CompuCredit Sells Debt Buying and ARM Unit, Jefferson Capital, for $130 million

Subprime lender CompuCredit (NASDAQ: CCRT) announced late Friday that it has sold its debt buying and collection subsidiary, Jefferson Capital, to an affiliate of private equity firm Flexpoint Ford. The total purchase price was $130.5 million.

Jefferson Capital, founded in 2002 and headquartered in St. Cloud, Minn. with operations in Minneapolis, Phoenix, Atlanta and Crawley, UK, is a leading national charged-off consumer debt buyer that focuses on purchasing a variety of consumer receivables for its own account.  Jefferson collects through both an internal collections effort as well as an extensive third-party debt collection agency network and its clients include creditors and national debt buyers. CompuCredit is a provider of various credit and related financial services and products to consumers who are underserved by traditional financial institutions. Flexpoint Ford is a private equity investment firm with $1 billion under management specializing in financial services and healthcare with offices in Chicago and New York.

CompuCredit said that of the $130.5 million it will be paid for Jefferson, $10.8 million will be received by the company if certain performance targets are met by December 31, 2014.

“We are very pleased with the terms of this agreement as it provides us a very favorable return on our Jefferson Capital investment as well as capital that can be used for expansion of our point-of-sale retail consumer lending platform, auto lending platform and other businesses with long-term growth potential that provide attractive returns,” said David G. Hanna, Chairman and CEO of CompuCredit.

We are excited to partner with Flexpoint, whose financial services expertise will be an asset as we expand upon our many successes,” said David Burton, President and CEO of Jefferson Capital. “Our management team will remain in place and continue to lead the organization.”

Kaulkin Ginsberg served as an advisor to Flexpoint Ford in the deal while Kirkland & Ellis LLP acted as legal counsel. Raymond James acted as financial advisor to CompuCredit and Troutman Sanders LLP acted as its legal counsel.