Wellesley investors stand to be up to 12p more in the pound better off if creditors back a company voluntary arrangement (CVA) rather than the property investment platform falling into administration, according to estimates.
The property development lender announced earlier this month that it had suspended all payments to investors while it asked its creditors to back a CVA to support a restructure.
A CVA outline, seen by Peer2Peer Finance News, outlines the financial benefits of a CVA compared with the alternative of the company having to go down the administration route.
Creditors are currently voting in the CVA until 13 October.
Investors in Wellesley’s mini-bonds are being offered an alternative equity option, by which they can subscribe for shares in the company instead of receiving a proposed cash payment.
Under the proposals, investors in Wellesley’s first unsecured mini-bond series launched in 2014 would receive 58p in the pound on a cash basis or 73p for equity from a CVA, compared with 48p in the pound from falling into administration.
Its asset-backed mini-bond investors, from products launched in 2019, could receive 71p in the pound through a CVA on a cash basis or 89p for equity compared with 77p under administration, according to the documents.
P2P investors could receive 48p in the pound from a CVA compared with 44p in the pound from falling into administration.
“Management is focused on delivering the CVA proposal which if supported by investors will enable us to extract the maximum financial benefit for both creditors and investors,” Andrew Turnbull, managing director of Wellesley, said.
“If the CVA is adopted this will allow management to continue to work with the developers to complete the outstanding housing developments and return the outstanding loan capital over a two to three year period.
“The company will be slimmed down to reduce costs to a minimum but to support the effective management of the loanbook.”