promotion and product improvement, as well as other synergies. ”
Mr. Rothamel continued, “Crediamigo has a well-respected board of directors and a strong management team. We have the right to appoint six of the ten board members in the future, and we expect that we will retain the leadership and leadership. ‘experience of a number.In addition, we plan to keep the current management team in place, and we look forward to working with them to drive the growth of the core business and explore synergistic value-added opportunities with our existing activities. ”
Javier Creel Moreno, Presidente Ejecutivo de Crediamigo, said: “We are delighted to enter into this meaningful partnership with EZCORP. Since Crediamigo was founded in 2003, we have built a substantial business and created a solid platform for growth. We are looking for a partner to help us accelerate our growth and capitalize on important market opportunities. We believe that EZCORP is an ideal partner because of its executive leadership and financial resources, Mexico and its current presence on the windows of many of the markets we serve. We anticipate a long and mutually productive partnership. ”
Under the final agreement, EZCORP will pay $ 38.7 million in cash to existing Crediamigo shareholders and will make an additional contribution $ 12 million in the capital of the company alongside $ 8 million which will be contributed by some of the minority shareholders. This additional capital will be used to repay existing debt and provide working capital. EZCORP will be required to pay existing shareholders additional amounts on each of the first and second anniversaries of closing if certain financial performance targets are met in 2012 and 2013.
Closing of the transaction is subject to the receipt of certain third party consents and the satisfaction of other customary conditions, and is expected to occur on or around January 31, 2012.
UBS Investment Bank acted as advisor to Crediamigo in this transaction.
EZCORP is a leading provider of specialized consumer financial services. It provides non-recourse secured loans, commonly referred to as pawn shops, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or home credit services. fees to clients looking for loans. In its pawn shops, the company also sells merchandise, mainly collateral confiscated from its pawn shops.
EZCORP operates over 1,100 pawn, buy / sell and personal financial services stores in the United States, Mexico and Canada. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the UK’s largest pawn shops with over 160 stores offering a full range of pawn shops, retail retail jewelry, gold buying and financial services; and Cash Converters International Limited (CCV.L and CCV.ASX), which franchises and operates a global network of more than 600 stores that provide personal financial services and sell second-hand merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements regarding the expected results of the proposed investment. These statements are based on EZCORP’s current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of uncertainties and other factors, including changes in the regulatory environment, developments market conditions in the overall economy and industry and consumer demand for the products and services offered by EZCORP and its affiliates. For a discussion of these and other factors affecting EZCORP’s business and prospects, see EZCORP’s annual, quarterly and other reports filed with the Securities and Exchange Commission.
EZCORP Investor Relations
SOURCE EZCORP, Inc.