‘’Crediamigo recorded net revenue of $6.9 million and net income attributable to EZCORP of $0.2 million for the two months ended March 31, 2012.’’
That’s an annualized $1.2 million net income attributable to Ezcorp.
Ezcorp paid €50.7 million with further conditional consideration payable in coming years for this stake in Crediamigo ($38.7 million existing shares,€12 million for new shares and further conditional payments after year 1 & 2 )
That’s a payback period of at least 42.25 years.
Such a return wouldn’t even cover the interest on a loan of $50.7 million representing just 2.37% interest.
Does the change in segment reporting mask the true character of the events by absorbing Crediamigo performance into a regional segment (Latin America)?
The extortionate interest expense for the quarter needs to be expanded upon. Does this include a penal loan facility arrangement fee incurred by Ezcorp in funding acquisition of Crediamigo? Or is Crediamigo’s debt burden of €94 million incurring extortionately high interest charges? Surely this was not overlooked at valuation stage.
There is mention of a €2 million cost of acquisition in the quarter...this must be expanded upon….is it loan arrangement fee?
‘’EZCORP announced that it has entered into a definitive agreement to acquire a 60% ownership interest in Prestaciones Finmart, or "Crediamigo", a specialty consumer finance company headquartered in Mexico City. Under the terms of the definitive agreement, EZCORP will pay $38.7M in cash to the existing stockholders of Crediamigo and will contribute an additional $12M to the capital of the company alongside $8M that will be contributed by certain of the minority shareholders. This additional capital will be used to repay existing indebtedness and provide working capital. EZCORP will be obligated to pay the existing stockholders additional amounts on each of the first and second anniversaries of the closing if certain financial performance targets are achieved during 2012 and 2013. Closing is subject to the receipt of certain third party consents and satisfaction of other customary conditions, and is expected to occur on or about January 31.’’
We would like to see a full independent forensic accountant's investigation to establish the identity of the pre-sale beneficial owners of all companies bought by Ezcorp to date as well as to establish the identity of the beneficial owners post acquisition where less than 100% acquired and to establish the identity of loan creditors in these newly acquired companies.
More detailed disclosure of new acquisitions and indeed disposals is required to include detailed investment appraisal.
to directly answer your first question (what would I like to see?)..............I would like to see reporting under the segments Ezcorp has always reported under which by implication would show Crediamigo on it's own as a new segment.The changes to a new segmental reporting format can run concurrently this quarter.I would like to see full disclosure of the investment appraisal for the Crediamigo transaction.I would to confirm that directors have acted in good faith for the benefit of the company and that therefore no legal action is required.
What exactly would you like to see? ......are you for real?
If you sent young Johnny down to the shop with a hundred dollar bill to buy a litre of milk and he came back with an almost empty carton and a receipt stating ''sundry items in the amount of ninety dollars'' you'd need your head examined if you thought that reasonable.
Have you called the CFO or contacted anyone at EZ?
Any dealings I've had with the new CFO,is between him and me.It's not my place to broadcast in this regard as I can only comment on publicly available information.They went to the great bother of changing the segment reporting a day before the announcement of current quarterly results and restated all prior quarterly periods to this new segmental split so as not to show Crediamigo performance in isolation.Not only have they forked out $50.7 million,they've also greatly increased the financial risk for the Ezcorp group due to the high gearing (heavy debt burden) of Crediamigo.....and what for?....an annual profit stream of $1.2 million dollars? a price earnings of 42 times forward earnings?
The directors have a legal duty under Delaware law to represent the company in good faith.
Proving very hard to nail down the facts when Ezcorp offers such little detail but it appears that the law firm Mayor Brown represented the unnamed arranger and senior lender, with respect to a MXP$620 million (US$50 million) syndicated loan facility to Crediamigo, a Mexican financial corporation. The facility was secured by payroll deduction loans granted by Mexican governmental employees.
Separately, White & Case represented HBK Investments in connection with purchasing a low portfolio for consumer credit held by Ixe Grupo Financiero as lender before Prestaciones Finmart, S.A. de C.V. (Crediamigo)as borrower.
Somebody at the top of Ezcorp thought it was a good idea to try and fool investors by announcing a change in segment reporting, from reporting by business type to reporting by region, a day before the announcement of the quarterly results without showing the current quarter under the old segment split which would have highlighted performance of Crediamigo in isolation.That or those persons have done serious damage to Ezcorp invetsor relations.