If you own shares of Cash Converters International Ltd (ASX: CCV) you'd probably have noticed that it is currently in a trading halt.
That means, no shares can be bought or sold until the ASX says so.
Cash Converters requested the halt because it says a settlement regarding a class action is pending.
Cash Converters, "is in the process of executing a Deed of Settlement in relation to the NSW Class Action," the company said in a statement to the ASX.
It said terms of the settlement have been verbally agreed and it is expected that the Deed will be signed on, or before, Thursday 18 June.
In late 2013, a class action was launched against Cash Converters on the basis on an alleged unlawful deferred establishment fee charged on loans in New South Wales.
"These fees were charged on loans until 30 June 2013 and no longer apply under the legislative regime which commenced on 1 July 2013", the company originally said in an ASX response to the class action on 10 October 2013.
At the time, Cash Converters had 18 stores in NSW. It also said it was only lending in the state for a matter of three years.
In its most recent half-yearly report, Cash Converters described the Class Action as a "contingent liability" and said there were no significant developments in the matter between 30 June 2014 and 31 December 2014. "The potential financial impact cannot be reliably estimated at this stage," it said at the time.
Should you buy Cash Converters shares?
Cash Converters shareholders have been on a tumultuous ride in 2015, with its share price plunging over 32%. Therefore, any significant 'one-off' cost that the company incurs as part of this Class Action would be yet another thorn in the side of a company which has been in hot water lately.
Earlier this year I wrote that given its recent track record, I'd rather buy Money3 Corporation Ltd (ASX: MNY) shares than Cash Converters; however following the recent share price falls its valuation has become a lot more compelling.
Indeed, provided the costs incurred as part of this Class Action are not significant, I think Cash Converters shares could now be worthy of a closer look.
