ThinkSmart Signs Up Societe Generale In Spain

ThinkSmart Signs Up Societe Generale In Spain

ThinkSmart Signs Up Societe Generale In Spain

 – Adds Société Générale as second funding partner in Spain

– Opens up new business opportunities with broadening of business lending

ThinkSmart Limited (ASX:TSM), a leading international computer and office equipment financing company, has executed a new wholesale funding agreement with Société Générale in Spain. The two year agreement adds Société Générale alongside Banco Santander as funders to ThinkSmart’s profitable Spanish operations, supporting ThinkSmart’s recent offensive to grow its distribution channels in the Spanish market.

“Our agreement with SG is further reinforcement of  the strength of ThinkSmart’s prudent business model, and we expect it to enable us to increase our catchment of Spain’s small business community by up to 40%,” said ThinkSmart Executive Chairman and CEO, Ned Montarello.

“We see upside in Spain through 2009/2010 and our strategy is to capitalise on this current period by expanding our distribution channels and developing supporting funders that will see us position our Spanish operations to grow market share strongly as the economy stabilises.”

Mr Montarello said the business is currently preparing to roll out through the newly signed Phone House network in Spain in July as well as commence a major promotional period with the existing PC City stores around the same period.

“Our Spanish operations posted a $0.7m EBITDA in 2008, a solid effort in a recessionary environment,” said Mr Montarello.  “We see significant opportunity now to grow this market with these new relationships in place.”Under its new agreement with SG, ThinkSmart will accept  the credit risk and fully provision for forecast credit losses.  Whilst the business anticipates these losses to be in the vicinity of 6%, the provision will be closer to 9% and will be fully cash funded at the commencement of each customer contract.

ThinkSmart will only lend to entities with a two year trading history.  Whilst this is tighter than other territories in which ThinkSmart operates, it sees this as a prudent measure whilst the market stabilizes

“This is a departure from our standard risk model, but, under the current market circumstances we believe the annual risk exposure at Group level of between €200,000 to €400,000 to be relatively immaterial,” Mr Montarello said.

“The maturity of our product in the Spanish market has seen us benefit from a solid contribution from the commencement of our Inertia and Insurance channels seeing EBITDA margin grow 7% to 27%.  All of these revenue sources remain unaffected by our new agreement.”

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