SME lender goes into voluntary administration

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.

The lender’s disclosure to the Australian Securities Exchange (ASX) states: “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.

“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.

Administrator Vaughan Strawbridge said: “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.

“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.”

In January, Axsesstoday appointed the former managing director of business lending at Commonwealth Bank, Joanna White, as its chief executive officer. Ms White replaced former CEO and co-founder, Peter Ferizis, who resigned in September last year, before the lender went into voluntary suspension ahead of a strategic review.

The newly appointed chief executive terminated chief financial officer and company secretary Joe Flanagan in February as one of her initial moves as the new boss, appointing the co-founder of Spiique Julia van Graas to the role of interim CFO until a permanent replacement is found.

Axsesstoday reported a 131 per cent increase in full-year revenue to $49.2 million and a 93 per cent rise in profit to $7 million in the 2018 financial year. But it expects to report a loss of between $13 million to $15 million for the first half of the 2019 financial year.

The lender attributed much of the loss to its transition to AASB 9 financial instruments, which added to the collective provision of approximately $27 million.

[Related: SME lender terminates CFO]