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MFN Financial Corporation on March 22 announced it has entered into a $300 million receivable financing agreement with Deutsche Bank AG, as agent and MFN Funding LLC, a special purpose company which will hold the company's automobile
finance receivable contracts and will borrow funds under the financing agreement.
The financing agreement is collateralized by substantially all of the company's automobile finance receivable contracts.
The company will use proceeds from the financing agreement, together with available cash, to liquidate at maturity on March 23, 2001, the company's existing $342,908,000
outstanding senior secured debt and to fund future purchases of finance receivable contracts on a revolving basis through the initial term expiring March 19, 2002.
Terms of the financing agreement call for the company to complete a term securitization of at least 90 percent of the eligible finance receivable contracts in the facility by June 30, 2001 and to complete subsequent term securitizations every six months thereafter. After the initial term securitization is
completed, the facility limit under the financing agreement will be reduced to
$150 million to fund new purchases of automobile finance receivable contracts.
"This financing agreement is a major step in our restructuring program, which began two years ago when the company emerged from bankruptcy under new leadership," said Jeffrey B. Weeden, president and CEO. "During the past two years our management team has succeeded in refocusing the company on the core business of buying and servicing automobile sales finance
contracts. We have exited non-core businesses and modernized our systems to improve efficiency and risk management. The signing of this financing agreement is further evidence that the company is back on solid financial
ground," Weeden said.
About MFN Financial Corporation
MFN Financial Corporation, with headquarters in Lake Forest, Ill., is a consumer finance company whose principal subsidiaries operate under the name of Mercury Finance Company.
Mercury Finance Company provides specialized,
individual financing for automobile nonprime credit buyers through automobile dealerships.
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