Vector Capital trading as expected, renegotiates inter-company loan

(Sharecast News) - Commercial lending group Vector Capital updated the market on its trading on Wednesday, reporting sustained positive momentum throughout the year's second half, aligning with the trends it described in its interim results. The AIM-traded company's board expected revenue, profit before tax for the full year, and the aggregate loan book at the end of 2023 would meet market expectations.

It attributed its performance to generating new lending opportunities through its introducer base and maintaining profitable trading margins with existing clients.

Prudent provisions for doubtful debts would be made in the full-year financial statements.

The company said demand for new loans remained robust, adding that it planned to announce its full-year results and a recommendation for a final dividend in early April.

Regarding its inter-company loan, Vector Capital confirmed that the interest rate on the Vector Holdings lending, totalling £4m, would remain unchanged at 6.25% until the loan's maturity on 31 December 2024.

Interest accrued daily and was payable quarterly on the last business day of March, June, September, and December.

The loan provided the company with competitively-priced financing for the medium-term growth of its loan book.

Vector Holdings holds a 75.1% interest in Vector Capital, and CEO Agam Jain is a controlling shareholder of Vector Holdings along with his immediate family.

As a result, renegotiating the inter-company loan was considered a related party transaction under the AIM rules.

However, after consultation with Vector Capital's nominated adviser, WH Ireland, the company's directors, excluding Jain, determined that the renegotiated terms of the loan were fair and reasonable from the shareholders' perspective.

"Our business model and loan management systems have demonstrated resilience throughout the challenging conditions of the last two years which has allowed us to continue to lend with confidence from our strong asset base," said chief executive officer Agam Jain.

"With demand for our loans remaining strong we look forward to 2024 with cautious optimism."

At 1143 GMT, shares in Vector Capital were up 6.96% at 33.8p.

Reporting by Josh White for Sharecast.com.