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 year ended December 31,
2009.
"In retiring virtually all of its debt and all of its Preferred
Shares, the financial health of Quest has substantially improved
over the course of 2009 leaving Quest with a book value of $274
million or $1.81 per share" said A. Murray Sinclair, Quest
Chairman. "In line with our expectations, Quest's loan monetization
has accelerated and allowed the Company to repurchase and retire
all of its $40 million First Preferred Shares, Series A and
subsequent to December 31, 2009, the Company's non-recourse loan
syndication, which is recorded as debt, has been reduced to a
balance of $2.9 million, which is expected to be reduced to nil
shortly. To date, further cash has also been used to repurchase and
cancel 1.8 million common shares under our normal course issuer
bid. The future cash generated from our loan monetization and
operations will allow us to recommence lending and continue to
pursue our normal course issuer bid."
2009 FINANCIAL HIGHLIGHTS
- The Company was able to fully repay all bank indebtedness and
Preferred Shares during 2009 through loan monetization and cash
from operations.
- Debt-facility-and-preferred-share-liability to equity ratio
was nil at December 31, 2009, a significant improvement from the
ratio of 0.31 to 1 a year earlier.
- Interest income was $25.0 million compared to $46.8 million a
year ago reflecting a reduction in performing loans upon which
interest is recognized.
- The Company recorded a net loss in 2009 due to specific loan
loss provisions of $31.1 million (21 cents per share) compared to
$13.7 million in 2008. Net loss was $21.6 million (14 cents per
share) compared to net income of $22.8 million (16 cents per share)
a year earlier. Including preferred share liability interest and
fees, the Company incurred one time charges of $11.1 million during
2009.
PROVISION FOR LOAN LOSSES
As anticipated due to weak economic and credit market
fundamentals during 2009, the Company had impaired loans with a
gross principal of $177.8 million (17 borrowers) at December 31,
2009 compared to $103.1 million (14 borrowers) at December 31,
2008. During the fourth quarter, a specific loan loss provision of
$16.2 million was recorded which increased the total allowance for
loan losses to $36.1 million as at December 31, 2009.
Jim Grosdanis, CFO stated "As the loan remediation process
continues, Quest continues to increase its ability to legally
control and market many of the properties under enforcement
proceedings. With the continued improvement in the credit and real
estate markets, Quest is beginning to see comparable real estate
activity as well as receiving purchase offers on properties under
our control. This has aided us in setting realistic values for
properties and a better timeline for receiving disposition proceeds
of properties."
OUTLOOK
"While the risk of further loan impairments remains" said Brian
Bayley, Quest President and CEO, "we're confident in our strategy
for preserving capital and realizing shareholder value. To that
end, where borrowers are addressing the economic realities of
today's marketplace and providing additional security, guarantees
and/or principal reductions to Quest, Quest has and will extend the
terms of its loans to allow borrowers to arrange alternate
financing, conduct an orderly sale of the properties or generally
maximize the value of the properties. While Quest continues to
manage and monetize its impaired loans, recommencing lending
activities and a continued pursuit of our normal course issuer bid,
should realize shareholder value."
DIVIDENDS AND TAX LOSS CARRY FORWARDS
Quest's common share dividend policy is guided by its status as
a MIC. This status allows the Company to reduce its taxable income
to a negligible amount through the payment of dividends to common
and preferred shareholders after first utilizing any tax losses and
other tax deduction carry-forwards. At December 31, 2009, there are
$33.4 million of non-capital tax losses available from 2009 and
carried forward from prior years which may be utilized in future
years. Quest did not have taxable income in 2009 to utilize these
tax losses. At this time, under the current economic circumstances,
Quest cannot reasonably determine the precise timing, in the short
term, of the utilization of its tax loss carry-forwards and it is
unlikely a dividend will be paid during 2010 or in the immediate
future.
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 March 24, 2010 and can
be accessed by dialing (416) 644-3414. The call will be recorded
and a replay made available for one week ending Wednesday, March
31, 2010 at midnight. The replay can be accessed about one hour
after the call by dialing (416) 640-1917 or toll free at
(877)289-8525 and entering passcode 4260802 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) or
contact:
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 (Toll Free): (800) 318-3094 Quest Capital Corp. Jim
Grosdanis Chief Financial Officer (604) 687-8378 (Toll Free): (800)
318-3094 www.questcapcorp.com
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