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Pioneer High Yield Offer

High Yield Offer: Pioneer Credit Ltd | ASX: PNC | Equity Up 28% Since Bond Issue

Pioneer Credit BBSW + 8.75% 5-year notes

In October IAM Capital Markets led an increase to the existing Pioneer MTN issue. The transaction was a small part of Pioneer’s broader refinancing strategy to significantly reduce their cost of funds, position themselves for growth, and capitalise the business.

Pioneer launched an amend and extend corporate action to existing noteholders (formerly PIOCRE BBSW + 7.25% 2023), with more than 90% of holders voting to accept the new terms. This allowed Pioneer to alter the terms of the existing AUD40m of MTN notes while also increasing the transaction by an additional AUD20m.

Table 1. Pioneer MTN Increase

Pioneer Credit MTN Increase
Issuer: Pioneer Credit Limited
ISIN: AU3FN0041505
Coupon Type: Floating Rate Note
Coupon: 3M BBSW + 8.75%
Maturity Date: 30-Nov-2026 (5 yr)
Issue Size: AUD60m
Early Call Premiums: Year 1: $104.00
Year 2: $103.00
Year 3: $102.00
Year 4: $101.00
Offer Price: $100.00 + accrued

Source: IAM Capital Markets

About Pioneer Credit

Pioneer Credit Ltd (ASX: PNC) is an ASX-listed financial services provider with over 200,000 customers across Australia and New Zealand. Pioneer listed in 2014, but its origins trace back to 2009.

Pioneer specialises in acquiring and servicing unsecured retail debt portfolios (PDPs) — typically personal loans and credit card accounts more than 180 days overdue from major/regional banks. Commonwealth Bank (CBA) is one of the key counterparties across the PDP book, which illustrates the ranking and quality of the underwriting at hand.

These portfolios consist of people with financial obligations to Pioneer. Portfolios are acquired at distressed values (around 20c in the dollar) and Pioneer works with customers to restructure and facilitate monthly payments over time.

Debt Restructuring Strategy

  • The business is a turnaround story that will materialise quickly thanks to an almost 50% reduction in cost-of-capital and an equity injection (announced on 2 November 2021) for the benefit of debt holders.
  • Pioneer has successfully refinanced their senior debt facility with Fortress. The new debt facility marks the end of a challenging period for Pioneer and the start of a new chapter characterised by sustainable performance and growth. This refinancing is the outcome of a comprehensive process undertaken by Pioneer over recent months, and it delivers:
    • Significantly reduced cost of funding;
    • Enhanced balance sheet flexibility and extended duration;
    • A sustainable path to profitability and deleveraging;
    • A platform for Pioneer to execute its growth strategy; and
    • A capital partnership with a highly sophisticated global investor.

Chart 1. Refinancing Capital Structure Summary

Source: Pioneer Credit Investor Presentation

The equity raise of AUD5.4m was supported by Nomura, an outgoing senior financier.

Following the refinance of Pioneer’s capital structure and coupled with the additional AUD5.4m of fresh equity capital, we believe the PIOCRE BBSW + 8.75% 5yr notes represent excellent relative value in the AUD high yield space. IAM Capital Markets continue to support the transaction through secondary market trading. Please contact your relationship manager for updated pricing.

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