RDL Realisation reports on COVID impact – RDL Realisation’s annual accounts to end December contain few surprises except the location of the AGM – the Moto Service Station, M5 Junction 27, Sampford Peverell – which investors cannot attend anyway because of COVID restrictions.
The board had this to say “whilst the full impact of the Covid-19 pandemic is yet to be felt by businesses worldwide, it has increased the credit risk associated with the Company’s underlying platform loans. As a result, the risk that Company’s assets may not be realised at their fair market value, or at any value, has increased. The loans at the highest risk of realisation are those provided to the SME platforms, which contain many small businesses that are reliant on consumer spending for food and retail. The CARES Act passed in the US is providing meaningful support to this economic demographic, but the lasting impact of this government stimulus is yet to be proven. Further, financial reporting has been disrupted making it difficult to assess the financial health of these borrowers. The Canadian SME portfolio is made up of venture loans to small tech-oriented companies. Repayment of these loans is heavily reliant on capital raise and new equity investment support. The capital markets in Canada have been disrupted as well making it difficult to assess the survivability of these borrowers.
Another material exposure is the CRE/real estate loan portfolio. The realisation of these loans relies more on the capital market for refinance and construction loan availability than consumer spending. The refinance and construction loan activity has slowed significantly thus delaying the payment of these loans. These loans are materially backed by hard asset collateral making it more likely to be repaid albeit on a much-delayed basis.”
“In the first half of 2020, we hope to realise a substantial part of the remaining assets and return the proceeds to our Shareholders. We will also continue to streamline management and other administrative costs and ultimately will look to delist the Company’s shares once the remaining assets have been substantively returned to Shareholders.”