Credit provider buys online lending business out of administration in multi-million pound deal

AIM-listed West Yorkshire home credit provider Morses Club has acquired CURO Transatlantic, trading as WageDayAdvance, out of administration in a multi-million pound deal. 

The £8.5m deal – completed through Morses Club’s fully owned subsidiary Shelby Finance – will be paid in cash, 50% on completion and the balance over five months – dependent on the final valuation of the acquired loan book. The acquisition adds a customer base of around 50,000, increasing the company’s overall customer base by over 20% and saves 205 jobs at CURO.

CURO TA is a provider of online loans in the non-standard credit market. Under the terms of the transaction, Morses Club is acquiring all the existing infrastructure of CURO TA including its decision platform, call centre, and online lending capabilities.  All of CURO TA’s current employees will become employees of Shelby Finance. The gross receivables (before any collection provisions), which exclude all the CURO TA bad loans identified by the company, amount to approximately £19m.

Batley-headquartered Morses Club said the acquisition fits well with the company’s stated strategic priority to increase its online offering in response to a growing demand. The firm added: “While it is not expected to add to earnings in the first 12 months, management are confident that the acquisition will make a positive contribution to earnings in FY21.”

Howard Smith and Ed Boyle of KPMG have today been appointed as Joint Administrators of CURO Transatlantic, trading as WageDayAdvance and Juo Loans. They immediately concluded a sale of the business, securing the jobs of all 205 employees of CTL. While 50,000 customers will transfer to Morses Club, in excess of 650,000 other customer accounts, both current and historic, remain with CTL.

The Joint Administrators are currently determining their strategy regarding CTL’s remaining loan book. Boyle, Joint Administrator and Partner at KPMG, said “We are pleased to have secured the sale of the business to Shelby, which is the best available outcome in the circumstances for CTL’s creditors and other stakeholders. CTL was subject to a significant number of consumer redress claims arising from its historic affordability, creditworthiness and responsible lending practices. Over time, and with the number of claims increasing, the financial and operational burden of resolving them became unsustainable. The Joint Administrators will now work to realise the remaining assets of the Company and to then distribute the available funds to creditors.”

Paul Smith, chief executive of Morses Club, added: “This exciting acquisition of such a well-established online lending business represents a significant escalation for Morses Club’s product diversification strategy. The range of online lending products that we will deploy through the newly acquired platform will exclude any form of payday style lending and the trading style will be dropped. The loan products will fit neatly within the existing Dot Dot Loans strategy, in terms of loan duration, affordability and forbearance. This acquisition, alongside those recently announced in our core HCC market, reinforces our plans to build a digital platform to meet the evolving needs of our customers across the UK, whether online or in the customer’s home.

“We look forward to working with the new teams to maximise the expertise that they bring to deliver best in class service and continue to broaden Morses Club’s capabilities and product offering in the non-standard credit space.”

Morses Club has reported a strong start to 2019 and earlier this month announced its second acquisition of the year – Hays Credit LLP; the firm acquired credit lender Eccles Savings & Loans in January.

Eversheds Sutherland advised Morses Club on the deal.

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