Debt collector PlusPlus Capital is strapped for cash and made its investors choose whether to swap out some debt securities for new ones or settle for smaller sums.
PlusPlus Capital's clients are extra-bank creditors and telecoms that sell it their customers' longstanding debts. These are usually straight loans, credit card, after-payment and leasing arrears.
The company reported its claims portfolio at €106 million last year. The group's total assets grew from €98.4 million to €113.5 million in 2021.
Shareholders' own capital came to €39.8 million in late 2021, according to the firm's annual report, and PlusPlus Capital repaid or refinanced €29.7 million worth of instruments and loans.
Daily Äripäev wrote four years ago (link in Estonian) that auditors found PlusPlus Capital's bookkeeping did not reflect the fair value of claims, and that a large part of the company's assets may be empty air.
PlusPlus' executive manager Krõõt Kilvet said that the company's financial reports have met international standards and been public and audited for years.
The company finances its activities mainly using debt instruments. Kilvet said that while PlusPlus has successfully refinanced its portfolio in the past, geopolitical and regional economic conditions have caused financial markets to freeze and a considerable hike in interest rates, which has made it very difficult to refinance debt securities.
The company said on November 7 that it has not made interest payments on securities issued in Estonia, and because outstanding payments are worth in excess of €10 million, it has to declare insolvency, even though it promises to work through the problem to stay in business.
A week later, PlusPlus proposed investors swap out their securities for new ones on which interest is due in a year's time. Those who refused, received an offer for 70 percent of their price and interest accrued. The investors had until December 2 to decide.
"We only manage portfolios that we have ourselves acquired. PlusPlus is not a [traditional] debt collector and does not use such techniques in portfolio management. Our priority is to offer voluntary and feasible payments solutions that motivate client cooperation. Our average claim is roughly €3,000 and the average payment plan three years," Kilvet said.
Editor: Marcus Turovski