American private equity firm Pine Brook has shed its stake in The Car Finance Company (TCFC), filings have shown, as the subprime lender heads towards a solvent dissolution this year.
Companies House filings for the year ending 30 June 2017 show Pine Brook Road Advisors’ shares in TCFC were ceded to a charity trust, following a complex reshuffling of the company’s legal structure.
TCFC fell into financial difficulties early last year after talks with Pine Brook to inject more cash to keep the company came to a halt.
In October, shareholders decided to stop funding new business, and move the existing customer portfolio to a special purpose vehicle dedicated to collecting debt. TCFC has been operating on an interim Financial Conduct Authority licence, which does not allow it to generate new contracts, since April 2017.
Under current plans, TCFC is set to dissolve in 2018, after the repayment of creditors, including previous shareholders, through the portfolio’s wind-down. Creditors will subsequently waive any outstanding debt.
TCFC said: “The board of directors, in conjunction with the funders, are currently assessing alternative solutions in order to optimise the recovery of value to the creditors whilst maintaining high levels of customer service.
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“It is the belief of the of the directors that the company can continue to trade in a solvent manner until the wind-down is complete.
The board acknowledged there could be “no certainty” of ongoing support for the agreement from creditors, but currently had “no reason” to believe support would be withdrawn.
TCFC said it intended to remain on the interim FCA licence, set to expire in 2018, adding that it was “exploring alternative solutions to service the customer base after this time”.
The main entity for TCFC reported a loss of £30m for the year ending June, up 60% from 2016. This was against revenues of £46.6m, down 7.8%.
Net liabilities for 2017 amounted to £52m. Current assets – those expected to be converted in cash within one year – totalled around the same.
TCFC used to be a majority shareholder in Passtime, a Colorado-based maker of devices allowing financed vehicles to be disabled remotely in case of belated payments. TCFC was a heavy user of the devices. The company has since sold its stake in Passtime to third-party shareholders.