After more than two years when COVID-related lender forbearance cut off the supply of delinquent debt to debt buyers and collectors, the tap has been turned back on.
Pioneer Credit announced yesterday that it has entered into a five-year agreement with Commonwealth Bank to acquire debt portfolios. It said the agreement would require annual investment of up to A$35 million.
Like a number of other companies in the sector, Pioneer has been through a difficult period. Some of its problems were COVID-related and others were of its own making.
It defaulted in 2019 and only put long-term refinancing in place late last year.
It lost $40.1 million in 2019/20 and $19.6 million in 2020/21. In the December half-year, it lost another $22.8 million.
The purchased debt portfolio shrank as the company did not have the funds to invest.
Things have picked up in recent months. In March, it signed a deal to pay $38.5 million for a debt portfolio with a face value of $85 million, consisting of 9550 big four bank and international lender accounts. It forecast “lifetime liquidations” of around $68.5 million.
To support that deal, Pioneer raised $11.3 million through an institutional and sophisticated investor placement.
And its lender Fortress Investment Group agreed to upsize its senior debt facility from $200 million, with a commitment of up to $40 million.