Scheme of Launch & Proposed Recapitalisation

Non-Standard Finance plc

('Non-Standard Finance', 'NSF' or the 'Company')

Launch of scheme of arrangement ('Scheme') and update on proposed recapitalisation

17 March 2023: Non-Standard Finance announces the launch of the Scheme and provides an update on the proposed recapitalisation (the "Proposed Recapitalisation") of the NSF group (the "Group"). The Scheme, if successful, will provide certainty on the extent of the Group's liability for historical redress claims, paving the way for a capital raise which, if successful, would restore the Group's balance sheet, fund the partial payment of redress claims under the Scheme and return Everyday Loans (branch-based lending) to profitable trading.

Scheme

Everyday Lending Limited, the wholly owned subsidiary of NSF which runs Everyday Loans and previously ran George Banco and Trust Two until they ceased new lending in November 2020, launches the Scheme today through the issuance of the Practice Statement Letter ("PSL") in relation to the Scheme.

As set out in the PSL, the Scheme will compromise:

Under the Scheme, £14 million (the "Scheme Fund") will be made available for payment to customers with valid Redress Claims and the FOS (the "Scheme Creditors"), in exchange for the release of the Redress Claims and the FOS Fees in their entirety. Scheme Creditors are estimated to receive between approximately 22% and 28% recovery.

The Group has negotiated the financial terms of the Scheme with a committee of customers, which decided that it preferred the Scheme over an insolvency process.

The FCA has reserved its position on the operation of the Scheme until it has completed its assessment of the proposals. The FCA has only very recently been provided with final details of the Scheme proposals.

The FCA has informed the firm that once the terms of the Scheme have been finalised and communicated to it, in the event that the FCA is not satisfied with the Scheme terms, it reserves the right to take any action it may consider appropriate, including to oppose the Scheme in Court.

Under the current expected timetable, the Court convening hearing will be held on 28 April 2023, the creditors' meeting where the Scheme Creditors will vote on the Scheme will be held virtually on or around 12 June 2023, and the Court sanction hearing will be held on 22 June 2023. Once sanctioned, the Scheme will be conditional upon the Scheme Fund being funded through the proceeds of the Proposed Recapitalisation or the Alternative Transaction (as defined below).

The Group is now relying on DISP 1.6.2R(2), pursuant to which the business is able to place a temporary hold on the processing of customer complaints included in the Scheme, as it is not in a position to provide a final response to these claims until the conclusion of the Scheme process.

Proposed Recapitalisation

The Scheme is a key component of the Proposed Recapitalisation, which will ensure the future of the Group and the Everyday Loans business. The Group's intention is for the Proposed Recapitalisation to be implemented shortly following Court sanction of the Scheme.

The Proposed Recapitalisation will involve:

The Proposed Recapitalisation has the support in principle of NSF's largest shareholder and the Group's secured lenders, subject to agreement on the terms and other conditions described below and, in the case of NSF's largest shareholder, further diligence on and its assessment of the Group's revised business plan and financial projections.

NSF expects the equity raise to include both a placing with new and existing institutional investors as well as an open offer component, whereby existing shareholders will be provided with an opportunity to participate in the capital raise.  The structure, detailed terms and viability of the equity raise are expected to be confirmed in Q2 2023 following consultation with major shareholders and potential investors.

Although the Proposed Recapitalisation will ensure the future of the Group and the Everyday Loans business, it will materially dilute the interests of NSF's existing equity holders, most likely to negligible value, unless they choose to participate in the equity raise.

Completion of the Proposed Recapitalisation is subject to the agreement of terms between lenders and the Group's largest shareholder, and a number of conditions, including Court sanction of the Scheme, shareholder approval, the take-up of shares under the equity raise and execution of definitive documents.  Assuming all conditions are satisfied, NSF expects the Proposed Recapitalisation to complete at the end of Q2 2023 or the start of Q3 2023.

The Group has also agreed with its secured lenders to implement an alternative transaction if the Scheme is sanctioned but the conditions to the Proposed Recapitalisation are not satisfied (the "Alternative Transaction"). The Alternative Transaction would involve a transfer of the ownership of the Group's business to the secured lenders in exchange for the release of a portion of their secured debt and the provision of a new lending facility. Part of the proceeds from this new lending facility would be used to fund the Scheme Fund and cover the costs of this Scheme. Under the Alternative Transaction, there would be no recovery for the Company's shareholders.

In the event that the Scheme is not sanctioned by the Court, or the Scheme is sanctioned but the Proposed Recapitalisation and Alternative Transaction both fail, then the Group would remain insolvent and the most likely outcome would be a Group-wide insolvency (most likely administration), resulting in no return for current shareholders, a significantly reduced return for secured lenders and minimal or no cash recovery for customers with valid redress claims.

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. The person responsible for arranging the release of this announcement on behalf of Non-Standard Finance plc is Sarah Day, Chief ESG Officer and Group Company Secretary.

Jono Gillespie, Group Chief Executive, said:

"We are very pleased to have reached this important milestone. Whilst this is, in a sense, only the end of the beginning, and significant additional work lies ahead over the coming months, the launch of the Scheme is the first key step in reaching certainty as to the extent of our liability for historical redress claims, which should then lead the way towards a successful recapitalisation of the Group and secure a successful future of our branch-based lending business. It has been a long journey to reach this point and I am thankful to all our stakeholders, including the customer committee, who have helped us get here. I would also like to express my sincere thanks and admiration to all the branch-network team at Everyday Loans who have continued to give 100% throughout this difficult period."