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Firstfolio has taken a major step towards solidifying its future after a company linked to a major shareholder agreed to take on $58.3 million of its debt.
The group has now “entered into binding documentation” for Welas to acquire Firstfolio’s $29 million senior debt facility from the Commonwealth Bank – seven weeks after agreeing the deal.
The debt facility will be extended from 7 July 2014 to 7 July 2016 as part of the deal.
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Firstfolio includes a retail loan aggregation and broking division, eChoice, and a wholesale finance, franchise and leasing business, Folio Mortgage & Finance.
Welas is a company associated with Firstfolio director and shareholder Tony Wales. It was previously classified as Firstfolio’s subordinated debt provider after loaning the group $29.3 million.
Welas will now become Firstfolio’s senior secured debt provider to the tune of $58.3 million.
According to Firstfolio’s half-yearly results, the company ended the 2013 calendar year with $60.5 million of debt after repaying $3.1 million during the preceding six months.
Chairman Eric Dodd said the debt deal places the company on a “strong financial footing” and would allow it to “pursue new growth opportunities” while reducing its debt in a measured way.
“The consolidation of our debt facilities and extension of the maturity of the assigned facility means we are very well placed to consider new alliances and build on the $18 billion in loans under management across the company,” he said.
“Firstfolio has a very strong nationwide mortgage broker network, with one of the leading online non-bank mortgage providers in eChoice, which provides tailor-made solutions to clients through its innovative technology.”
Mr Wales said he was a committed long-term shareholder and financier to Firstfolio.
“Given the ongoing consolidation and evolution of the financial services sector, I believe the company is well-financed to build on its market position and support its customers by delivering innovative financial service solutions,” he said.
[Related: Firstfolio reports $294,000 loss]
