Trinity Capital is going through a consolidation that will likely affect its share price, its revenue and its earnings for the first time in more than two years.
The company, which has grown rapidly in recent years, is consolidating its debt management business, taking the riskiest of its debt-servicing businesses.
The merger will make it easier for the company to pay its bills, and it could also boost its profitability and give it more flexibility in dealing with its debt.
Trinity has grown to $2.4 billion in debt, and that debt is $6 billion in total, according to Thomson Reuters data.
Its cash is now about $6.5 billion.
But Trinity has also invested heavily in acquisitions, hiring more than 50 employees since January.
Trinity Capital had a $2 billion cash position when the deal was announced in April, according.
It has about $3 billion in cash, according in a regulatory filing.
The acquisition of Trinity is not the only big-name merger Trinity has been through in recent months.
It bought the equity-management firm Fidelity in May, a move that helped Trinity expand its reach.
Trinity had a cash position of $1.3 billion at the end of March, according, a regulatory document.
Trinity was able to spend a little more money in April because it had a surplus of $500 million in cash and an operating surplus of about $1 billion, according the filing.
Trinity said it will be able to use the money it has in the new assets to make new acquisitions.
Trinity will also be able more easily use the proceeds from those acquisitions to fund its debt, the filing said.
Trinity announced the merger in a news release, and said the deal will create a single entity that can manage the debt of Trinity and its debt servicing business.
Trinity’s share price has fallen over the last year, but the company had been profitable and profitable enough that it was able pay its debt without having to sell any of its assets.
Trinity Chief Executive Officer Mark Johnson told analysts the consolidation will allow the company more flexibility with its revenue strategy and also allow Trinity to make more money.
Trinity, which manages $7 billion in assets, will continue to operate as a debt-service business.
It will continue as an asset-management business, and its share will be held by the new entity, Johnson said.
The new entity will have a higher leverage ratio and more flexibility to spend on other assets, Johnson added.
Trinity could continue to invest in debt management assets, such as its debt to assets ratio, and use that money to pay down its debt and fund acquisitions, Johnson noted.
Trinity is already paying down its debts.
Trinity reported a $4.4 million cash loss on $2 million of revenue in its most recent fiscal year, a decrease of 7.5% from the previous year.
The debt-to-equity ratio was a record low of 2.8% in its fiscal year ending Sept. 30, according Thomson Reuters.
Trinity also reported that it had more than $1 million in uncollected unpaid debt in the first quarter.
Trinity did not provide a financial explanation for the $1,400 million of uncollections, but it said the debt collection and debt settlement costs of the company were about $300 million.
Trinity shares have fallen almost 40% since their peak in July, though the company said it is on track to report a profit this year.
Trinity stock is down about 25% over the past year.