Long HY bond idea:

$CURO Secured '25s 9.5% YTW. Payday lender w US (75%) & CAD (25%) operations. Net debt $600M vs. $200M EBITDA & contract to sell virtual lease-to-own unit (non EBITDA contributor) to SPAC for ~$80M net cash & $240M stock.

Credit @PlaceboCapital. More

Key risks: $600 stimulus checks significantly slow new originations (as previous stimulus did); SPAC sale falls apart; quick & coordinated state regulatory attack on the model (CAD reg environment ~bulletproof).

Cap structure: 2 SPV (US/CAD) securitization issuers w $120M outstanding. Secured '25s w $690M outstanding. CAD business not encumbered by the notes. Two undrawn revolvers on US/CAD ops. Notes callable 9/21 @ 104.12. Cash of $212M (or $300M PF post-SPAC).

Delinquencies: existing loan book performing extraordinarily well due to stimulus.

Originations: declining loan balances, due to stimulus cash in consumer pockets, squeezing profitability (US). Results in -21% yoy EBITDA & record cash levels $217M vs. $62M in 2019.

Thesis: originations will be pressured, but likely return by 2H21. Clear runway w no debt maturities ahead of Notes. SPAC will close. Katapult is a real business, unlike BNPL, & comps to $AAN Progressive unit. Some notes likely repurchased on open mkt & a '21 call on the table.

If you have information resulting in arrest of this thesis, please public blast or DM me. Love to hear from you.