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RDL Realisation accounts published

Manager resigns at Ranger Direct Lending

RDL Realisation accounts published – RDL Realisation has just published accounts for the year ended 31 December 2018, somewhat later than is normal – hence the need to suspend their shares while the accounts were being finalised.

Since the AGM on 19 June 2018 (when the wind up strategy was adopted), the company has returned 264p per share in the form of dividend payments. This amounts to approximately 26% of the published NAV as of 30 June 2018.

The NAV at the end of December (which includes the write downs to the value of Princeton announced in February 2019 and the $9m write down to the value of the vehicle services platform announced in April) is £5.88 ($7.49). A dividend of 17.14p was announced in May and is payable in July.

The company has adopted a three-pronged approach to winding down its portfolio of 12 platforms.
  • The first category consisted of portfolios that could be sold outright. Having run a sale process, only three portfolios and a small equity position could be exited in this way without accepting a material discount.
  • The second category consisted of two sizeable positions where the Company was the sole platform capital provider. One was successfully refinanced at par in December 2018. The second recently entered a forbearance agreement in light of its many contractual breaches and is now working with the company on a plan to return the capital.
  • The third category consisted of portfolios that are best run off. They are working to ensure that the overwhelming majority of this category will be repaid by late 2019. However, there can be no guarantee that the company will be successful in accomplishing this objective. Some residual positions will only be liquidated once various bankruptcy proceedings are completed, with Princeton being the most notable, and it is expected that these will take longer.


The company’s subsidiary RDLZ has issued Zero Dividend Preference Shares that require the company to meet a 2.75x asset cover ratio after any capital distribution, save for dividends required to maintain the investment trust status. The ZDP Shares mature on 31 July 2021 and accrue an annualised return of 5% per year. In light of the wind-down, the company has been in active discussions with ZDP Shareholders about an early retirement of their instruments. To date, the company has bought back almost 14% of the originally issued ZDP Shares. If zero holders approve it on 20 June, they will be repaid early, freeing up the company to make further returns to ordinary shareholders.


At 31 December 2018, 91.3% of the portfolio was invested in secured debt instruments (including loans, cash advances, and receivables financing) to mainly SME borrowers, and 8.7% of the portfolio consisted of unsecured consumer loans.

SME/CRE Loans Platform

Reduced from $51,414,447 to $40,446,802

Since June 2018, there has been a regular run-off of all performing investments. The Executive Directors are in weekly contact with this platform who are trying to assist in the sale of some investments to its other investors throughout 2019, and remaining investments will be run off.

Note: Included in the balance above is USD 4.5m which is an acquisition loan extended to the Second SME Loans Platform – see below.

Second SME Loans Platform

Balance increased from $26,703,908 to $39,375,565

Due to the combination of the loss in volume from the reduced number of new vehicle service contracts generated by the platform and cash drain from losses at affiliated entities, the platform failed to make a series of mandatory pre-payments, and the platform has failed to meet the required loan to value requirements. These factors entitled the company to declare an event of default pursuant to its Master Loan Agreement. The platform has recently found a new funding source for new vehicle service contracts going forward and is making payments under a revised repayment schedule. The Company has since the year end executed a Forbearance Agreement and Cash Control Agreement which will bring credit monitoring and cash controls to a standard customary for financing structures of this type.

The platform has engaged an investment banker to assist in the refinancing efforts and there are ongoing communications with prospective new lenders. The refinancing of the notes as a portfolio has been complicated by the fact that in May (prior to the appointment of the new board of Directors), the Company also extended a USD 4.5M enterprise value loan to this platform to finance an acquisition of a loss-making business and unlike the previous loan, there is no advance rate based on discrete collateral. This loan falls due in May 2019 and is reported in the balance of the SME/CRE Lending Platform. The investment balance secured by vehicle service contracts at 31 December 2018 was USD 44m. The Board continues to investigate why this loan was made. The LTV, which as at 31 December 2018 was 103% and at 31 March 2019 was 129%, representing a significant breach of the LTV requirement. As a result, taking into consideration the Duff & Phelps Report, the report of another independent third party, and internal credit analysis, an additional reserve of approximately USD 9m to reflect the estimated impairment to the loan value has been recognised as of 31 December 2018. The combined balance of the two loans at the VSC platform as 31 December 2018 was USD 48.5m. The total balance after the impairment charge is USD 39m. Restructuring efforts are continuing.

Real Estate Lending Partner

Balanced reduced from $71,848,345 to $36,836,583

There has been a combination of sales of some investments with help of the platform and regular run-off of all performing investments, particularly during the latter part of the year. The platform will continue to assist with the sale of some investments to its other investors throughout 2019, and the remaining investments will be run-off.

Princeton Alternative Income Fund

From $29,321,483  to $15,000,000

Subsequent to the year end and as announced on 11 February 2019 the company is currently estimating a potential recovery of approximately USD 15m from the Princeton bankruptcy. The audit report says “the directors have been unable to provide us with sufficient appropriate audit evidence in relation to the investment in Princeton recorded at a value of $15.0 million.”

Canadian SME Lending Platform

From $15,919,670 to $4,974,099

The ongoing review of the platform’s operations unfortunately revealed that the platform had not been adequately servicing the loans sold to the company. To prevent further deterioration of the Canadian SME Lending Platform portfolio, the former Investment Manager temporarily took over the servicing of these investments. These are now serviced directly by the Company. Using the information from the former Investment Manager’s direct contact with the borrowers, the Company continued its servicing and re-structuring of payment obligations with individual borrowers whose loans were originated by the platform. These loans are venture loans to mainly small and early stage companies with underdeveloped profit profiles which bear certain risks common to venture lending. The remaining investments are expected to be run off in due course under a variety of collection efforts. Current collection efforts include litigation and realisation of collateral proceeds, restructured pay out terms with longer amortisation, and participation in royalty streams from future company sales to be applied to the outstanding loans.

Equipment Loans Platform

From $1,915,580 to $669,641

Since June 2018, there has been a regular run-off of all performing investments. The remaining investments are expected to be run-off.

Second Consumer Loans Platform

From $3,277,167 to $299,655

Since June 2018, there has been a regular run-off of all performing investments. Platform will try to assist in the sale of some or all remaining loans to its other investors in 2019, and remaining investments (if any) will be run-off.

Invoice Factoring Platform

From $1,811,185 to $175,477

Since June 2018, there has been a regular run-off of all performing investments. The remaining investments are expected to be run-off.

Third SME Loans Platform

From $3,853,550 to $21,296

Since June 2018, there has been a regular run-off of all performing investments. The remaining investments are expected to be run-off.

Consumer Loans Platform

From $37,789,106 to $7,587

From June to October 2018, there has been a regular run-off of all performing investments. In October, all performing loans were sold to a third party which left the non-performing loans to run-off.

RDL : RDL Realisation accounts published

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