PRA GROUP INCPRAA
PRA GROUP INC Debt Disclosure
Borrowings:
Borrowings consisted of the following as of December 31, 2024 and 2023 (amounts in thousands):
| 2024 | 2023 | ||||||||||
| North American revolving credit facility | $ | 519,519 | $ | 396,303 | |||||||
| United Kingdom revolving credit facility | 494,185 | 502,847 | |||||||||
| European revolving credit facility | 555,726 | 538,565 | |||||||||
| North American term loan | 470,111 | 442,500 | |||||||||
| Credit facility borrowings | 2,039,541 | 1,880,215 | |||||||||
| Senior Notes due 2025 (the "2025 Notes") | — | 298,000 | |||||||||
| Senior Notes due 2028 (the "2028 Notes") | 398,000 | 398,000 | |||||||||
| Senior Notes due 2029 (the "2029 Notes") | 350,000 | 350,000 | |||||||||
| Senior Notes due 2030 (the "2030 Notes") | 550,000 | — | |||||||||
| Senior notes | 1,298,000 | 1,046,000 | |||||||||
| Credit facility borrowings and senior notes | 3,337,541 | 2,926,215 | |||||||||
| Unamortized debt premium and issuance costs, net | (10,920) | (11,945) | |||||||||
| Total | $ | 3,326,621 | $ | 2,914,270 | |||||||
The following principal payments are due on the Company's borrowings as of December 31, 2024, for the years ending December 31, (amounts in thousands):
| 2025 | $ | 10,000 | |||
| 2026 | 10,000 | ||||
| 2027 | 565,726 | ||||
| 2028 | 408,000 | ||||
| 2029 | 1,793,815 | ||||
| Thereafter | 550,000 | ||||
| Total | $ | 3,337,541 | |||
The Company was in compliance with the covenants of its financing arrangements as of December 31, 2024.
North American revolving credit facility and term loan
On October 28, 2024, the Company entered into the second amendment of its North American revolving credit facility and term loan to, among other things, extend the maturity date from July 30, 2026 to October 28, 2029, increase the aggregate revolving and term loan commitments by $40.1 million to $1.548 billion, reduce the U.S. domestic revolving credit facility from $1.0 billion to $950.0 million, increase the Canadian revolving credit facility from $75.0 million to $125.0 million, increase the term loan from $432.5 million to $472.6 million and modify certain financial covenants.
The total credit facility includes an aggregate principal amount of $1.545 billion (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded $470.1 million term loan, (ii) a $950.0 million domestic revolving credit facility, and (iii) a $125.0 million Canadian revolving credit facility. The facility includes an accordion feature allowing for up to $500.0 million in potential additional commitments and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan sub-limit that would reduce the amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate, Canadian prime pate, Canadian Overnight Repo Rate Average ("CORRA") or Secured Overnight Financing Rate ("SOFR"), for the applicable term. All borrowings incur an additional facility margin of 2.25%, or 2.00% if the consolidated senior secured leverage ratio is less than or equal to 1.60 to 1.0. The revolving loans within the credit facilities are subject to a 0% floor, or, for Canadian prime rate loans, a 1.00% floor. The revolving credit facilities also bear an unused line fee of 0.35% per annum, or 0.30% if the consolidated senior secured leverage ratio is less than or equal to 1.60 to 1.0, payable quarterly in arrears. The facility matures on October 28, 2029, and as of December 31, 2024, total availability was $555.5 million, comprised of $278.5 million based on current ERC and subject to debt covenants, and $277.0 million of additional availability subject to borrowing base and debt covenants, including advance rates.
Borrowings under the facility are guaranteed by the Company's U.S. and Canadian subsidiaries (provided that the Canadian subsidiaries only guarantee borrowings under the Canadian revolving credit facility) and are secured by a first priority lien on substantially all of the Company's assets. The facility contains events of default and restrictive covenants, including the following:
•the ERC borrowing base is 35% for all eligible Core asset pools and 55% for all Insolvency eligible asset pools;
•the Company's consolidated total leverage ratio cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;
•the Company's consolidated senior secured leverage ratio cannot exceed 2.50 to 1.0 as of the end of any fiscal quarter;
•subject to no default or event of default, cash dividends and distributions during any fiscal year cannot exceed $50.0 million; and
•the Company's consolidated fixed charge coverage ratio cannot be less than 2.00 to 1.0.
As of December 31, 2024 and 2023, the outstanding balance and weighted average interest rate by type of borrowing under the facility were as follows (dollar amounts in thousands):
| 2024 | 2023 | ||||||||||||||||||||||
| Amount Outstanding | Weighted Average Interest Rate | Amount Outstanding | Weighted Average Interest Rate | ||||||||||||||||||||
| Term loan | $ | 470,111 | 6.55 | % | $ | 442,500 | 7.67 | % | |||||||||||||||
| Revolving credit facility | 519,519 | 6.48 | 396,303 | 7.67 | |||||||||||||||||||
United Kingdom ("UK") revolving credit facility
On October 30, 2024, the Company entered into an amendment of its UK revolving credit facility to, among other things, extend the maturity date from July 30, 2026 to October 30, 2029, decrease the revolving credit facility from $800.0 million to $725.0 million and modify certain financial covenants to more closely conform to the North American revolving credit facility.
The UK revolving credit facility consists of a $725.0 million revolving credit facility (subject to a borrowing base), and an accordion feature for up to $200.0 million in additional commitments, subject to certain conditions. Borrowings, which are available in U.S. dollars, euro and pounds sterling, accrue interest for the applicable term at either the base rate, SOFR, Sterling Overnight Index Average ("SONIA") or, in the case of euro borrowings, the Euro Interbank Offered Rate ("Euribor") plus an applicable margin of 2.75% per annum or, if the consolidated senior secured leverage ratio is less than or equal to 1.60 to 1.0, an applicable margin of 2.50% per annum. SONIA borrowings carry an additional 0.10% credit adjustment spread, while SOFR and Euribor borrowings carry no additional spread. The facility also has a commitment fee of 0.30% per annum, payable quarterly in arrears. If the consolidated senior secured leverage ratio is greater than 1.60 to 1.0, the commitment fee increases to 0.35% per annum. The facility matures on October 30, 2029, and as of December 31, 2024, total availability was $230.8 million, comprised of $90.0 million based on current ERC and subject to debt covenants, and $140.8 million of additional availability subject to borrowing base and debt covenants, including advance rates.
The facility is secured by substantially all of the assets of PRA Group UK Limited ("PRA UK"), all of the equity interests in PRA UK and certain equity interests of PRA Group Europe Holding I S.à r.l. ("PRA Group Europe"), certain bank accounts of PRA Group Europe and certain intercompany loans extended by PRA Group Europe to PRA UK. The facility contains events of default and restrictive covenants, including the following:
•the borrowing base equals the sum of up to: (i) 35% of the ERC of PRA UK’s eligible asset pools; plus (ii) 55% of PRA UK’s Insolvency eligible asset pools; minus (iii) certain reserves to be established by the Administrative Agent;
•the Company's consolidated leverage ratio cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;
•the Company's consolidated senior secured leverage ratio cannot exceed 2.50 to 1.0 as of the end of any fiscal quarter; and
•the Company's consolidated fixed charge coverage ratio cannot be less than 2.00 to 1.0.
As of December 31, 2024 and 2023, the outstanding balance and weighted average interest rate under the facility were as follows (dollar amounts in thousands):
| 2024 | 2023 | ||||||||||||||||||||||
| Amount Outstanding | Weighted Average Interest Rate | Amount Outstanding | Weighted Average Interest Rate | ||||||||||||||||||||
| Revolving credit facility | $ | 494,185 | 7.57 | % | $ | 502,847 | 7.80 | % | |||||||||||||||
European revolving credit facility
On October 28, 2024, the Company entered into an amendment of its European revolving credit facility to modify certain financial covenants to more closely conform to the North American and UK revolving credit facilities.
The European revolving credit facility provides revolving borrowings for an aggregate amount of approximately €730.0 million (subject to the borrowing base) and an uncommitted accordion feature for up to €500.0 million, subject to certain conditions. Borrowings, which are available in euro, Norwegian krone, Danish krone, Swedish krona and Polish zloty, accrue interest at the Interbank Offered Rate plus 2.80% - 3.80% (as determined by the estimated remaining collections ratio ("ERC Ratio") as defined in the agreement), bear an unused line fee, currently 1.120% per annum, or 35% of the margin, are subject to a 0% floor, and are payable monthly in arrears. Additionally, the Company has a separate agreement for an overdraft facility in the aggregate amount of $40.0 million (subject to the borrowing base), which accrues interest (per currency) at rates that can change daily, and bears a facility line fee of 0.125% per quarter, payable quarterly in arrears. The facility matures on November 23, 2027, and as of December 31, 2024, total availability (including the overdraft) was $240.0 million, comprised of $195.7 million based on current ERC and subject to debt covenants, and $44.3 million of additional availability subject to borrowing base and debt covenants, including advance rates.
The facility is secured by a first perfected security interest in all of the equity interests in certain operating subsidiaries of the named borrowers under the facility, certain intercompany loans and certain shareholder loans extended by the Company to those borrowers. Further, the Company guarantees all obligations and liabilities under the facility. The facility contains event of default and restrictive covenants including the following:
•the ERC Ratio of the borrowers under the facility cannot exceed 45%;
•the Company's consolidated total leverage ratio cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;
•the Company's consolidated senior secured leverage ratio cannot exceed 2.50 to 1.0 as of the end of any fiscal quarter;
•the Company's consolidated fixed charge coverage ratio cannot be less than 2.00 to 1.0;
•interest bearing deposits in AK Nordic AB cannot exceed SEK2.2 billion; and
•the Borrowers' cash collections must meet certain thresholds, measured on a quarterly basis.
As of December 31, 2024 and 2023, the outstanding balance and weighted average interest rate under the facility were as follows (dollar amounts in thousands):
| 2024 | 2023 | ||||||||||||||||||||||
| Amount Outstanding | Weighted Average Interest Rate | Amount Outstanding | Weighted Average Interest Rate | ||||||||||||||||||||
| Revolving credit facility | $ | 555,726 | 7.68 | % | $ | 538,565 | 8.05 | % | |||||||||||||||
2030 Notes
On May 20, 2024, the Company completed the private offering of $400.0 million in aggregate principal amount of its 8.875% senior notes due January 31, 2030. The related indenture contains customary terms and covenants, including certain events of default after which the notes may be due and payable immediately. The notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted subsidiaries that guarantee the North American revolving credit facility, subject to certain exceptions. Interest on the notes is payable semi-annually, in arrears, on January 31 and July 31 of each year.
On November 25, 2024, the Company completed the private offering of an additional $150.0 million in aggregate principal amount of 2030 Notes at a price of 103.625% of their principal amount. The additional notes are the same class and series as, and are otherwise identical to, the previously issued 2030 Notes other than with respect to the date of issuance and issue price.
Before June 1, 2026, the Company may redeem the notes, in whole or in part, at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus the applicable "make whole" premium. On or before June 1, 2026, the Company may redeem up to 40% of the aggregate principal amount of the notes at a redemption price of 108.875% plus accrued and unpaid interest with the net cash proceeds of a public offering of common stock of the Company provided, that at least 60% in aggregate principal amount of the notes remains outstanding immediately after the occurrence of such redemption and that such redemption will occur within 90 days of the date of the closing of such public offering.
In addition, on or after June 1, 2026, the Company may redeem the notes, in whole or in part, at a price equal to 104.438% of the aggregate principal amount of the notes being redeemed. The applicable redemption price changes if redeemed during the 12 months beginning June 1 of each year to 102.219% for 2027 and then 100% for 2028 and thereafter.
In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's notes at an offer price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company will be required to make an offer to repurchase the notes at 100% of their principal amount plus accrued and unpaid interest.
2029 Notes
On September 22, 2021, the Company completed the private offering of $350.0 million in aggregate principal amount of its 5.00% senior notes due October 1, 2029. The related indenture contains customary terms and covenants, including certain events of default after which the notes may be due and payable immediately. The notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted subsidiaries that guarantee the North American revolving credit facility, subject to certain exceptions. Interest on the notes is payable semi-annually, in arrears, on October 1 and April 1 of each year.
The notes may be redeemed, at the Company's option, in whole or in part at a price equal to 102.50% of the aggregate principal amount of the notes being redeemed. The applicable redemption price changes if redeemed during the 12 months beginning October 1 of each year to 101.25% for 2025 and then 100% for 2026 and thereafter.
In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's notes at an offer price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company will be required to make an offer to repurchase the notes at 100% of their principal amount plus accrued and unpaid interest.
2028 Notes
On February 6, 2023, the Company completed the private offering of $400.0 million in aggregate principal amount of its 8.375% senior notes due February 1, 2028. The related indenture contains customary terms and covenants, including certain events of default after which the notes may be due and payable immediately. The notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted subsidiaries that guarantee the North American revolving credit facility, subject to certain exceptions. Interest on the notes is payable semi-annually, in arrears, on February 1 and August 1 of each year.
The notes may be redeemed at the Company's option in whole or in part at a price equal to 104.188% of the aggregate principal amount of the notes being redeemed. The applicable redemption price changes if redeemed during the 12 months beginning February 1 of each year to 102.094% for 2026 and then 100% for 2027 and thereafter.
In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's notes at an offer price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company will be required to make an offer to repurchase the notes at 100% of their principal amount plus accrued and unpaid interest.
2025 Notes
On September 3, 2024, using funds obtained primarily from the North American revolving credit facility, the Company repaid the 2025 Notes in full by redeeming $298.0 million in aggregate principal amount at par value.
Convertible Senior Notes due 2023
The Company used substantially all of the net proceeds from the issuance of the 2028 Notes to retire the $345.0 million aggregate principal amount of its 3.50% convertible senior notes at their maturity on June 1, 2023. Interest expense on the notes was recognized using an effective interest rate of 4.00%. For the year ended December 31, 2024, no interest expense was recognized. For the years ended December 31, 2023 and 2022, total interest expense on the notes was $5.8 million and $13.8 million, respectively.
Interest expense, net
The Company incurs interest expense on its borrowings, interest-bearing deposits and interest rate derivatives. The Company earns interest income on certain of its cash and cash equivalents, restricted cash and its interest rate derivatives. Interest expense, net was as follows for the years ended December 31, 2024, 2023 and 2022 (amounts in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| Interest expense | $ | 238,568 | $ | 194,667 | $ | 132,905 | |||||||||||
| Interest income | (9,301) | (12,943) | (2,228) | ||||||||||||||
| Interest expense, net | $ | 229,267 | $ | 181,724 | $ | 130,677 | |||||||||||
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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.