– The industry is aware of the difficult situation – E24

Debt collection company Kredinor has been given a temporary lifeline by banks. But it required NOK 675 million from one of the owners.

The nation's largest debt collection company got financial breathing room after warning it may be violating the terms of the company's loan earlier this fall.

Kredinor has now agreed with the banks some relaxations in terms and an extended term for an ongoing and revolving loan, while one of the company's owners, Sparebank1 Group, will provide Kredinor with a loan of up to NOK 675 million.

– Negotiation

Chairman of the Board of Directors Sverre Gissing in Credenor expressed his great satisfaction with the solution, after what he described as “demanding but constructive” negotiations.

– It is always negotiated to reach a reasonable outcome, but I think we found a good balance between the contributions of owners and banks, Gissing tells E24.

– Claim

Animal time and slimmer wallets affect not only people's ability to pay, but also the companies responsible for collecting debts, once the defaults are over.

This summer, several of the nation's largest debt collection companies reported losses, some for the first time in history.

At the same time, companies have been forced to take massive write-downs on portfolio values ​​of unpaid claims, as many are less likely to be able to settle for themselves.

– I think everyone in the industry knows that this is a difficult macroeconomic situation, says the head of Credenor.

As of the end of September, Credenor had written down the portfolio value by NOK 268 million so far this year, including NOK 180 million in the third quarter alone.

Fire the top manager

Regarding the announced third quarter numbers Kredinor had violated the terms of the loan sometime between October and December.

Earlier this month, Klaus Anders Nystein, CEO of Credenor, was fired that day, and was temporarily replaced by Chief Investment Officer Rolf Ek Johansen.

Meanwhile, Director of Operations Lisa S. Legalet-Hansen to the position of Deputy General Manager.

-We want to focus on and strengthen the core business. That's why we appointed this team, led by Rolf, who was an investment manager and knows the industry well after many years, Kredinor's boss told E24 at the time.

Breathing danger

In the new agreement with the banks, Credenor amended the loan terms as of the fourth quarter of 2023.

Kredinor's collection requirement of 95 percent of the portfolio is now stated to be measured quarterly, but it will be allowed to collect at least one quarter at 90 percent on a 12-month rolling basis, according to Stock market announcement on Friday.

The total loan portfolio must not exceed 72.5 percent, and the percentage of secured loans must not exceed 60 percent.

The banks participating in the existing and revolving loan (revolving credit facility), DNB, Nordea, SR-Bank and Swedbank, also extended the term by one year, maturing in November 2025.

As part of the agreement, one of the main owners, Sparebank1 Group, granted Kredinor a subordinated loan of NOK 675 million.

“The previously notified situation relating to the risk of breach of loan terms has been addressed,” Credenor wrote in the exchange announcement.

Claimed landlord support

The Chairman of the Board will not say whether the NOK 675 million is a request from the banks to modify the terms of the loan.

– There is a delicate balance between minimum requirements, buffering and freedom of action. But without it we wouldn't have been able to find a solution, and that's part of the nature of it, Gissing says.

– Can you guarantee the owner that you will not come and ask for more money?

-It is very difficult to guarantee anything in this world. What is at least certain is that this gives us a good solution for the company, and that there is now full focus on running the business further, says the Chairman of the Board of Directors.

Fast process

He praises the owners and banks for the good operation.

The process has gone relatively quickly, over a few weeks now, as there has been a parallel dialogue with owners and banks to find common solutions that satisfy everyone, says Gissing.

Kredinor is owned by Sparebank 1 Group and the Kredinor Foundation.

The chairman refers to the owners when asked who gave the company the NOK 675 million loan.

The loan has a lower priority or security than revolving credit facilities with banks.

The loan also comes behind Kredinor's NOK1.5 billion bond loan, of which the company has drawn NOK1 billion as of today.

Savings banks turn the pages

Chairman of the Board Per Halvorsen from Sparebank Group 1 confirms that banks in the savings bank alliance provide up to NOK 675 million in loans.

– It is the Sparebank1 minus LO banks that provide the loan across the Sparebank1 group, broken down by the size of the individual banks, the Chairman of the Board tells E24.

Halvorsen is currently CEO of Sparebank 1 Sørøst-Norge.

– Will NOK 675 million be enough for Kredinor to stay within the terms of the loan and manage it alone for the foreseeable future?

– We believe that it should be sufficient based on the information available to us until today, says the Chairman of the Board of Directors.

-Is it a sign that debt collection companies themselves are having problems meeting the terms of the loan?

– What we see is that the framework conditions for conducting debt collection activities have changed significantly. It's much more demanding than it was a few years ago, and you have to adapt your speed to the circumstances in order to run a profitable business in this industry today, says Halvorsen.