Quest Capital Corp. ("Quest" or the "Company") (TSX: QC)(NYSE Amex:
QCC), a Canadian Mortgage Investment Corporation ("MIC"), today
reported its financial results for the three and nine months ended
September 30, 2009, including continued progress in monetizing its
loan portfolio and its plans to begin to repurchase its preferred
shares.
"Quest's market-responsive strategies have started to pay off as
we continued to monetize more loans in the quarter, we are
achieving the financial flexibility we believe is paramount for our
future," said A. Murray Sinclair, Quest Chairman. "The cash
generation from our strategies has allowed us to cancel our
revolving debt facility, initiate cash dividend payments to our
preferred shareholders and begin to repurchase our preferred shares
as part of an agreement we announced on September 30, 2009. These
achievements are in line with our expectations and reflect the hard
work we believe is necessary to combat challenging conditions in
our markets."
THIRD QUARTER RESULTS
- The Company's cash position increased to $10.7 million at
September 30, 2009 from $3.1 million at June 30, 2009.
- $15 million of loans were monetized. This represents 8 loans
repaid in full and 6 partial repayments. This does not include the
successful remediation of a $27 million construction loan in
Vancouver, British Columbia which should be monetized early to mid
2011.
- Debt-facility-and-preferred-share-liability to equity ratio
was 0.14 to 1 at September 30, 2009 a significant improvement from
the ratio of 0.27 to 1 a year earlier.
- Net interest income was $2.7 million compared to $11.7 million
a year ago reflecting a reduction in performing loans upon which
interest is recognized.
- The Company was unprofitable due to specific loan loss
provisions of $8.1 million (5 cents per share) compared to $2.3
million in 2008. Net loss was $5.2 million (3 cents per share)
compared to net income of $6.4 million (4 cents per share) a year
earlier.
NINE MONTH RESULTS
- $53 million of loans were monetized. This represents 17 loans
repaid in full and 15 partial repayments.
- Net interest income was $13.1 million compared to $33.2
million a year ago.
- Net loss was $8.1 million (loss of 5 cents per share)
including specific loan loss provisions of $26.8 million (18 cents
per share) as well as $1.5 million in severance costs (1 cent per
share) compared to net income of $21.0 million (14 cents per
diluted share) a year ago.
- Shareholders' equity at September 30, 2009 was $288 million,
down $3 million from $291 million at December 31, 2008.
- Book value per share at September 30, 2009 was $1.90 compared
to $1.98 at December 31, 2008.
CREDIT QUALITY
As anticipated, due to weak economic and credit market
fundamentals during the first nine months of 2009, the Company had
impaired loans of $168 million to 19 borrowers compared to $162
million (17 borrowers) at June 30, 2009 and $19 million (4
borrowers) at September 30, 2008. Remedial action has been taken on
each impaired loan. On 14 of these loans totaling $141 million,
specific reserves in the amount of $27 million have been provided.
Management has not provided for the remaining loans because the
estimated net realizable value of their collateral, at this time,
is in excess of the carrying value.
DIVIDEND POLICY AND TAX LOSS CARRY FORWARDS
At September 30, 2009, there were $20 million of tax losses
carried forward which may be utilized further in 2009 and future
years to offset taxable income. Quest did not have taxable income
in the third quarter of 2009 nor was the Company able to utilize
its tax losses carried forward. Accordingly, the Company did not
declare a quarterly common share dividend on September 30, 2009.
Quest will not be paying a dividend on its common shares until it
has utilized all of its tax losses and at this time, under the
current economic circumstances, Quest cannot reasonably determine
the timing, in the short term, of the utilization of its tax loss
carry forwards.
OUTLOOK
"Canadian credit and real estate markets continue to show
improvements," said Brian Bayley, Quest President and CEO.
"However, many of our borrowers still remain challenged in finding
take-out financing and as a result, risk of loan impairments
remains. For that reason, in order to preserve the value of the
portfolio, where borrowers are providing additional security,
guarantees and/or principal reductions, Quest has and will extend
the terms of its loans to allow borrowers to obtain take out
financing or conduct an orderly sale of the properties. We're
confident that this is the right formula for preserving capital and
realizing shareholder value."
Jim Grosdanis, CFO added, "Where borrowers are unable or
unwilling to provide additional security, Quest actively pursues
the enforcement of its rights which will lead to loans classified
as impaired. With the continuing monetization of its loan portfolio
and the recent amendment of its preferred shares, Quest has a
better ability to preserve value during negotiations and offers on
several of its problem loans."
CONFERENCE CALL
A conference call will be hosted by A. Murray Sinclair,
Chairman, and Jim Grosdanis, Chief Financial Officer. It will begin
at 11:00 am Eastern Daylight Savings Time on November 9, 2009 and
can be accessed by dialing (416) 644-3422. The call will be
recorded and a replay made available for one week ending Monday,
November 16, 2009 at midnight. The replay can be accessed about one
hour after the call by dialing (416) 640-1917 and entering passcode
21311672 followed by the number sign.
ABOUT QUEST
Quest Capital Corp. is a publicly traded mortgage investment
corporation. For more information about Quest, please visit our
website (www.questcapcorp.com) or SEDAR (www.sedar.com).
Forward Looking Statements
This press release may include certain statements that
constitute "forward-looking statements", and "forward-looking
information" within the meaning of applicable securities laws
("forward-looking statements" and "forward-looking information" are
collectively referred to as "forward-looking statements", unless
otherwise stated). Such forward-looking statements involve known
and unknown risks and uncertainties that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking
statements may relate to the Company's future outlook and
anticipated events or results and may include statements regarding
the Company's future financial position, business strategy,
budgets, litigation, projected costs, financial results, taxes,
plans and objectives. We have based these forward-looking
statements largely on our current expectations and projections
about future events and financial trends affecting the financial
condition of our business.
These forward-looking statements were derived utilizing numerous
assumptions regarding expected growth, results of operations,
performance and business prospects and opportunities that could
cause our actual results to differ materially from those in the
forward-looking statements. While the Company considers these
assumptions to be reasonable, based on information currently
available, they may prove to be incorrect. Forward-looking
statements should not be read as a guarantee of future performance
or results. Forward-looking statements are based on information
available at the time those statements are made and/or management's
good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. To the extent any
forward-looking statements constitute future-oriented financial
information or financial outlooks, as those terms are defined under
applicable Canadian securities laws, such statements are being
provided to describe the current potential of the Company and
readers are cautioned that these statements may not be appropriate
for any other purpose, including investment decisions.
Forward-looking statements speak only as of the date those
statements are made. Except as required by applicable law, we
assume no obligation to update or to publicly announce the results
of any change to any forward-looking statement contained or
incorporated by reference herein to reflect actual results, future
events or developments, changes in assumptions or changes in other
factors affecting the forward-looking statements. If we update any
one or more forward-looking statements, no inference should be
drawn that we will make additional updates with respect to those or
other forward-looking statements. You should not place undue
importance on forward-looking statements and should not rely upon
these statements as of any other date. All forward-looking
statements contained in this press release are expressly qualified
in their entirety by this cautionary notice.
Contacts: Quest Capital Corp. A. Murray Sinclair Chairman (604)
687-8378 or (Toll Free): (800) 318-3094 Quest Capital Corp. Jim
Grosdanis Chief Financial Officer (604) 687-8378 or (Toll Free):
(800) 318-3094 (604) 682-3941 (FAX) www.questcapcorp.com
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