Australian Collection Agency Wins Government Contract in Turnaround

Repcol Limited, formerly a major player in the Australian debt buying market, announced Monday a contract to collect debt for an Australian government agency in a move that could transition the company to a contingency collection shop.

The company, based in Balcatta – a suburb of the largest city on the Australian West coast, Perth – said that its subsidiary, Repcol (WA) Pty Ltd., won a contract to collect debt for Western Australia’s Department of Housing and Works. Repcol said the contract will include collection services arising from vacated housing, housing bond assistance and general debts.

The contract will run for two years and is the first contract the company has won after being named to the Western Australia State Government Common Use Arrangement Panel for recovery services. The panel is a blanket contract for government procurement that will afford Repcol access to agencies it previously had not worked for.

In announcing the contract, Repcol noted that it was part of a major restructuring and refocus of its business following an exit from debt buying. Repcol is now focused on growing its debt collection operations in Western Australia, according to its half-year report issued last month. 

After going on a buying spree – of both companies ("Large Australian Collection Agency Buys Debt Purchaser," Aug. 7, 2006) and debt portfolios – the company was forced to take a $36 million charge in the second half of 2006 on its purchased portfolio. The company then launched an aggressive restructuring program.

In June 2007, Repcol sold its entire Australian debt portfolio. In December, the company sold its stake in Transpacific Debt Purchase Pty Limited, a debt buyer, to American company Cargill Financial Services. With that divestment, Repcol was completely out of the debt buying business and free to concentrate on contingency debt collection.

The 34 year-old company reached the height of its powers in 2005, when it reported $36.9 million in revenues and an employee count of more than 400.

For the half-year ended Dec. 31, 2007, Repcol reported revenues from debt collection of $3.6 million and a net loss of $1.3 million. But this compared favorably to the $59 million the company reported losing in the half-year ended Dec. 31, 2006.

Repcol is publicly traded on the Australian Stock Exchange under the symbol RCP.