PricewaterhouseCoopers (PwC), the accounting firm that has been managing the affairs of troubled Canadian lender Bridging Finance, is now seeking to scrap the sales process and instead wind down the Bay Street firm, a decision that could lead to more than $1 billion in losses for investors.
PwC says it has determined that a liquidation of Bridging Finance’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% of Bridging’s net asset value (NAV) of $2.09 billion.
It’s an anti-climactic culmination of a sales 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 Finance’s assets.
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 be recovered by September 30 of this year.
However, PwC 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 slamming PwC’s attempt to scrap the sales process and said it will seek to block the move when it goes before a court for approval.
That group reiterated its desire to see Bridging Finance sold to asset-management giant BlackRock (BLK).
Bridging Finance was put into receivership by the Ontario Superior Court of Justice on April 30 of last year at the behest of Ontario Securities Commission (OSC) as it investigated alleged violations of securities laws at the lender.
The OSC has 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.
