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Chesswood Group Ltd T.CHW

Alternate Symbol(s):  CHWWF

Chesswood Group Limited is a Canada-based holding company. The Company, through its subsidiaries, engages in the business of specialty finance, including equipment finance throughout North America and vehicle finance and legal sector finance in Canada, as well as the origination and management of private credit alternatives for North American investors. Its subsidiaries include Pawnee Leasing Corporation (Pawnee), Tandem Finance Inc. (Tandem), Vault Credit Corporation (Vault Credit), Rifco National Auto Finance Corporation and others. Pawnee, which finances micro and small-ticket commercial equipment for small and medium-sized businesses in the United States through a third-party broker channel. Tandem, which sources micro and small-ticket commercial equipment originations to small and medium-sized businesses through the equipment vendor channel in the United States. Vault Credit provides commercial equipment financing and loans to small and medium-sized businesses across Canada.


TSX:CHW - Post by User

Bullboard Posts
Comment by Capharnaumon May 19, 2020 2:23pm
210 Views
Post# 31047226

RE:Dead stock

RE:Dead stock
Rakaposhi wrote: It's curtains for CHW. My ACB is $11 or so. They misled investors twice in a few months. First boasting they had ample room to manoeuvre, then a dividend cut nonetheless, now a total cancellation. The language also does not hint at even trying to get back to paying. I'd say $2 bucks and sold to the lowest bidder. Large insider holdings does not mean a company is well run.


They did say that liquidities were enough to pursue operations, but they also said that their calcs didn't include funding new business.

It looks like their creditors weren't willing to let them draw funds for new business while they still paid a dividend, so they suspended the dividend. Otherwise, they'd have to stop new business. Between the two, they likely judged that in the long run it was preferable to keep on lending. This bit from the last news release likely explains the new cut:

"New Business Funding

Pawnee and Tandem temporarily halted new originations late in April while we are in the process of working with the revolving credit facility syndicate for amendments which will better address COVID-19 related experience and expectations. Once completed, we expect to resume funding new transactions once again in the U.S. (at the more modest levels contemplated in Chesswood's annual MD&A). In Canada, Blue Chip continues to fund new business under its stricter COVID-19 credit guidelines."


I think it looks bad on them for cutting the dividend twice. They should have dealt with the lendors and make sure everything was tied together before announcing the first cut (to make the right call once).
Bullboard Posts