ENCORE CAPITAL GROUP INCECPG
ENCORE CAPITAL GROUP INC Debt Disclosure
Note 6: Borrowings
The Company is in compliance in all material respects with all covenants under its financing arrangements as of December 31, 2025. The components of the Company’s consolidated borrowings were as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Global senior secured revolving credit facility | $ | 631,998 | $ | 865,365 | |||||||
| Senior secured notes | 2,324,335 | 1,846,047 | |||||||||
Convertible senior notes | 230,000 | 330,000 | |||||||||
| Cabot securitisation senior facility | 343,539 | 319,137 | |||||||||
U.S. facility | 450,000 | 283,500 | |||||||||
| Other | 52,926 | 64,904 | |||||||||
| 596 | 1,065 | ||||||||||
| 4,033,394 | 3,710,018 | ||||||||||
| Less: debt discount and issuance costs, net of amortization | (32,101) | (37,256) | |||||||||
| Total | $ | 4,001,293 | $ | 3,672,762 | |||||||
Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.
Global Senior Secured Revolving Credit Facility
In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). On May 22, 2025, the Company issued an additional commitment increase notice and entered into an amendment letter that amended and supplemented the Global Senior Facility to, among other things, (1) reflect a $190.0 million upsize of the facility from $1,295.0 million to $1,485.0 million, and (2) extend the termination date of the facility from September 2028 to September 2029, except for a $69.5 million tranche that terminates in September 2028. The amendment was accounted for as a debt modification. As of December 31, 2025, the Global Senior Facility included the following key provisions:
•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.25%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;
•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;
•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;
•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;
•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;
•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.
The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
As of December 31, 2025, the outstanding borrowings under the Global Senior Facility were $632.0 million. The weighted average interest rate of the Global Senior Facility was 6.39% and 7.51% for the years ended December 31, 2025 and December 31, 2024, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $814.3 million as of December 31, 2025.
Senior Secured Notes
The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):
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| December 31, 2025 | December 31, 2024 | Issue Currency | Maturity Date | Interest Payment Dates | Interest Rate | ||||||||||||||||||||||||||||||
| Encore 2028 Notes | $ | 336,803 | $ | 312,880 | GBP | Jun 1, 2028 | Jun 1, Dec 1 | 4.250 | % | ||||||||||||||||||||||||||
| Encore 2028 Floating Rate Notes | 487,532 | 533,167 | EUR | Jan 15, 2028 | Jan 15, Apr 15, Jul 15, Oct 15 | EURIBOR +4.250%(1) | |||||||||||||||||||||||||||||
Encore 2029 Notes | 500,000 | 500,000 | USD | Apr 1, 2029 | Apr 1, Oct 1 | 9.250 | % | ||||||||||||||||||||||||||||
Encore 2030 Notes | 500,000 | 500,000 | USD | May 15, 2030 | May 15, Nov 15 | 8.500 | % | ||||||||||||||||||||||||||||
Encore 2031 Notes | 500,000 | — | USD | Apr 15, 2031 | Apr 15, Oct 15 | 6.625 | % | ||||||||||||||||||||||||||||
| $ | 2,324,335 | $ | 1,846,047 | ||||||||||||||||||||||||||||||||
(1) Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.
The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
In October 2025, the Company issued $500.0 million in aggregate principal amount of 6.625% Senior Secured Notes due April 2031 at an issue price of 100.000% (the “Encore 2031 Notes”). Interest on the Encore 2031 Notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2026. The Company used the proceeds from this offering to pay down drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the Encore 2031 Notes.
In November 2025, the Company repaid €100.0 million (approximately $117.5 million based on an exchange rate of $1.00 to €0.85, the exchange rate as of December 31, 2025) of the principal outstanding under the Encore 2028 Floating Rate Notes. This repayment was funded by borrowings from our Global Senior Facility. In connection with the partial repayment of the Encore 2028 Floating Rate Notes, the Company wrote off the related unamortized debt discount and issuance costs and recognized a loss on extinguishment of debt of $1.6 million during the year ended December 31, 2025.
The Encore 2028 Floating Rate Notes had a weighted average interest rate of 6.58% and 7.96% for the years ended December 31, 2025 and 2024, respectively.
Convertible Notes
The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Note”) ($ in thousands):
| December 31, 2025 | December 31, 2024 | Maturity Date | Interest Payment Dates | Interest Rate | |||||||||||||||||||||||||
| 2025 Convertible Notes | $ | — | $ | 100,000 | Oct 1, 2025 | Apr 1, Oct 1 | 3.250 | % | |||||||||||||||||||||
2029 Convertible Notes | 230,000 | 230,000 | Mar 15, 2029 | Mar 15, Sep 15 | 4.000 | % | |||||||||||||||||||||||
| $ | 230,000 | $ | 330,000 | ||||||||||||||||||||||||||
In October 2025, the Company settled its $100.0 million 2025 Convertible Notes upon conversion in cash for $106.2 million, of which $6.2 million (the excess above the principal amount) represented the conversion spread and was recognized as a reduction in the Company’s stockholders’ equity in the Company’s consolidated statement of financial condition as of December 31, 2025. No gain or loss was recognized as a result of the conversion of the 2025 Convertible Notes. The settlement was funded by borrowings from the Company’s Global Senior Facility.
In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately
negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements.
Certain key terms related to the convertible features as of December 31, 2025 are listed below ($ in thousands, except conversion or exchange price):
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| 2029 Convertible Notes | |||||
Initial conversion price | $ | 65.89 | |||
| Closing stock price at date of issuance | $ | 51.68 | |||
| Closing stock price date | Feb 28, 2023 | ||||
| Initial conversion rate (shares per $1,000 principal amount) | 15.1763 | ||||
Effective conversion price(1) | $ | 82.69 | |||
Excess of if-converted value compared to principal(2) | $ | — | |||
Conversion date | Dec 15, 2028 | ||||
(1)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.
(2)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on December 31, 2025 using a hypothetical share price based on the closing stock price on December 31, 2025.
Prior to the close of business on the business day immediately preceding the free conversion date (listed above), holders may convert their Convertible Notes under certain circumstances set forth in the indenture. On or after the free conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time.
In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.
The Company’s convertible notes are carried as a single liability, which reflects the principal amount of the convertible notes. Interest expense related to the Convertible Notes was $11.6 million, $12.5 million, and $12.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Cabot Securitisation Senior Facility
Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after January 18, 2028, a step up margin ranging from zero to 1.00%. The Cabot Securitisation Senior Facility matures in January 2030.
As of December 31, 2025, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $343.5 million based on an exchange rate of $1.00 to £0.74, the exchange rate as of December 31, 2025). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was £279.4 million (approximately $376.4 million based on an exchange rate of $1.00 to £0.74, the exchange rate as of December 31, 2025) as of December 31, 2025. The weighted average interest rate of the Cabot Securitisation Senior Facility, was 7.44% and 8.32% for the years ended December 31, 2025 and 2024, respectively.
Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 7: Variable Interest Entities” for further details.
U.S. Facility
In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility (as amended, the “U.S. Facility”). On July 3, 2025, the U.S. Facility was amended to extend the maturity date from October 2027 to October
2028 and to increase the committed amount from $300.0 million to $450.0 million. The amendment was accounted for as a debt modification. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50%.
As of December 31, 2025, the outstanding borrowings under the U.S. Facility were $450.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of December 31, 2025, this included receivables acquired from MCM, the book value of which was $770.5 million. The weighted average interest rate of the U.S. Facility was 7.71% and 8.62% for the years ended December 31, 2025 and 2024, respectively.
The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 7: Variable Interest Entities” for further details.
Finance Lease Liabilities
The Company has finance lease liabilities primarily for computer equipment. As of December 31, 2025, the Company’s finance lease liabilities were $0.6 million. Refer to “Note 12: Leases” for further details.
Maturity Schedule
The aggregate amounts of the Company’s borrowings, including finance lease liabilities, maturing in each of the next five years and thereafter are as follows (in thousands):
| 2026 | $ | 21,301 | |||
| 2027 | 20,497 | ||||
| 2028 | 1,351,932 | ||||
| 2029 | 1,296,125 | ||||
| 2030 | 843,539 | ||||
| Thereafter | 500,000 | ||||
| Total | $ | 4,033,394 | |||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.