http://www.rcap.com/press_Feb2,2002.asp Economic Downturn Spells Opportunity for Resurgent Capital Year-end Total Acquisition of $1.8 Billion in Distressed Debt Fuels Continued Growth GREENVILLE, S.C., Feb. 18, 2002 - While rising unemployment and continued poor earnings cause concern in several sectors of the U.S. economy, local financial services company Resurgent Capital Services is positioning itself to prosper from the current challenging economy. The Greenville-based company acquires numerous types of secured and unsecured consumer debt - including personal bankruptcies, credit card debt and defaulted mortgages - then seeks to earn a return on that debt by helping consumers restore their credit and pay back their loans. The current economy has caused a surge in distressed debt and driven down the cost of acquiring such debt for firms like Resurgent. As a result, the company recently added more than $1.8 billion of distressed consumer debt to its portfolio, bringing its total nearly $3 billion in newly acquired debt for the year just ended. Recent acquisitions include what is believed to be the largest transaction this year involving Chapter 13 bankrupt credit card receivables, which alone totaled over $700 million in purchased balances. The company also continued to expand its high-loan-to-value second mortgage business by acquiring just under $100 million in assets, as well as purchasing the monthly defaults from a $1.3 billion securitization of similar mortgage assets. "Not every company in our industry has the financial strength to make these kinds of acquisitions," noted Resurgent Capital Services President Tim Grant. "Even with reduced acquisition costs, we face the same return on equity pressures as other financial services companies. But our relationship with our parent company, Sherman Financial Group, provides us with access to capital that might not otherwise be available in the marketplace." Resurgent is taking advantage of that financial muscle to capitalize upon the significant opportunities presented by the sluggish economy. For example, unemployment - which foreshadows consumers' ability to repay their debts - has increased steadily since October 2000 before peaking in December 2001 at 5.8 percent. Increasing unemployment is a major reason personal bankruptcy filings were on track at the end of 2001 to surpass the record-breaking levels of 1998, when nearly 1.5 million new cases were filed. And the Fitch Credit Card Performance Index, which tracks credit card delinquencies and charge-offs, was nearly 20 percent higher in September 2001 than at the same time the year before, according to Credit & Collections World. All of which adds up to a tremendous opportunity for companies like Resurgent. But it is not a guarantee of success. "For one thing," notes Grant, "increasing unemployment does very little to help consumers pay off their debts. But we believe our experience, creativity and proprietary processes and systems give us an edge in recouping our investment in distressed consumer debt." Still, the distressed debt market, like the economy itself, is cyclical in nature. So while the cost of acquiring debt may have bottomed out, consumers' ability to pay back those debts is bound to improve over the coming months. "A number of indicators, such as increasing new home sales and rising productivity, suggest that we may be nearing economic recovery," added Grant. "That's good for our country, and it will be good for Resurgent, too. With our expanded portfolio of distressed debt, we're well positioned to capitalize on improvements in the overall economy." About Resurgent Capital Services Resurgent Capital Services, a nationwide specialized buyer of distressed consumer debt, purchases Chapter 13 bankruptcies, telecommunications receivables, student loans, high loan-to-value second mortgages, and auto and mortgage deficiencies. Formed in 1998, Resurgent provides a full range of risk management and cash flow alternatives to the consumer credit-granting industry. Headquartered in Greenville, S.C., Resurgent employs more than 200 people.
