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Is Nicholas Financial on the Selling Block ??

06-Nov-2013

CLEARWATER, Fla. — Is Nicholas Financial up for sale? It sure does seem so because for the second time in three years, Nicholas Financial retained a financial adviser to assist the subprime finance company's board of directors with consideration of a possible sale.

Last week, Nicholas Financial officials said their board retained Janney Montgomery Scott as their financial adviser to assist the board in evaluating possible strategic alternatives for the company. That assistance would be for, but not limited to, the possible sale of Nicholas Financial or certain assets, potential acquisition and expansion opportunities, and/or a possible debt or equity financing.

Nicholas Financial also acknowledged that it has received an unsolicited, non-binding indication of interest from a potential third-party acquirer. So to say they are not considering selling may be a stretch.

"The company cautions its shareholders and others considering trading in its securities that its board of directors only recently received the indication of interest, and that the process of considering this proposal as well as other possible strategic alternatives for the company is only in its beginning stages," Nicholas Financial officials said.

"The board of directors will proceed in an organized and timely manner to consider possible alternatives for the company and their implications," they continued. Accordingly, no assurances can be given as to whether any particular strategic alternative for the company will be recommended or undertaken or, if so, upon what terms and conditions.
"The company currently does not intend to make any further public announcements regarding its board of directors' review of possible strategic alternatives until this evaluation process has been completed," Nicholas Financial officials went on to say. This suggests that they will remain tight lipped regarding what they may or may not be looking to pursue.

Back in January of 2011, the company was in a similar position. After receiving interest from a third party about potentially acquiring the company, Nicholas Financial hired Hyde Park Capital Advisors to serve as an independent financial adviser to explore the various opportunities available. And maybe the price or the timing wasn’t right but if given the chance to travel back in time one has to wonder if the board would be more receptive to offers considering the companies less than stellar performance these last couple of years.

Nicholas Financial is coming off a third-quarter performance during its current fiscal year that saw net earnings decrease 15 percent year-over-year.

The company posted $4.566 million in net earnings during the quarter that closed on Dec. 31. The figure was off from the previous fiscal year's third quarter when Nicholas Financial generated $5.363 million in net earnings. However, the company's Q3 revenue ticked up 4 percent year-over-year, rising to $17.889 million from $17.140 million. So it’s a little less here and maybe a little more there.

"During the three months ended December 31, our results were affected by an increase in the net charge-off rate and an after-tax charge of $747,000 or $0.06 per share, which is related to a 5 percent withholding tax associated with the one-time special cash dividend of $2 per share paid in December. The withholding is required under the Canada-United States Income Tax Convention, "Nicholas Financial chairman and chief executive officer Peter Vosotas said.
"While competition remains fierce, we are committed to maintaining our conservative underwriting principles. We will continue to develop additional markets and expect to continue our branch network expansion," Vosotas continued.

Either way, it should be interesting to see where this all leads to in the future. Until then, we wish Nicholas Financial all the best.

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