RDL Realisation (RDL) hopes to have the majority of its portfolio repaid by the middle of next year but has warned the pandemic is weighing on the value of the assets.
The US-focused alternative finance-focused investment trust has been in wind-down since 2018, and said in its half-year results today (22 September) that its overriding objective is to achieve a balance between delivering maximum value and making timely returns of capital to shareholders.
“We are constantly re-assessing the potential realisation values of the assets in the portfolio against the costs of running the company and it is this analysis that guides our wind-down decisions,” Brendan Hawthorne, chair of RDL, said.
“By the middle of 2021, we hope to have realised substantially all of the remaining assets and return the proceeds to our shareholders and ultimately will look to de-list the company’s shares once the remaining assets have been substantively returned to shareholders.”
Its update revealed that the pandemic has heightened the risk that the underlying assets may not be realised at their fair market value or any at all.
“The loans at the highest risk of realisation are those provided to the small- and medium-sized enterprise (SME) platforms, which contain many small businesses that are reliant on consumer spending for food and retail,” Hawthorne added.
“The Coronavirus Aid, Relief, and Economic Security Act (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.”
RDL said its net asset value return for the first half of the year was down 5.84 per cent in dollar terms and it made a loss of $1.8m (£1.4m).
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