OnDeck Capital in high-stakes talks with creditors

Register now

OnDeck Capital, an online small-business lender that has been hit hard by the coronavirus recession, is in potentially make-or-break negotiations with creditors.

The talks involve a corporate debt facility under which the New York company has been forced to make large payouts recently as a result of faltering credit quality.

OnDeck said in a securities filing Tuesday that as of last week, it owed approximately $92 million under the facility. That followed a $13 million payout to creditors.

“Internally, our top focus is liquidity and capital preservation,” OnDeck CEO Noah Breslow said during the company's earnings call on April 30.
“Internally, our top focus is liquidity and capital preservation,” OnDeck CEO Noah Breslow said during the company's earnings call on April 30.

This week, OnDeck reached an agreement with creditors under which it would make an additional $5 million payment in exchange for a delay in increased monthly principal repayments until at least July 14.

OnDeck said that it reached the most recent short-term agreement with its creditors in contemplation of entering into a broader deal to address impacts stemming from the economic fallout of the pandemic.

At the end of April, 45% of OnDeck’s loans were in some stage of delinquency, up from 11% at the end of 2019. The firm paused new loans early in the pandemic, though it resumed them this month.

“OnDeck is working in a constructive manner with our lenders on a potential amendment to the corporate facility,” the company said in a written statement.

If a deal with creditors cannot be reached, OnDeck will owe principal repayments of $21 million each month starting on July 17, and continuing until the loan facility is fully repaid, according to the securities filing.

OnDeck had $121.2 million in cash and cash equivalents as of March 31, according to an earlier securities filing.

Shares in OnDeck, which has been publicly traded since 2014, were listed at 78 cents a share early Wednesday afternoon. At that price, the company’s market capitalization is less than $50 million, which is down from more than $1 billion in 2015.

“Internally, our top focus is liquidity and capital preservation,” OnDeck CEO Noah Breslow said during the company's earnings call on April 30.

Earlier this month, OnDeck disclosed that it was evaluating options for how to comply with a New York Stock Exchange rule that can result in the delisting of companies that fail to maintain a minimum share price of $1. OnDeck has until Jan. 1 to regain compliance.

In addition to its own lending business, OnDeck provides digital lending technology to banks.

For reprint and licensing requests for this article, click here.
Marketplace lending OnDeck Capital Coronavirus Credit quality
MORE FROM AMERICAN BANKER