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By Jorn Madslien
BBC News Online |
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Europe's largest debt collecting company,
Intrum Justitia, has announced plans
to pay back some debts of its own.
I think it could become more difficult for private individuals [to repay their debts] when interest rates go up and the stock markets fall
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Intrum Justitia spokesman
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The Swedish-based debt collector aims to raise money by selling shares to investors hungry for a share of the growing market for unpaid debts.
"Research shows that individuals and companies are getting deeper into debt now than they used to," a company spokesman told BBC News Online.
In many European countries, credit card and consumer debts are at historic highs.
And this could create plenty of work for debt collectors.
"I think it could become more difficult for private individuals [to repay their debts] when interest rates go up and stock markets fall," the spokesman said.
Easy come...
Companies may also find it hard to service their debts.
In fact, even Intrum Justitia has been weighed down.
Intrum Justitia
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5% European market share
82,000 clients
2,600 employees
Operations in 21 countries
2.3bn kronor revenues
13% sales rise
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The company's cash flow has been strong, the spokesman said, but it has not been sufficient to wipe out its liabilities.
Which is why it plans to raise 1.35bn Swedish kronor (£92m; $135m) from a share issue on 7 June.
The issue is expected to be highly successful given the current strong appetite for Nordic shares, analysts have said.
...easy go
Once Intrum Justitia has raised the cash, most of it will be passed on to its creditors, removing the company's own debt burden.
"If you don't pay your bills you damage enterprise."
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"Proceeds of the [share] offering will be used to repay loans from the principal shareholders," the company said.
They would also be used "to repay a subordinated loan taken to finance a portion of the 2001 acquisition of Dun and Bradstreet's European RMS operations".
Going shopping
Any remaining cash would be used "for general corporate purposes", Intrum Justitia said.
Intrum Justitia's plea
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This could include the acquisition of some of its smaller competitors.
Europe's debt collection market is extremely fragmented, and the company believes that it offers good opportunities for takeovers.
Intrum Justitia wants to boost its growth in the European debt collection markets.
With more than 82,000 clients in 21 European countries, the company already commands a 5% share of the market for so-called "outsourced debt collection".
This market share is set to grow, in part by buying other debt collecting firms.
In addition, Intrum Justitia's existing business should benefit as ever more firms contract out the collection of their debts, and as the collector's systems are getting increasingly efficient, the spokesman said.
Intrum Justitia's existing businesses have grown by about 10% per year over the last five years and the spokesman said this growth rate should continue looking ahead.
Serving society
Intrum Justitia denied suggestions that making money from other people's difficulties was a dubious pursuit.
"We are helping companies getting paid for their goods and services," the spokesman said.
"If you don't pay your bills you damage enterprise."
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http://news.bbc.co.uk/2/hi/business/2000101.stm
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