Cash America Plans Spin-off Of Enova Business - Update

(RTTNews) - Specialty financial services firm Cash America International Inc (CSH) said Thursday it will review strategic alternatives, including a tax-free spin-off into two publicly traded companies. The plan includes the separation of its online lending business that comprises the e-commerce unit Enova International Inc.

Cash America shares were up 12 percent in morning trade on the New York Stock Exchange, following the news.

Cash America said a spin-off of Enova would create a stand-alone, publicly traded online lending company with about $766 million in annual revenue as of December 2013.

If the plan succeeds, the company will operate as two separate publicly traded companies, with Enova International owning the online lending business with operations in the U.S., the UK, Australia and Canada.

The other company, Cash America International Inc, would own the storefront lending businesses that comprise its retail services unit, with more than 1,000 locations in the U.S. and Mexico.

As independent companies, both Cash America and Enova would be better positioned to focus on their industry-specific business strategies, said the company's CEO CEO Daniel Freehan. A separation would also allow Cash America to sharpen its focus on storefront lending operations.

The company said that if a spin-off were to occur, David Fisher, who has been Enova's CEO since January 2013, would continue in that role.

The company will analyze the potential separation and expects to make a final recommendation to its board in 2014. If approved, a transaction would likely be completed in late 2014 or early 2015.

The company currently expects any spin-off would be in the form of a tax-free distribution of at least 80 percent of the Enova common stock to the company's shareholders.

As of December 2013, Cash America operated 1,006 total locations offering specialty financial services to consumers, which included 869 lending locations in the U.S. mainly under the names Cash America Pawn, SuperPawn, Cash America Payday Advance, and Cashland.

Separately, the company said it expects first-quarter earnings to come in above its previously announced expectations.

The company now expects first-quarter net income of $1.50 to $1.55 per share, which exceeds the $1.25 per share that was the top of its previously published estimate.

On average, 11 analysts polled by Thomson Reuters currently expect earnings of $1.20 per share for the quarter. Analysts' estimates typically excludes special items.

The positive expectation is due mainly to lower loan losses in its online consumer loan portfolio, greater retail sales proceeds and better operating efficiencies in retail lending services business.

Cash America stock is trading at $43.12, up $4.62 or 12.00%, on a volume of over 1 million shares.