Item 1.01. Entry into a Material Definitive Agreement.
On August 1, 2014, Encore Capital Group, Inc. (the "Company") entered into a
Stock Purchase Agreement (the "Purchase Agreement") with Atlantic Credit &
Finance, Inc. ("Atlantic") and the sellers named therein. Pursuant to the
Purchase Agreement, the Company acquired all of the outstanding equity interests
of Atlantic for approximately $70.0 million in cash (the "Acquisition").
Atlantic acquires and liquidates consumer finance receivables originated and
charged off by national financial institutions. At the closing of the
Acquisition, the Company made additional payments totaling approximately $126.1
million to retire certain indebtedness and other obligations of Atlantic. The
Company financed the acquisition through borrowings under its Second Amended and
Restated Credit Agreement dated as of February 25, 2014 (the "Restated Credit
Agreement") by and among the Company, the several banks and other financial
institutions and lenders from time to time party thereto and listed on the
signature pages thereof, and SunTrust Bank, as administrative agent and
On August 1, 2014, the Company amended the Restated Credit Agreement to, among
other things, (i) modify the permitted investment provisions in the Restated
Credit Agreement to allow investments of up to $205 million for the purpose of
consummating the Acquisition, (ii) increase the Company's ability to incur
additional unsecured or subordinated indebtedness from $450 million to $750
million, (iii) increase the basket of investments permitted in unrestricted
subsidiaries from $200 million to $250 million, and (iv) add a basket to allow
for investments in certain subsidiaries of Propel Financial Services, LLC of
$200 million. On August 1, 2014, the Company amended the Second Amended and
Restated Senior Secured Note Purchase Agreement dated as of May 9, 2013 (as
amended, the "Note Purchase Agreement") by and among the Company, on the one
hand, and The Prudential Insurance Company of America, Pruco Life Insurance
Company, Prudential Retirement Insurance and Annuity Company and Prudential
Annuities Life Assurance Corporations, on the other hand, for purposes of
aligning the covenants in the Note Purchase Agreement with the modified
covenants in the Restated Credit Agreement.
The foregoing summary of the Purchase Agreement and the amendments to the
Restated Credit Agreement and the Note Purchase Agreement do not purport to be
complete and are qualified in their entirety by reference to the complete text
of the documents, copies of which will be filed as exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
Item 7.01. Regulation FD Disclosure.
On August 7, 2014, the Company issued a press release announcing the
Acquisition. The press release is furnished hereto as Exhibit 99.1 and is
incorporated herein solely for purposes of this Item 7.01.
Item 9.01. Financial Statements and Exhibits.
Exhibit Number Description
99.1 Press release dated August 7, 2014