J.G. Wentworth Company® (“J.G. Wentworth” or the “Company”) (OTCQX: JGWE) In line with its consistently devastating financial results over the past several quarters, the J.G. Wentworth-Peachtree Company recently took actions that further indicate the Company is struggling to pay down its debt and is quickly running out of cash and access to credit to complete structured settlement and annuity transactions. This and other aspects of the Company resulted in a significant downgrade of the company’s credit rating by influential agency Moody’s.
In a press release dated June 3, 2016 Moody’s announced that the J.G. Wentworth-Peachtree Company had “elected to reduce total warehouse capacity for structured settlement and annuity payment purchasing…and terminated its warehouse credit agreement with Credit Suisse.” They did not indicate any clear resolution to this conundrum of running out of sources of cash.
Other signs of financial trouble highlighting their cash problems was their move to re-finance its warehouse credit agreement with Barclays Bank PLC and Natixis New York by “extending the maturity and revolving period [of their debt] by twelve (12) months.” This is in effect asking for more time to try to pay down debt that they currently do not have enough cash to pay off, demonstrating financial instability within the J.G. Wentworth-Peachtree Company.
Influential ratings agency Moody’s has concluded that the J.G. Wentworth-Peachtree Company is in a sustained period of financial distress worthy of a downgrade by two full levels from Caa1 to Caa2. Their rating action dated October 26, 2016 looked at many factors. Ratings at the Caa levels are for high credit-risk companies of poor standing, and are seen as speculative investments.
Moody’s assessment paid particular attention to the restructuring that the J.G. Wentworth-Peachtree Company announced they completed, describing the extension of their debt maturities as Default events according to their definition of defaults.
They list many factors of the J.G. Wentworth-Peachtree Company’s operations as reasons for them to conclude that the Company has a negative outlook, including their weak capital structure that makes it improbable that they could find sustainable financing for their transactions. Other factors include but are not limited to a high risk of default due to heavy leveraging, upcoming debt maturities that require re-financing at potentially much higher cost of money, and weak credit profile. Moody’s concludes that the JGW-Peachtree Company has “no tangible capital, with a tangible equity deficit representing -1% of tangible assets, as well as weak profitability.”
– See more at: http://www.datsyn.com/press-release/16755/2016/11/16/JG-WENTWORTH-PEACHTREE-FINANCIAL-CRISIS-KILLS-HOPE-OF-CASH-NOW-FOR-SETTLEMENT-SELLERS-AS-THE-COMPANYS-ACCESS-TO-CASH-DRIES-UP#sthash.7eolEkQO.dpuf
Source: Featured News