Press Release: CURO Group Holdings Corp. -8-
In December 2020, we announced that Katapult and FinServ entered into a definitive merger agreement that, when completed, we expect will provide consideration to us in a combination of cash and stock. Based on market prices as of the date of this release, we expect to receive consideration with a total value between $520 million and $540 million, an increase from $365 million at the time the transaction was agreed to in December 2020. To date, our total cash investment in Katapult is $27.5 million. Upon closing of the transaction, we anticipate receiving cash of up to $130 million while maintaining at least a 21% ownership, on a fully-diluted basis, in the newly formed public company. The transaction is expected to close during the first half of 2021 and remains subject to approval by FinServ's stockholders and other customary closing conditions. The transaction will result in both a cash tax liability and deferred tax liability, with the cash tax liability dependent upon cash received at closing. Assuming cash proceeds to us of $130 million, our estimated cash tax liability is approximately $35 million.
The table below presents select financial information for Katapult for the periods presented:
We report financial results for two reportable segments: the U.S. and Canada. Following is a summary of results of operations for the segment and period indicated:
U.S. Segment Results - For the Three Months Ended December 31, 2020 and 2019
U.S. revenues decreased by $93.7 million, or 39.0%, to $146.6 million, compared to the prior-year period for the three months ended December 31, 2020, as a result of the declines in combined gross loans receivable described above. Excluding the impact of California Installment loan runoff stemming from regulatory changes that were effective January 1, 2020, U.S. revenues decreased $73.0 million, or 35.0%. Sequentially, U.S. revenues increased $13.7 million, or 10.3%. Excluding California portfolios impacted by regulatory changes, U.S. revenues increased $16.6 million, or 13.9%, sequentially.
The provision for losses decreased $52.5 million, or 47.0%, primarily as a result of lower loan volume and lower NCOs, as previously described. U.S. NCOs decreased by $57.7 million, or 51.8%, year over year and the U.S. NCO rate improved by 420 bps to 21.0% for the three months ended December 31, 2020 from 25.2% in the prior-year period.
Non-advertising costs of providing services for the three months ended December 31, 2020 were $34.0 million, a decrease of $8.9 million, or 20.7%, compared to $42.8 million for the three months ended December 31, 2019. The decrease was primarily driven by Ad Astra costs of $3.6 million, which prior to its acquisition by us were included in Non-advertising costs of providing services. The remaining decrease year over year in Non-advertising costs of providing services was due to (i) lower underwriting and other variable costs as a result of lower demand and (ii) lower collection costs resulting from government stimulus-related pay-downs.
Advertising costs decreased $3.9 million, or 26.2%, year over year because of COVID-19 Impacts.
Corporate, district and other expenses were $38.4 million for the three months ended December 31, 2020, an increase of $6.6 million, or 20.8%, compared to the prior-year period. Corporate, district and other expenses for the three months ended December 31, 2020 included $1.9 million of collection costs related to Ad Astra, which were historically included in Non-advertising costs of providing services. Excluding Ad Astra costs, Corporate, district and other expenses increased $4.4 million year over year, primarily due to the timing and extent of variable compensation and higher professional fees compared to the prior-year period, partially offset by certain cost reductions, including work-from-home initiatives, to manage COVID-19 Impacts.
U.S. interest expense for the three months ended December 31, 2020 increased $1.3 million, or 8.4%, primarily related to the new Non-Recourse U.S. SPV Facility, which we closed in April 2020.
As described above, we recognize our share of Katapult's income on a two-month lag and recorded income of $1.9 million for the three months ended December 31, 2020.
U.S. Segment Results - For the Year Ended December 31, 2020 and 2019
U.S. revenues decreased by $275.0 million, or 30.1%, to $638.5 million for the year ended December 31, 2020 compared to the prior year, as a result of decreases in combined gross loans receivable. Excluding the aforementioned impact of California Installment loan runoff, U.S. revenues decreased by $203.0 million, or 26.2%.
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