Encore Capital Group Inc. is combining the balance sheets of its two primary operating units, Midland Credit Management Inc. in the U.S. and Cabot Credit Management in the U.K., into a unified funding structure.

Through this, the company aims to achieve a unified financing strategy to combine Cabot's balance sheet with that of the wider Encore group. It said the resulting global balance sheet strength and funding diversity will position Encore to take advantage of opportunities arising from an anticipated change in the credit cycle.

In order to implement the new structure, the company must complete financing transactions, including an amended multi-currency revolving credit facility that supports the operations of both the units, with an increased total commitment of $1.05 billion and an extension of maturity to 2024, and with Encore and all its material subsidiaries as guarantors. The transactions also include a new stretch facility with a committed amount of up to $300 million.

The effectiveness of the financing transactions is dependent upon satisfaction of certain conditions, including receipt of consents from at least a majority of the holders of Cabot's £513 million 7.5% senior secured notes due 2023 and €400 million senior secured floating-rate notes due 2024.

Encore intends to repay and terminate its current domestic revolving credit facility and term loan facility and repay a portion of its outstanding senior secured notes if conditions to the effectiveness of the financing transactions are satisfied.

Upon successful completion of the financing transactions, the company expects to record related charges in the third quarter of approximately $18 million after tax.