Quest Captial Reports Second Quarter 2010 Results
August 05 2010 - 5:07PM
Marketwired
Quest Capital Corp. ("Quest" or the "Company") (TSX: QC)(NYSE Amex:
QCC) today reported its financial results for the three and six
months ended June 30, 2010, including substantial ongoing progress
in monetizing its real estate loans.
"As a result of almost $30 million in loan monetizations in the
second quarter and $87 million year to date, we are well on track
with our stated recovery strategy," said A. Murray Sinclair, Quest
Chairman. As previously announced in June, with approximately $64
million of cash, we are looking forward to completing our
substantial issuer bid and start resource lending shortly after
closing the Sprott transaction. If approved by our shareholders on
August 17, 2010, the migration to resource lending is expected to
significantly enhance the long-term earnings and growth potential
of our business and result in the early resumption of dividends in
2011."
Mr. Sinclair added, "In simple terms, the plan would see Sprott
manage a rebranded company, called Sprott Resource Lending Corp.,
that will finance a growing component of natural resource companies
that is not served by conventional banks. Sprott will bring its
considerable management expertise as well as deal flow, contacts
and execution abilities to Sprott Resource Lending, and would
invest up to $25 million by way of private placement in the
rebranded Quest. It is our strongly held view that such a change is
in the best interests of all Quest shareholders as a resource-based
portfolio is expected to produce shorter-term loan durations with
above average interest yields with the additional upside of bonus
arrangements generally tied to the underlying resource properties
or shares of the borrower."
SECOND QUARTER RESULTS
-- Net interest income in the second quarter was $3.8 million compared to
$3.9 million a year ago.
-- Loan loss in the quarter, net of recoveries, was $2.5 million compared
to $5.9 million a year ago.
-- Net loss was $0.9 million ($0.01 per share) compared to a loss of $4.3
million ($0.03 per share) in the second quarter of 2009.
-- Loan principal repaid and sold in the second quarter included $28.4
million in loan principal repayments and sale proceeds received in cash
as well as $5.7 million of principal transferred to other assets on the
sale of two loans.
SIX MONTH RESULTS
-- Net loss was reduced to $0.6 million ($0.00 per share) compared to net
loss of $2.9 million ($0.02 per share) a year ago even though net
interest income was $7.1 million compared to $10.5 million a year ago.
-- Loan loss in the period was reduced to $4.1 million from $8.5 million a
year ago.
-- Loans receivable declined to $198.8 million from $274.2 million at year
end 2009 reflecting the decision to focus on loan monetizations rather
than new lending, which reduced the total number of loans receivable to
25 from 34 at the end of 2009.
-- Total liabilities decreased 86% to $3.4 million from $24.5 million at
2009 year end.
-- Book value per share at June 30, 2010 increased 2% to $1.85 compared to
$1.81 at December 31, 2009.
OUTLOOK
"Quest has ceased new real estate lending activity in
anticipation of shareholder approval as a resource lender and a
substantial issuer bid of up to $60 million of the Company's common
shares set to expire on August 30, 2010," said Jim Grosdanis, Chief
Financial Officer. "The substantial issuer bid will allow those
shareholders focused solely on real estate investing an additional
exit option prior to the change in strategy. Over the near term,
the Company is expected to incur transition costs and a reduction
in interest income which should result in temporary operating
losses for the Company. Having said this, we are continuing to
aggressively pursue our real estate loan monetization activities
and increase our current cash balance to prepare Quest for the
transition to a publicly traded resource lending institution.
Sprott has assured us that once approved by our shareholders,
investing of available funds in natural resource loans will be
initiated without delay."
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 August 6, 2010 and can
be accessed by dialing (416) 644-3417. The call will be recorded
and a replay made available for one week ending Friday, August 13,
2009 at midnight. The replay can be accessed about one hour after
the call by dialing (416) 640-1917 and entering passcode 4332954
followed by the number sign.
ABOUT QUEST
Quest is currently a publicly traded mortgage investment
corporation. As a natural resource lender, Quest will ultimately
cease to be a mortgage investment corporation. Accordingly, Quest
will provide further guidance as to its ability or intention to
remain a mortgage investment corporation for the remainder of the
current fiscal year.
At a special meeting of shareholders on August 17, 2010,
shareholders will consider the Sprott transaction, endorsed by
Quest's Board of Directors, and to vote on the various resolutions
to effect the Sprott transaction. Circulars and other documents
relating to the substantial issuer bid and the special meeting of
shareholders have been sent to shareholders and are available on
the Company's website under the headings "Substantial Issuer Bid"
and "Special Meeting", respectively, or alternatively, at
www.sedar.com or www.sec.gov.
For more information about Quest, please visit our website
(www.questcapcorp.com) or 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 (800)
318-3094 or (604) 687-8378 Quest Capital Corp. Jim Grosdanis CFO
(800) 318-3094 or (604) 687-8378 (604) 682-3941 (FAX)
www.questcapcorp.com
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