Perth debt collection specialist Keith John has sold his Pioneer Credit Management Services business into a listed national enterprise for the second time in the past six years.
Perth debt collection specialist Keith John has sold his Pioneer Credit Management Services business into a listed national enterprise for the second time in the past six years.
Sydney-based Credit Corp Group Ltd has bought Pioneer from Mr John and his business partner Mark Street for an undisclosed value, with an 80:20 split between cash and shares.
In confirming the sale to WA Business News today, Mr John said the deal was very different to the sale of a previous version of Pioneer to fledgling national operator RMG Ltd, which traded as Receivables Management Group.
Pioneer was restarted by Mr John and Mr Street after RMG ran into management turmoil and financial difficulties.
Mr John said the deal with RMG was part of a wave of consolidation across the industry with Pioneer one of 23 acquisitions by the listed parent.
He said Credit Corp was the strongest player in Australia and the purchase would be complementary for both businesses which have a operational links for some time.
"We have worked with these guys for the past three years and they have become one of our most significant clients," Mr John said.
He said the past year that relationship had extended to Credit Corp staff being located in Pioneer's East Perth offices.
"They specialise in debt purchase whereas we specialise in fee-for-service work," Mr John added.
He said the Pioneer brand would grow as the national mercantile brand for Credit Corp.
Shares in Credit Corp, which has a market capitalisation fo around $300 million, were up more than 2 per cent after the deal was announced.
Below are the full annoucements:
Directors are pleased to announce that the Company has acquired 100 percent of the issued capital of
Pioneer Credit Management Services Pty Ltd, a leading private receivables management company with
operations headquartered in Perth.
Credit Corp's Managing Director Geoffrey Lucas stated, "We have developed an increasingly successful
commercial relationship with Pioneer over recent years and are delighted today to announce this acquisition.
Pioneer Credit's Managing Director Keith John is a highly regarded Executive in the industry and he has built
an organisation with an exceptional reputation and a culture closely matching our own. We have enjoyed
drawing on Keith's skills and look forward to his growing contribution to our Senior Management Team in
coming years."
The acquisition will result in the substantial growth of Credit Corp's Western Australian operations, increasing
the Company's existing presence in Perth to a full-time equivalent headcount of approximately 60. Both Mr.
John and his fellow Pioneer Credit Founder and Director Mr. Mark Street have entered into employment
contracts with Credit Corp. Like the recent acquisition in Queensland, the purchase of Pioneer underpins
Credit Corp's strategy of growing its labour centres in regions outside Sydney in order to attract and retain
the best possible mix of talent.
Mr Lucas added "Keith has successfully built Pioneer Credit into one of Australia's leading private recovery
firms. Whilst we will be maintaining a number of high quality agency contracts and applying Pioneer's
contingent collections expertise strategically within our debt purchase client base, we are looking forward to
leveraging our now strong West Australian operation predominantly into our ledger acquisition business. The
team Keith has assembled will enable an immediate, substantial and efficient scaling of our operations
capacity in Western Australia."
The acquisition is effective 1 July 2006 and will be financed using a mix of operating cash and existing debt
facilities. Consideration for the transaction is broken into 80% cash and 20% shares, which are linked to a
number of performance metrics and will be paid over a three year period subject to meeting hurdle criteria.
The acquisition is expected to contribute $1 million in EBIT in the 2007 financial year.
In light of this acquisition and following on from Credit Corp's strong ledger purchase program in the 2006
financial year, Directors today announced an upgraded post tax earnings guidance range of $18 million to
$19 million in the 2007 financial year. This upgrade represents an uplift of 29% to 36% NPAT growth on the
upper end of the company's recent guidance as to the 2006 financial year result. The company anticipates
reporting 2006 results on 23 August, 2006.
The Directors of Pioneer Credit Management Services Pty Ltd (Pioneer Credit) today announce the sale of
all shares in the company to Credit Corp Group Limited (CCP), Australia's largest and most successful
financial recovery company.
Since its commencement in January 2003 Pioneer Credit has grown quickly to become one of the largest
commission based debt recovery agencies in Australia with a team of over 60 people in East Perth.
As part of the transaction announced today CCP advises that the Pioneer Credit brand will become the
brand for its commission based business and that it will be expanding its collection facilities in Perth.
Both Pioneer Credit Directors Keith R. John and Mark Street will continue on with the group.
Keith will remain a Director of Pioneer Credit and be based in Perth with responsibility for the West
Australian debt purchase operation, the growth of the national mercantile business, and a range of other
group initiatives.
Announcing the sale today Keith said "Since the commencement of Pioneer Credit in 2003 CCP has been
one of our most significant clients. In the past six months the Pioneer Credit / CCP relationship has grown
more rapidly to encompass a Credit Corp team located in our East Perth Contact Centre. The sale
announced today is the result of the close working relationship between the two organisations and will
produce significant opportunities for every Pioneer Credit team member to grow their careers and
contribute to the leading debt management group in the Southern Hemisphere."
Credit Corp Group CEO Geoff Lucas added "We are pleased to have Keith and his team join our group.
The alignment in values between Pioneer Credit and Credit Corp has been a critical element in
considering this transaction and we look forward to the Pioneer Credit business continuing to be a
growing profitable brand within Australasia."
CCP is an Australian Stock Exchange listed company (ASX Code: CCP) with a market capitalisation
approaching AUD$300m. CCP is the largest and most profitable purchaser of debt ledgers in Australia with
and a FY2007 forecast net profit after taxation of $18m to $19m.
