NewtekOne completes $184M loan securitization

NewtekOne, Inc., a provider of business and financial services with a market capitalization of $279 million, announced today the successful closure of a significant securitization deal. According to InvestingPro data, the company has been quickly burning through cash, with negative free cash flow of $153 million in the last twelve months. On Monday, the company’s subsidiary, Newtek Business (NASDAQ:NEWT) Service Holdco 6, Inc., sold a series of notes totaling approximately $184 million backed by alternative loan program loans.

The transaction involved the sale of $155.93 million of Class A Notes, $23.82 million of Class B Notes, and $4.33 million of a Class C Note issued by NALP Business Loan Trust 2025-1. These notes are supported by $216.56 million of collateral, which includes $184.41 million in originated loans from Newtek ALP Holdings and a $32.15 million prefunding account for the acquisition of additional ALP loans. The company maintains strong liquidity with a current ratio of 35.6x, indicating its ability to meet short-term obligations.

Each class of notes received a separate rating from Morningstar DBRS, with Class A Notes rated “A (low) (sf)” and priced at a yield of 6.338%, Class B Notes rated “BBB (sf)” at 7.838%, and the Class C Note rated “BB (sf)” at 10.338%. The weighted average yield for the notes stood at 6.62%, with an advance rate of 85%.

The notes were offered and sold under Rule 144A of the Securities Act of 1933, as they were not registered under the Act. This means they may not be offered or sold without registration or an applicable exemption from registration requirements.

This securitization marks a strategic financial move for NewtekOne, which operates under the industrial classification of national commercial banks. The company, headquartered in Boca Raton, Florida, has transitioned from its former identity as Newtek Business Services Corp., a change that took effect on September 30, 2013.

NewtekOne’s common stock, along with the notes involved in the securitization, is traded on the Nasdaq Global Market under the ticker symbols NEWT, NEWTZ, NEWTI, NEWTG, and NEWTH respectively. The stock currently trades at a P/E ratio of 5.49x and offers a significant dividend yield of 7.29%, having maintained dividend payments for 11 consecutive years. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional key insights available to subscribers through the comprehensive Pro Research Report.

The information regarding this securitization is based on a press release statement filed with the SEC.

In other recent news, NewtekOne, Inc. has disclosed several significant developments. The company reported executive leadership changes, appointing Peter Downs as President of Newtek Bank, N.A., and Frank DeMaria as Chief Financial Officer. These appointments are part of NewtekOne’s strategy to bolster its leadership team. In financial maneuvers, NewtekOne completed a $30 million offering of 8.375% notes due in 2030, with plans to use the proceeds for refinancing existing debt and general corporate purposes. This financial move coincides with an upgrade in the company’s credit rating by Egan-Jones Ratings Company from "BBB+" to "A-," reflecting improved financial metrics.

Additionally, NewtekOne is transitioning to a predominantly remote workforce, resulting in an annual cost reduction of approximately $2 million due to the termination of three office leases. This shift aligns with the company’s strategy to leverage technology for client engagement and operational efficiency. In other board-related developments, Salvatore Mulia retired from the Board of Directors, leading to a reduction in board size and the appointment of Fernando Perez-Hickman to the Audit Committee. Lastly, NewtekOne appointed John O’Connor as Chief Revenue Officer of its payment processing subsidiary, Newtek Merchant Solutions, to drive growth in business solutions and deposit accounts. These recent developments reflect NewtekOne’s ongoing efforts to enhance its operational and financial strategies.

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