MOGO ADDRESSES QUERIES ON FINANCIAL COVENANTS
Riga, Latvia, 10 July 2020. Mogo Finance and the representative of the investors in the Euro bonds have agreed to temporarily increase the potential financial covenants headroom, in exchange of a liquidity undertaking that would ensure timely payment of interests.
We would like to stress that no covenant breach of the Euro bonds has occurred so far and the above actions were a precautionary measure of our management to keep all options open for Mogo Finance during the Covid-19 crisis.
Mogo Finance has recently come across rumours circulating in the market, that may be detrimental to investors in the Euro bonds and to Mogo Finance itself. Mogo Finance is committed to address them in the following news release as well as upcoming investors’ call.
Since the beginning of this unprecedented pandemic, Mogo’s management has had four priorities: (i) the healthcare of its employees, (ii) the serving of its customers, (iii) the maintenance of its operations and (iv) the protection of its creditors, including the bondholders.
In May 2020, Mogo Finance investigated whether it was legally feasible to mitigate potentially adverse and extraordinary effects of the pandemic on its financial covenants. Within the limits of the terms and conditions of the Euro bonds, and after lengthy discussions with the bondholders’ agent, it was agreed with the bondholders’ agent to temporarily decrease the capitalisation ratio and suspend the interest coverage ratio in exchange of a liquidity undertaking that would ensure timely payment of interests despite a potential stress scenario and expected market contraction. This was in line with measures taken during the pandemic by other market participants, whereby creditors are allowing debtors to tackle the economic consequences of Covid-19 in the interest of all parties. The measure was taken in the best interest of the investors in the Euro bonds, whose rating was affirmed again on 2 July 2020, also as a result of the temporary measure.
The main obligation of Mogo Finance towards the investors is to pay interests and capital on the bonds, which is actually safe and has become more certain with the liquidity undertaking.
“As of today, the financial covenants are within the thresholds set out under the terms and conditions. This was a hard-to-take precautionary measure to ensure that continuity of operations and cash generation would have not been affected by extraordinary circumstances beyond Mogo’s control. We have already taken certain business decisions to curtail the pressure on financials on which the public including Euro bond investors will be informed in due course” says the Mogo Finance CFO, Maris Kreics.
Mogo Finance will organise an investor call for Wednesday, 15 July 2020. A separate press release with details will follow.
Mogo Finance (CFO), Email: email@example.com
About Mogo Finance:
Mogo Finance is one of the largest and fastest-growing secured used car financing companies in Europe. Recognizing the niche in used car financing underserved by traditional lenders, Mogo Finance has expanded its operations to 17 countries issuing over EUR 550 million up to date and running a net loan and used car rent portfolio over EUR 196 million. Mogo offers secured loans up to EUR 15,000 with maximum tenor of 84 months making used car financing process convenient, both for its customers and partners. Wide geographical presence makes Mogo unique over its rivals and diversifies revenue streams.
Mogo Finance operates through its own branch network, more than 2,000 partner locations and strong online presence. Physical footprint makes Mogo Finance top of mind brand in used car financing. Established in 2012, headquartered in Riga, Latvia Mogo Finance operates in: Latvia, Estonia, Lithuania, Georgia, Poland, Romania, Bulgaria, Moldova, Albania, Belarus, Armenia, Uzbekistan, Kazakhstan, North Macedonia, Bosnia and Herzegovina, Kenya and Uganda.