Atlanticus Holdings Corporation (ATLC) has announced they will be selling a new issue of baby bonds with a maturity date in 2029.
The company has a preferred issue outstanding as well as a baby bond already–they are here.
The company will be able to redeem bonds anytime–with payment of a ‘bonus’ added to the $25. Here is their language from the prospectus–
The Notes will mature on January 31, 2029. We may redeem the Notes for cash in whole or in part at any time at our option. Prior to January 31, 2026, the redemption price will be $25.00 per $25.00 principal amount of Notes, plus a “make-whole” premium calculated as described herein, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, we may redeem the Notes (i) on or after January 31, 2026 and prior to January 31, 2027, at a price equal to $25.50 per $25.00 principal amount of Notes, (ii) on or after January 31, 2027 and prior to January 31, 2028, at a price equal to $25.25 per $25.00 principal amount of Notes, and (iii) on or after January 31, 2028, at a price equal to $25.00 per $25.00 principal amount of Notes, plus (in each case noted above) accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The preliminary prospectus can be read here.
Thanks to NewToThis 2015 for being on top of this one.
Unless I’m reading it wrong this looks like it’s only a 2 million share offering. Quite a bit smaller than the prior deal.
Being in the consumer debt business with poor credit consumers when you’re not a too big to fail bank eventually doesn’t end well. Regardless if you’re the fintech provider
This is from the 10Q – Maybe this debt is what the new notes are for:
On November 14, 2019, a wholly-owned subsidiary issued 50.5 million Class B preferred units at a purchase price of $1.00 per unit to an unrelated third party. The units carry a 16% preferred return to be paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. A holder of the Class B Preferred Units may, at its election, require the Company to redeem part or all of such holder’s Class B Preferred Units for cash on or after October 14, 2024. In March 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms. The proceeds from the transaction are being used for general corporate purposes. The Company has the right to redeem the Class B Preferred Units at any time with notice. We have included the issuance of these Class B preferred units as temporary noncontrolling interest on the consolidated balance sheets. Dividends paid on the Class B preferred units are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. See Note 11, “Net Income Attributable to Controlling Interests Per Common Share” for more information.
ATLCP was doing poorly for awhile and recently bounced back, I’ll be comparing to the new one when it starts tarding. Term issues typically carry a premium over perpetuals but I’m not sure that matters if expecting lower rates and possible upside.
I own both ATLCP and CL. A pretty good amount of it. I have always been keeping an eye on ATLC in the sense of their earnings. They always seem to make money per common share each and every quarter. Is the concern less of making money each quarter and being more worried about a total blow out some future quarter due to their business model?