Failed collections operator Receivables Management Group emerged from 13 months in administration last week, resuming trade on the Australian Stock Exchange last Friday.
Failed collections operator Receivables Management Group emerged from 13 months in administration last week, resuming trade on the Australian Stock Exchange last Friday.
The former Melbourne-based national credit management player went into administration on April 28 last year, and its shares were suspended from trading on the ASX the following day.
Subsequently, creditors agreed to a proposal to recapitalise the company, and a deed of company arrangement was executed on August 11.
Creditors further agreed to a variation to the company arrangement in November to allow West Perth company reconstruction specialist, Ascent Capital, to recapitalise the business.
Ascent Capital director Gary Steinepreis told WA Business News his company’s goal was to reconstruct and revitalise RMG and keep the existing business going.
“We have arranged for the debt collection to be outsourced, to ensure expertise in the company’s core business activity and minimise the risk exposure for ourselves,” Mr Steinepreis said.
RMG’s debt collection functions will be undertaken by Melbourne’s Australian Receivables Ltd, which bought RMG’s remaining business from the administrators in June last year.
RMG has just completed a $1.8 million capital raising to help it evaluate other opportunities in the collections sector and general consumer services, and also repay a $725,000 loan from Ascent.
In preparation for the resumption of its operations, the company acquired two debt portfolios, with a face value totalling $2.04 million, made up of credit card debt and personal loans, from ARL for $25,000 from funds provided by Ascent.
Under the terms of the debt portfolio purchase, ARL is the exclusive collections agent and will receive a collection fee of 42.5 per cent of the debt collected.
Of the net proceeds received after ARL’s collection fee, RMG will pay creditors 50 per cent of the amount collected above $25,000 in the first year, and any balance will be retained by RMG to help re-establish the company.
Mr Steinepreis and fellow Ascent directors David Steinepreis and Paul Hearne have been appointed directors of RMG and propose to continue to operate the business as a collections group, while also pursuing complementary acquisitions.
“Our strategy will be to grow the business slowly and over time generate a return for shareholders, and we will look at timely acquisitions after completing appropriate due diligence,” Gary Steinepries said.
The first aim, however, was to re-establish the business, and there were no large acquisitions plans currently on the agenda, he said.
The collapse of RMG last year had implications in the mercantile sector Australia wide. RMG embarked on an aggressive acquisition plan in 2000, buying 23 debt collection firms nation-wide, including four from Perth, to form a major industry player.
However, the business was ultimately placed in the hands of administrators Wayne Benton and Rod Slattery of PPB last year, contributing to a period of uncertainty in the collections sector in WA.
Industry sources believe the previous RMG model failed because it operated on a centralised call centre structure, not a decentralised model, which did not work effectively in local markets.
RMG’s new board is looking at other services sectors, such as financial services, as potential acquisition or development targets, and will consider projects within Australia as well as overseas.
