By Huw Jones
LONDON (Reuters) - British consumer lender Non-Standard Finance (NSF) said on Friday it has agreed provisional terms with its lenders to convert 71 million pounds ($89 million) of secured debt into equity as part of a recapitalisation that would likely wipe out existing shareholders.
"It is anticipated the lenders would hold approximately 20% of NSF's enlarged issued share capital if the proposed capital raise is successful. As at 31 December 2022, the Company had total gross debt of 255 million pounds," Non-Standard Finance said in a statement.
NSF said the indicative proposal from its lenders would substantially improve its balance sheet following a successful capital raising, underpinning prospects for strong growth in its lending business and a return to profitability.
"Although the proposed recapitalisation will ensure the future of the Group and the Everyday Loans business, it will materially dilute the interests of NSF's existing equity holders, most likely to negligible value, unless they choose to participate in the equity raise," the company said.
Without strengthening the balance sheet, the group would remain insolvent and most likely go into administration, the company added.
NSF said Non-executive Chairman Charles Gregson will stand down after more than 8 years on the board.
At its annual meeting, Niall Booker will stand for election as non-executive chairman to replace him.
The subprime lender last month outlined plans to recapitalise through a share sale.
($1 = 0.7977 pounds)