PwC to scrap Bridging Finance sale
PricewaterhouseCoopers (PwC), which has been managing the affairs of troubled Bay Street lender Bridging Finance for almost a year, is seeking to scrap the sale process and instead opt for an orderly wind down of the firm, which it warned could result in more than $1 billion in losses for investors.
In an update filed Friday, PwC said it determined that a liquidation of Bridging’s assets is the best course of action, particularly after identifying “significant issues” with many of the firm’s loans.
It estimated that it will be able to recover between $701 million and $880 million on behalf of the lender’s investors. That would represent a recovery of just 34 to 42 per cent of Bridging’s net asset value (NAV) of $2.09 billion that was reported as of March 31, 2021.
It’s an anti-climactic culmination of a sale and investment solicitation process that PwC said at one point saw more than 200 parties involved. That pool of potential bidders was eventually narrowed down to just four bids for all of Bridging’s assets.
In its report, PwC said those bids were at a “significant discount” to NAV, and added that the best cash proposal it received was less than the receiver’s lowest estimated recovery under its liquidation strategy. It also disclosed that the best proposal it received for an investment in Bridging was too fraught with risks to warrant pursuing.
Pending court approval of its wind-down strategy, PwC said it hopes to make an initial distribution of wind-down proceeds by June 30, and estimated that up to $150 million will recovered by Sept. 30. However, it cautioned that it could take up to five years for the remainder of Bridging’s assets to be recovered. PwC also estimated that up to $36 million in fees will be collected over a five-year span.
A group purporting to represent unitholders in Bridging’s investment funds released a statement Sunday slamming PwC’s attemp to scrap the sale process, and said it will seek to block the move when it goes before a court for approval on Friday.
That group reiterated its desire to see Bridging Finance sold to asset-management giant BlackRock.
Bridging Finance was put into receivership by the Ontario Superior Court of Justice on April 30, 2021, at the behest of Ontario Securities Commission (OSC) staff as it investigated alleged violations of securities laws at the lender. OSC staff have alleged tens of millions of dollars were misappropriated from its investment funds, and also claimed improper dealings occurred with two key clients, Sean McCoshen and Gary Ng.
None of the allegations have been proven in court or before the OSC.