UK Debt Buyer Aiming to Slash Borrowing Costs

Lowell Group, a purchaser of non-performing consumer debt portfolios in the United Kingdom, is working on a deal aimed at slashing its cost of borrowing.

Goldman Sachs and JP Morgan expect to sell a new bond to investors with a yield of approximately 6 percent. Lowell's current arrangements pay interest of more than 10 percent.

Lowell Group, owned by the private equity firm TDR Capital since 2011, hopes to then purchase additional consumer debt portfolios although it could also give TDR the flexibility to pay itself a small dividend if additional purchases do not prove to be attractive, company officials said.

Divisions for Lowell Group include Red Debt Collection Services, a specialist debt recovery department which focuses on telecoms accounts.

Lowell Group acquired Interlaken Group last year, a move that followed an initial entry into contingency collections in January 2011 when it set up Lowell Preston (Tocatto) - designed as a research and development hub offering clients a chance to work with Lowell Group on a commission basis.

Its success demonstrated the size and potential of the opportunity to operate separate collection and debt purchase businesses under one umbrella company, providing the rationale for the Interlaken deal, Lowell Group officials said at the time.

The largest UK debt purchasers include Lowell Group, Cabot Credit Management, Arrow Global, CapQuest, Marlin Financial Group, Link Financial and Max Recovery.

Last month, Encore Capital Group Inc., a large U.S.-based debt buyer, acquired Marlin Financial for approximately $481 million through Cabot Credit, the UK subsidiary Encore acquired last year.