NewtekOne, Inc. (NASDAQ:NEWT), a commercial banking company with a market capitalization of $375 million, has successfully amended the terms of its outstanding 8.125% Senior Notes due in 2025. The company announced on Monday that it entered into agreements with note holders to extend the maturity date from February 1, 2025, to February 1, 2027.
According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 23.33, though it has been quickly burning through cash recently.
The Boca Raton, Florida-based company, formerly known as Newtek Business (NASDAQ:NEWT) Services Corp., has preserved the original interest rate of 8.125% per annum and the principal amount of $50 million for the Senior Notes.
The amended notes, now referred to as the Amended Senior Notes, will be redeemable in full, but not in part, at the company's discretion starting from November 1, 2026, until the new maturity date in 2027.
The redemption price is set at 100% of the outstanding principal plus any accrued but unpaid interest. This $50 million note represents just a portion of the company's total debt of $661 million, as reported in InvestingPro's comprehensive financial analysis.
The extension of the maturity date provides NewtekOne with additional time to manage its financial obligations. This strategic move could be seen as a proactive step by the company to strengthen its financial position and potentially reduce near-term liquidity pressures.
Despite cash flow challenges, InvestingPro data shows the company remains profitable with a net income of $42 million in the last twelve months and trades at an attractive P/E ratio of 8.46. Subscribers to InvestingPro can access the full financial health analysis and 8 additional ProTips for NEWT, along with detailed valuation metrics available in the Pro Research Report.
The exchange of the notes took effect today, being conducted as a private placement under Section 4(a)(2) of the Securities Act of 1933, to institutional accredited investors. As specified by the company, the Amended Senior Notes have not been registered under the Securities Act and are, therefore, subject to restrictions on their sale or offer in the United States, unless registered or exempt from registration requirements.
This information is based on a press release statement filed with the Securities and Exchange Commission on December 11, 2024. Further details regarding the original terms of the Senior Notes can be found in the company's Current Report on Form 8-K filed on January 24, 2023. The company's Chief Executive Officer, President, and Chairman of the Board, Barry Sloane, signed off on the report, affirming the completion of the necessary formalities.
"In other recent news, Newtek Business Services Corp reported robust Q3 earnings, with earnings per share (EPS) of $0.45, surpassing the consensus estimate of $0.43. The company confirmed its EPS guidance for 2024 to be between $1.85 and $2.05, and introduced its 2025 EPS guidance, projecting a range of $2.00 to $2.25.
Following these developments, Piper Sandler increased its price target for Newtek from $13.00 to $15.00, maintaining a neutral rating. In addition, the company is merging its technology unit, NTS, into Paltalk, with completion expected in Q1 2024.
Newtek's financial health was highlighted by a return on average assets of 2.8% and a net interest margin of 5.29%, outperforming industry counterparts. The company also recorded a 12% growth in deposits and a 17% increase in loans. Furthermore, Newtek's payment processing segment reported a pre-tax income rise of 32.5% to $5.3 million for the quarter.
These recent developments indicate a robust financial position for Newtek as it transitions into a financial holding company. Despite some challenges, the company's strong financials and clear future vision position it well within the dynamic banking sector."
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