An SME lender has announced it is entering voluntary administration, after losing the support of its senior leaders.
Axsesstoday, a publicly listed SME lender, went into voluntary administration after senior lenders said they were unable to continue supporting the business with ongoing waivers of breaches of loan terms.
“Axsesstoday’s business has grown significantly over the past three years, placing pressure on the capital structure of the business. This, coupled with higher arrears than anticipated, has resulted in breaches of financial covenants with its lenders and a capital structure that is inadequate for the business and its continued growth," said the lender's statement to the ASX.
“The directors sought a voluntary suspension from its listing on the ASX in September while they undertook a review of the business and sought to raise capital to enable the group to, amongst other things, comply with the terms of its finance documents and set itself for future growth.”
The non-bank lender reported to the ASX in October last year that a change in its bad debt provisioning methodology, combined with an increase to its impairment recognition to begin at 180 days past due (instead of 30 days), had “inadvertently triggered a breach of its financial covenants” with its senior lenders.
Changes to Axsesstoday’s corporate structure, through the introduction of new entities within the group, were also approved without the consent of the banks.
Further, $2 million in funding “in business loans through one of these new entities” was secured outside agreed terms.
The SME lender said it sought consent from noteholders and bondholders to waive the covenant breaches and make amendments to the lending agreement terms to “remove ambiguity in the interpretation of the covenants”.
However, on 5 April, senior lenders notified Axsesstoday that it would not be able to continue supporting the business.
'Business as usual'
"It is business as usual and we expect there will be strong interest from onshore and offshore investors. We will achieve a recapitalisation or sale and will continue to work with the group’s financial advisers, Moelis Australia, to ensure a positive outcome," said administrator Vaughan Strawbridge.
“The voluntary administration process will allow greater flexibility for the restructure of Axsesstoday and seek to ensure the future of the business in the Australian asset-based lending market."
Insolvency accountant asks: Have you paid your tax yet?
By John Papadopoulos
Ask the Experts: Does automation stack up financially?
By Christopher Overton
Opinion: How bad do things have to get?!
By Adam Zuchetti