Repcol signs over debt facility to Credit Corp

Subiaco-based debt collection agency Repcol Ltd has signed an agreement with Credit Corp Group Ltd which will see the Sydney company become its major secured creditor.

Credit Corp will acquire one of Repcol's senior debt facilities, and will undertake due diligence with respect to a potential full restructure or recapitalisation, after taking over the debt and supporting securities held in the company by National Australia Bank.

The company has had its shares suspended since February, after warning it expected to make a loss significantly higher than the $7 million to $9 million predicted in November last year.

The full text of a company announcement is pasted below

As foreshadowed in the announcement to the market on 10 April 2007 Repcol has been considering a number of approaches by parties expressing interest in acquiring the Company or certain of its assets.

Following a consideration of these approaches, Repcol Limited (ASX:RPC) has entered into an agreement with Credit Corp Group Limited ("CCG") for CCG to take assignment of a senior debt facility in relation to Repcol whilst undertaking due diligence with respect to a potential recapitalisation/restructure of Repcol.

To give effect to this agreement Repcol's debt and supporting securities with National Australia Bank have been transferred and assigned to CCG with effect from Wednesday 18 April 2007.

Terms of a Standstill Agreement have been agreed for the period to 28 May 2007 between Repcol and CCG in relation to interest, principal repayments and CCG's security rights.

On 28 May 2007, Repcol and CCG will hold options to sell or buy respectively Repcol's owned debt ledgers for an agreed amount in excess of Repcol's assigned debt to CCG. Repcol would only exercise this option if a suitable restructuring or recapitalisation proposal is not agreed.

The options are subject to Repcol shareholders' approval. This is because any exercise of the options would result in the sale of Repcol's debt ledgers which would constitute the sale of a major asset under the ASX listing rules.

An Extraordinary General Meeting ("EGM") will be called to seek shareholder approval to enable Repcol to exercise its put option and CCG to exercise its call option. Further information will be provided in the Notice of Meeting and accompanying Explanatory Memorandum to shareholders.

If either of the options is exercised, Repcol would continue to service the majority of the debt ledgers sold for a commercial commission rate during the four month period to 28 September 2007.

Until 28 May 2007, CCG will have exclusivity in terms of developing a restructuring or recapitalisation proposal for Repcol. Any restructuring or recapitalisation proposal received from CCG would also be subject to shareholder approval.

Finalisation of the Audit Review of the Half Year Accounts

The agreement with CCG and recent approaches from other parties interested in acquiring certain of Repcol's assets have enabled Repcol to establish a value for its debt ledgers.

Preparation of the Company's half year accounts on a going concern basis is dependent on Repcol restructuring its activities and resolving events of default with respect to agreements with Cargill Financial Services Inc. Discussions are continuing with Cargill Financial Services Inc in this regard.

The Company is now finalising the audit review of the half year accounts.

As mentioned in previous updates, operations continue as normal.