Anexo expands debt facilities with its two main lenders

Integrated credit hire and legal services provider Anexo Group announced increased debt facilities following discussions with its two major lenders on Thursday, to fund growth in its credit hire and legal services divisions.

The AIM-traded firm said that in total, the facilities would provide additional financing of £16m across the year.

Looking at its credit hire division, Anexo explained that Direct Accident Management (DAMS) and Professional and Legal Services (PALS) - both subsidiaries of its credit hire operation EDGE - used an invoice discounting facility provided by Secure Trust Bank, which was secured on the respective trade receivables of each company.

It said that the funding under those agreements was being increased immediately to £25m from £18.5m, split between £17m as a credit hire facility, £6.5m as a credit repair facility, and £1.5m to support growth within PALS.

That initial increase would be followed by three quarterly increases of £2.5m, taking the overall facility to £32.5m.

The overall facility limit would be £36.5m, with the minimum period for the agreement extended to 31 December 2022.

Interest on the credit hire and credit repair facilities was charged at 3.75% above base rate, while interest on the PALS facility was charged at 2.75% above base rate.

In July 2020, DAMS secured a £5m loan facility from Secure Trust Bank under the government's Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The loan was secured on a repayment basis over the three-year period, with a three month capital repayment holiday, £2m of which was to be paid as a final instalment.

Interest was payable at the CLBIL scheme interest rate, with the facility provided alongside the newly-agreed facilities, and the final instalment now being amortised over the remaining life of the facility.

Looking at its legal services division, Anexo said its legal services operation Bond Turner operated with a revolving credit facility provided by HSBC Bank.

The group said it had received approval from HSBC for an immediate increase in the facility to £10m from £8m, committed for a period of three years, with interest payable at SONIA rates.

It said it was expecting to finalise the arrangement shortly.

In July 2020, Anexo secured a loan of £2.1m from a specialist litigation funder to support the investment in marketing costs associated with the VW emissions class action.

The terms of the loan were that interest accrued at the rate of 10% per annum, with maturity at the earlier of settlement of the claim and receipt of the proceeds, or three years from the date of receipt of funding.

In addition to the interest charges, the loan attracted a share of the proceeds to be determined by reference to the level of fees generated for the group.

The company said the terms of that arrangement remained unchanged.

“We are delighted to have agreed new terms with our two longstanding finance providers,” said executive chairman Alan Sellers.

“The agreements underline the strength of our relationships with our lenders and their confidence in our business model and growth aspirations.”

Sellers said the new facilities would enable the firm to broaden its dual strategies of raising the number of vehicles on the road, while investing in legal staff and infrastructure to increase the level of cash collections.

“The board believes that its policy of concentrating on growth will offer new opportunities for the group and create long-term value for all our shareholders.”

At 1305 BST, shares in Anexo Group were up 1.06% at 143p.