(Reuters) - U.S. consumer finance company J.G. Wentworth Co has hired a financial adviser to help it address its debt burden, as fierce competition eats into its profits, people familiar with the matter said on Friday.
J.G. Wentworth, known for its catchy jingles and television commercials, has hired investment bank Evercore Partners Inc to help it fix its capital structure, which includes an approximately $440 million term loan, the people said.
The sources asked not to be identified because the matter is confidential. Spokespeople for J.G. Wentworth did not immediately return requests for comment. Evercore declined to comment.
J.G. Wentworth had $300 million drawn on its credit line as of Sept. 30.
The Radnor, Pennsylvania-based company buys future payments that consumers expect to receive from various sources including state lotteries, insurance companies and annuities, and in turn pays its customers a lump sum. J.G. Wentworth securitizes the future payments and sells them.
Low interest rates have increased competition, J.G. Wentworth said in its 2016 annual report.
The company has also been under investigation by the Consumer Finance Protection Bureau. Specialty finance firms like J.G. Wentworth and payday lenders were under scrutiny by the CFPB, but the future of that effort is unclear after on-going court attempts to dismantle the consumer advocacy agency.
J.G. Wentworth has faced financial struggles in the past, when tightness in the credit markets hurt its ability to buy customers’ future payments.
The company filed for bankruptcy in 2009, which was exceptionally short at just two weeks. Buyout firm JLL Partners helped fund J.G. Wentworth’s bankruptcy with an equity injection and now owns about 5 percent of its shares. The company went public in 2013.
J.G. Wentworth acquired competitor Peachtree Financial Solutions in 2011, and in attempt to diversify its business, expanded into the origination of residential mortgages in 2015 when it acquired WestStar Mortgage Inc.
For the quarter ended Sept. 30, J.G. Wentworth’s most recently reported period, the company reported record home loan volume and stabilization in its other businesses.
J.G. Wentworth posted a loss of $18.7 million for the quarter, up from a loss of $26.7 million in the same time period in 2015.
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