Owners open for sale – E24

Owners open for sale – E24

The rise in interest rates has been tough for the debt collection industry. Sparebank 1 saw values ​​at Kredinor collapse.

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The sharp rise in interest rates has led to red numbers and a sharp decline in the value of the country's largest debt collection company, Credenor.

Now the owners, Sparebank1 Group and Kredinorstiftelsen, are open for sale.

Newly elected Kredinor president Torbjørn Martinsen confirms this to E24.

– Both owners will be open to all possibilities, whether it is a sale of the company or a structural solution. But before getting to that point, a company must show good underlying profitability, Martinsen says.

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- Sparebank1 is a long-term owner, albeit within an area not defined as a core business for the group, says newly elected Kredinor Chairman Torbjörn Martinsen.

Interest rate shock

The sharp rise in interest rates is severely impacting the debt collection industry, and has contributed to this Kredinor lost half a billion kroner last year.

This is due to the sharp rise in interest rates, and the fact that there is an evolution in people's financial situations which means that those who default on debt have a weaker service capacity, says Martinsen.

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He will now take action to reverse this trend.

– We will now develop a good strategy for the company's operations, where the main focus will be on Kredinor's core business, which is debt collection and portfolio purchasing. “So my wish is that we implement measures that can make the company produce good black characters,” says the Chairman of the Board of Directors.

Ownership has changed

In addition to the election of a new president, a general meeting was approved at Credenor this week Changes in the ownership relationship between Sparebank1 Group and Kredinorstiftelsen.

The background is that a crisis loan from Sparebank1 Group worth NOK 675 million to Kredinor earlier this year has been converted into shares.

This changes the ownership portion to approximately 69 percent for the Sparebank1 group and approximately 31 percent for the Kredinorstiftelsen group, from the previous 50/50.

Collapses

The deal is based on Credinor's valuation of NOK 1.2 billion, according to Stock exchange announcement.

This is NOK 2.4 billion lower than what Kredinor was worth when the Kredinor group-owned Modhi Finans and Sparebank1 merged in 2022. At that time, the value was NOK 3.6 billion.

This was confirmed by former Credenor president Sverre Gissing. It also explains the sharp decline in value.

The main reason is very simple, which is high interest rates. Kredinor has large portfolios of distressed debt that need financing, and that financing is becoming more expensive, Gjessing tells E24.

Sverre Gissing resigned this week from his position as president of Kredinor.

– High financial leverage

He points out that depreciation is common across the entire industry, and parallels the evolution of the real estate industry.

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Competitor Intrum with A.J Net debt is approximately SEK 58 billionThey have similar challenges.

– How can an entire industry stop at the same time?

All industries with high loan-to-value ratios face the same challenge today, says Gissing.

He adds that there were also some challenges associated with the merger of Credenor and Moody Finance.

The two companies have merged as of October 2022, meaning Sparebank1 Group, which owns Kredinorstiftelsen and Modhi, share ownership.

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– Merger

A NOK 1.2 billion valuation before the NOK 675 million loan, according to Gissing. This values ​​the company at approximately NOK 1.9 billion today.

In the same stock exchange announcement, it was announced that Kredinor may go into effect.

“The value was negotiated between the owners of Kredinor, with the support of external advisors, and reflects that an agreement has also been concluded on how the proceeds of the potential sale of the business will be distributed between the owners.” .

explains newly elected President Torbjørn Martinsen.

– It is implied when concluding such an agreement that a sale may be a possibility. He says there have been many consolidations in the industry, and more are likely to happen soon.

Chairman of the Board Sverre Olaf Hilsem, Kredenorstiftelsen.

– Connected

He is supported by Chairman of the Board of Directors Sverre Olaf Hilsem at the Credenor Foundation.

– We feel that we and Sparebank 1 agree on the strategy of full or partial sale of the company when the company and the market are ready for it, the Chairman of the Board of Directors wrote in an email to E24.

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The institution valued Credenor at more than NOK 2.1 billion in 2022, before the merger with Modhi Finans.

Today, the foundation's ownership is valued at about NOK 600 million, about 31 percent of “a company twice as big,” the chairman notes.

– The value evolution reflects the evolution of the company and the market of which Credenor is a part, Hilcim wrote.

Losses in billions

Kredinor dates back to 1876 and until 2022 was a cooperative owned by customers or members of the cooperative.

The form of ownership was then changed to a limited company so that Credenor could raise capital and participate in structural changes, which the co-op was not open to.

The Kredinor Foundation was then established as a long-term owner in Kredinor.

The foundation can pass on Credenor profits according to cooperative principles, but it also has charitable purposes, according to Laws.

The chairman is not concerned about weaker dividend prospects.

– He writes that Kredinorstiftelsen has the necessary working capital for several years of work also to achieve the purpose of the enterprise.

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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