TORONTO, Nov. 9, 2021 /CNW/ - Standard Mercantile
Acquisition Corp. (TSX: SMA) (the "Company") today released its
financial results for the quarter ended September 30, 2021. The financial
statements and MD&A can be found at www.sedar.com or
www.standardmercantileacquisition.com.
Financial Highlights & Business Update
On May 6, 2021, the shareholders
of the Company approved a special resolution at the 2021 annual and
special meeting (the "2021 Meeting") of the Company authorizing an
amendment (the "Orderly Wind-Up Amendment") to the previously
approved orderly wind-up of the Company's assets and the return of
capital to shareholders. The purpose of the Orderly Wind-Up
Amendment is to provide the board of directors (the "Board") of the
Company with additional flexibility to explore a transaction or
series of transactions that could increase the value of Company as
a publicly-listed entity, while continuing to pursue an
orderly disposition of the Company's assets and distribution of
cash as and when available, and as determined to be in the best
interests of the Company and its shareholders.
At the 2021 Meeting, the shareholders of the Company also
approved a special resolution to authorize amendments to the
articles (the "Articles") of the Company to: (i) change the name of
the Company from "Trez Capital Senior Mortgage Investment
Corporation" to "Standard Mercantile Acquisition Corp." (the "Name
Change"), or such other name as the Board determines appropriate
and as may be acceptable to applicable regulatory authorities; (ii)
authorize the Board to appoint one or more additional directors in
between meetings of shareholders up to a maximum of one-third of
the number of directors elected at the previous meeting of
shareholders; and (iii) change the Province in which the registered
office of the Company is situated from British Columbia to Ontario. The Name change and other amendments
to the Articles were effected on June 4,
2021.
During the quarter ended March 31,
2020, the COVID-19 outbreak was declared a pandemic by the
World Health Organization. Since that time, the situation has
continued to be dynamic and the duration and magnitude of the
impact on the economy and our business are not fully known at this
time. These impacts could include further decreases in the fair
value of our mortgage investments or potential future decreases in
revenue or profitability of our ongoing operations. It is not
possible to reliably estimate the length and severity of these
developments and the impact on the financial results and condition
of the Company as it relates to its ability to complete the orderly
wind-up plan of the Company, as amended by the Orderly Wind-Up
Amendment.
Income from operations for the three months ended September 30, 2021, was lower than same quarter
last year due to lower revenue from a reduced mortgage portfolio
(i.e. higher average mortgage portfolio in Q3 of 2020) as the
mortgage monetization strategy continues and due to higher expenses
driven by stock-based compensation expense in current period.
Income from operations for the nine months ended September 30, 2021, was lower than same period
last year by $0.75 million due to
lower revenue from a reduced mortgage portfolio in current period,
higher stock-based compensation expense of $0.2 million in current period and a favorable
incentive fee recovery of $0.26
million in prior period.
Basic income per share from the three months ended September 30, 2021, was $0.01 compared to $0.03 in the same period in 2020 primarily due to
lower revenue from a reduced mortgage portfolio as the mortgage
monetization strategy continues, and higher expenses driven by
stock-based compensation expense in current period. Basic income
per share from the nine months ended September 30, 2021, was $0.02 compared to $(0.05) in the same period in 2020 primarily due
to lower revenue from a reduced mortgage portfolio as the mortgage
monetization strategy continues in current period, and higher
expenses driven by stock-based compensation expense in current
period offset by a fair value loss adjustment on investment in
mortgages of $(1.3) million in prior
period.
At September 30, 2021, the Company
had two mortgages outstanding. Of the two mortgages remaining, the
more significant one is set to mature in December 2022. During the second quarter of 2020,
the borrower requested a three month deferral of mortgage payments,
due to the inability of tenants to pay rent as a result of the
COVID-19 economic and health crisis. The deferral was
granted. Regular payments resumed during the third quarter of 2020,
and the Company made certain amendments to this mortgage in
December 2020, including extending
the term of this mortgage through December
2022 in consideration of certain lump-sum repayments which
commenced in December 2020. As of
September 30, 2021, the Company did
not make any fair market value adjustments based on the
management's assessment of the fair market value of its investment
in both mortgages.
Regular Monthly & Special Distributions
In the third quarter of 2017, the Board made a decision to
suspend regular monthly distributions until further notice. This
decision was premised on a review of the last remaining mortgages
and anticipated cash requirements at that time, as well as the fact
that one of the two remaining mortgages is shared with an external
senior loan-sharing partner.
There were no regular distributions made for the three months
ended September 30, 2021
(June 30, 2020 - $2,488,143).
The Company made a special distribution of $0.478 per Class A share of the Company totaling,
$3,510,819 on March 29, 2021.
The Board anticipates from time to time making further special
distributions as the two remaining mortgages in the portfolio
mature or are sold, or if the Board otherwise determines that it is
appropriate to do so based on cash balances, subject to reasonable
expected operating expenditures and repayment of the senior loan
participant on one of the remaining mortgages.
Forward Looking Statements
Statements in this press release contain forward-looking
information. Such forward-looking information may be identified by
words such as "anticipates", "plans", "proposes", "estimates",
"intends", "expects", "believes", "may" and "will". The
forward-looking statements are founded on the basis of expectations
and assumptions made by the Company. Details of the risk factors
relating to the Company and its business are discussed under the
heading "Business Risks and Uncertainties" in the Company's annual
Management's Discussion & Analysis for the year ended
December 31, 2020 and under the
heading "Risk Factors" in the Company's Annual Information Form
dated March 31, 2021, copies of which
are available on the Company's SEDAR profile at www.sedar.com. Most
of these factors are outside the control of the Company. Investors
are cautioned not to put undue reliance on forward-looking
information. These statements speak only as of the date of this
press release. Except as otherwise required by applicable
securities statutes or regulation, the Company expressly disclaims
any intent or obligation to update publicly forward-looking
information, whether as a result of new information, future events
or otherwise.
About the Company
The Company holds a portfolio of mortgages in Canada. At the 2021 Meeting, the Company
sought and received shareholder approval to change its name to
"Standard Mercantile Acquisition Corp.", among other amendments to
the Articles. The Company is focused on monetizing its remaining
mortgage assets and is considering options to enable its
shareholders to participate in the potential future value of the
Company through transactions that could capitalize on the Company's
public listing. The Board has experience in sourcing, evaluating
and executing transactions of this nature.
SOURCE Standard Mercantile Acquisition Corp.