Non-Standard Finance PLC (LSE:NSF) shares fell another 22% to 0.32p as it warned a proposed recapitalisation will "materially dilute" the interests of existing shareholders to "negligible value", unless they choose to participate in the equity raise.
Last month the sub-prime lender warned that its balance sheet was “deeply insolvent” and needed a scheme of arrangement to raise emergency funds.
If the scheme is successful it will "provide certainty" on its liability to pay off historical redress claims, paving the way for a capital raise to restore its balance sheet, fund the partial payment of redress claims and return its Everyday Loans branches to "profitable trading".
Under the scheme, which launches today, £14mln will be made available for payment of valid redress claims and with scheme creditors estimated to receive around 22-28% recovery.
The proposed recapitalisation, which has support from its largest shareholder and its secured lenders, will involve a £95mln equity issue, with the lenders releasing a portion of their debt in exchange for shares in NSF, and debt maturity dates extended from this August to June 2027.
NSF said it is looking at cancelling its main market listing and moving to AIM.