The decision by neobank Volt to close its doors on Wednesday sealed the fate of Brisbane-based shareholder Collection House which went into administration on Thursday after it failed in a last attempt to raise fresh capital.
Collection House said the administration was limited to the listed company, not its subsidiaries, meaning hundreds of jobs remain intact for the time being.
The company was a shareholder in Volt.
Collection House invested $8.5 million for a 4.5% stake in Volt in 2019. A new round of funding by Volt in 2020 saw the value of Collection House’s Volt shareholding cut to $4.9 million. That fell to $3.5 million in 2021.
As of April this year, Collection House had a $5 million debt that was secured by the stake in Volt.
“CLH has a remaining $6m senior debt facility secured on a limited-recourse basis against the Company’s investment in Volt Bank Limited (the “Volt Facility”). $1.0 million of this Volt Facility was repaid during March 2022 with the outstanding balance now $5.0 million. CLH continues to actively explore opportunities to realise this investment and expects to repay this remaining facility in the near future,” Collection House said in a statement to the ASX on April 26.
Volt’s announcement on Wednesday that it was closing its doors and returning around $100 million in deposits to customers spelled the end for Collection House as the security for the $5 million loan had no value.
Collection House asked for trading in its shares to be halted on Wednesday to allow it to look at funding options.
But on Thursday, it requested in a statement to the ASX “that its securities be suspended immediately.”
“The voluntary suspension is necessary as the Directors of the Company have on 29 June 2022 appointed John Park, Ben Campbell and Kelly Trenfield of FTI Consulting as Voluntary Administrators,” the statement said.
“The Administrators are appointed to Collection House only and not its subsidiaries.
“The decision comes after exhaustive attempts to restructure the business and raise additional funding were unsuccessful.
“The Administrators will conduct an independent assessment of Collection House and its business, whilst they engage with key stakeholders regarding funding options, and run an expedited sale and recapitalisation process for the Company in parallel.
Administrator, John Park, said in the statement to the ASX: “Our intention is to undertake an urgent process seeking options to restructure and recapitalise the Collection House business”.
Trading in the Company’s shares on the ASX will remain suspended during the administration period. This announcement was authorised to be provided to the ASX by the Company’s Board of Directors.
Collection House had a market value of $9.6 million and a share price of 6.8 cents when administrators were appointed.