DFC Global being sold to Lone Star Funds

Posted: April 04, 2014

DFC Global Corp., a payday and pawnshop lender based in Berwyn, on Wednesday announced its sale to a Dallas private-equity firm for $9.50 per share, or $366.5 million.

The deal was signed on the same day a new regulator of consumer finance took over in the United Kingdom, which is DFC's biggest market.

Already last year, tougher lending rules - including one that limited the number of rollovers of short-term loans - went into effect in the United Kingdom, resulting in a steep decline in DFC's projected profits for the fiscal year ending June 30.

DFC has cut its prediction for this year's cash earnings from as much as $240 million in August to $156 million now.

The United Kingdom, where DFC has 596 locations, accounted for 47.5 percent of DFC's $262.3 million in revenue in the quarter ended Dec. 31.

In the United States, which accounted for just 12.2 percent of DFC's revenue in the quarter, regulators are also writing tougher payday lending rules.

The $9.50 buyout price represented a 5.8 percent premium over DFC's close Tuesday. The stock closed at $9.45 on Wednesday. The sale price is well below the stock's recent high of $16.35 in August, before DFC warned that its fiscal 2014 results would be lower than in the previous year.

Shares in DFC, which went public in 2005, reached their all-time high of $24.13 in 2011.

The buyer is Lone Star Funds, which has long specialized in buying portfolios of distressed loans. Including the assumption of debt, the deal is worth $1.3 billion, according to DFC.

The transaction, which requires regulatory and shareholder approval, is expected to close in the July-September quarter. DFC has about 1,500 locations in North America and Europe.

According to a Q&A for employees included in a regulatory filing, Lone Star is expected to keep DFC's management in place. Jeffrey A. Weiss has been DFC's chairman and chief executive since 1990, when an affiliate of Bear Stearns bought it.


215-854-4651 @InqBrubaker

comments powered by Disqus