Strategic Finance expects to record a loss of $84 million in the last half of 2009.The troubled finance company announced the provisional loss in a letter sent to investors today.The figure was $51.2 million more than the official loss for the same period
Strategic Finance expects to record a loss of $84 million in the last half of 2009.
The troubled finance company announced the provisional loss in a letter sent to investors today.
The figure was $51.2 million more than the official loss for the same period in 2008 ($32.8 million) and meant the company’s loan book would be more than 75% less than what it owed to investors.
In the letter, chairman Denis Thom said some of the company’s larger loans had “become more distressed” as debt tied up in property proved tough to recover.
“In these situations the outcome for SFL becomes uncertain and the directors believe that it is prudent and appropriate to make a full provision of loss,” he wrote.
Chief executive Kerry Finnigan told NBR whether the company would be able to recover its assets and at what rate was out of its hands.
“We’re just mindful that we can’t control that,” he said.
The company breached the terms of the moratorium it entered in December 2008 when it missed the date for the first instalment of payment to its investors.
That meant the company’s trustees were brought in to help iron out the company’s kinks – but the 14-day time limit for those discussions was expected to be surpassed next week.
Now that the company’s losses meant the 75% threshold could be passed, another trustee review would be triggered.
The trustees would deal with both issues – the lack of payment and the loss of money – at the same time, Mr Finnigan said.
He said the company would be taking whatever legal options it had to recover its assets, and was not prepared to sell its assets at below value prices.
“We know what fair value is and for the assets that we have got and we are not prepared to just bump them at any price to make the cashflow to make the payments.”
He would not put a timeframe on the process.
“It will take as long as it takes,” he said. “I think investors want a robust discussion to happen to ensure they get the appropriate outcome.”
Full audited financial results for the company are expected in late February.
