Small business lender Prospa has confirmed that the sale of the company is proceeding according to plan and a scheme booklet will be sent to shareholders later this month, ahead of a scheme meeting in July.

Prospa announced in February that it had entered into a scheme implementation deed with a consortium led by local investment manager Salter Brothers. 

The cash or scrip offer worth 45 cents a share valued the company at around A$73.5 million, which was a premium over the share price but less than the $96.4 million of cash and cash equivalents on the balance sheet at June 30 last year.

One unusual aspect of the deal is that Prospa has agreed with its lender iPartners to amend its facility agreement to allow Prospa to on-lend up to $12 million to the consortium in order to fund part of the cash consideration.

The provision of the iPartners funding will be subject to shareholder approval at the scheme meeting.

Another condition is that Prospa shareholders must elect to receive scrip consideration in respect of at least 74 per cent of the Prospa shares on issue for the scheme to proceed.

Prospa also provided a March quarter business update yesterday, showing lower originations and a 7.7 per cent fall in the loan book to $822 million, compared with the previous corresponding period. Revenue was also down around 7 per cent.

Prospa chief executive Greg Moshal said the company’s focus was on the quality of the loan book. This is in response to a doubling of bad debts in 2022/23.

At March 31, the company had access to $891 of funding facilities, which was down $74 million compared with the previous corresponding period.

However, in April the company raised $200 million through an issue of asset-backed securities. The $124 million of A notes were priced at a margin of 200 basis points over the one-month bank bill swap rate.