Distribution Finance Capital Holdings (LON: DFCH) is down 24% today. They lent money to someone who appears unlikely to pay it back. Which is fun, obviously. Also not unprecedented, and it’s a smallish part of their portfolio so not something that is going to wreck the business.
The announcement: “The Group previously reported that as at 30 June 2023 the Group's arrears included £10.4m of balance outstanding in respect of a large single obligor; RoyaleLife and associated companies ("RoyaleLife"), a customer of the Company since June 2018, representing c.2 per cent of the Group's loan book as at 30 September 2023. Whilst the refinancing and restructuring of RoyaleLife was in progress, it had been delayed, and at that time the Group's assessment, following engagement with key stakeholders, was that the Group would be repaid should the proposed refinance complete as planned. The Group is aware of a significant number of assets which have been sold out of trust or are missing from confirmed locations and following continued work with various stakeholders, it is now clear that RoyaleLife's financial situation and operation is much opaquer and more complex than originally determined, adversely impacting, to a greater degree than expected, a larger number of secured lenders and other creditors.”
This is bad, but survivable, for DFCH.
Distribution Finance Capital Holdings share price from Google Finance
What’s much more fin about this is RoyaleLife. Here’s one report on it: “Robert Bull, the majority owner of British bungalow giant RoyaleLife, saw his public profile reach new heights this year when he entered The Sunday Times Rich List for the first time. In a piece to accompany his entry, Bull, 46, told of how he had become bankrupt in 2016, but had since recovered to build a £4-billion ($5.1 billion) business that specializes in selling pre-fabricated dwellings to over-45s. His net worth was estimated by The Sunday Times at around £1.9 billion.” That business is now coming apart.
“Part of the appeal of lending like this is that it’s backed by hard, real assets, that lenders can take as security for money advanced. By appointing administrators to the entities they hold security over, the funds are in effect taking control of the assets to ensure their investors are paid back. The creditor action against RoyaleLife doesn’t appear to have stopped. Two winding-up petitions, requests by creditors to have businesses shuttered by a court order, made by law firm DLA Piper against group entities were heard in a London court last week. One was granted and the company shuttered, the other was dismissed because that firm was already in administration. A spokesperson for DLA Piper declined to comment.”
Well, yes, but if the assets aren’t there then that’s not how it works out, is it? Our bet is that RoyaleLife is going to end up as the most wondrously juicy scandal.
