Encore Capital increases credit agreement availability, amends terms

By Tali Rackner

Norfolk, Va., July 15 – Encore Capital Group, Inc. amended its second amended and restated credit agreement with administrative agent SunTrust Bank on July 9, according to an 8-K filing with the Securities and Exchange Commission.

The amendment raises the company’s ability to incur additional unsecured or subordinated debt to $1.1 billion from $750 million.

The amendment also increases the maximum cash flow leverage ratio to 2.5 times from 2 times and adds a maximum cash flow secured leverage ratio of 2 times, which may be temporarily increased to up to 2.25 times following the consummation of a permitted acquisition in which the purchase price is $100 million or more.

In addition, various investment baskets were consolidated into a single basket not to exceed the greater of (a) 200% of the consolidated net worth of Encore and its restricted subsidiaries; and (b) an unlimited amount such that after giving effect to the making of any investment, the cash flow leverage ratio is less than 1.25 times. The basket for permitted acquisitions was increased to $225 million per fiscal year from $225 million over the life of the restated credit agreement.

The maximum amount of permitted stock repurchases was also increased to $150 million from $50 million.

Encore is a San Diego-based provider of debt management and recovery services for consumers and property owners.

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