- Business financier, Chesswood Group Limited (TSX:CHW), is reducing its dividend indefinitely, while the company deals with pandemics effects on its client base
- The monthly dividend is being halved from C$0.07 to $0.035 to manage an expected reduction in debt repayments from the company’s clients
- Due to the pandemic’s effects on a range of industries, Chesswood has seen significant rise in deferrals and payment renegotiations, as businesses attempt to navigate reduced cashflows and industry-wide shutdowns
- In further efforts to improve its liquidity, the company has cut 31 employees and reduced the salaries of its management team by 20 per cent
- Chesswood Group Limited (CHW) is down 9.81 per cent, with shares trading at $3.40 and market cap of $55.24 million
Business financier, Chesswood Group Limited (TSX:CHW), is reducing its dividend indefinitely, while the company deals with the pandemic’s effects on its clients.
The monthly dividend is being halved from C$0.07 to $0.035 and comes into effect from the company’s next payment, which is scheduled for May 15.
The COVID-19 pandemic has been severely impacting the company’s debt portfolio and uncertainty surrounding credit repayments has motivated the dividend reduction.
Chesswood has seen a significant rise in deferrals and payment negations, as businesses attempt to navigate reduced cashflows and industry-wide shutdowns.
However, the company was quick to point out that it is not forgiving payments. Instead, these deferrals are to be paid one to two months later than expected. Otherwise, payment schedules are being renegotiated and deferred payments are being dispersed.
Around 16 per cent of Chesswood’s clients have asked for payment deferrals of this kind. Chesswood believes that these payments will not result in defaults and expects post-COVID levels of payment to return to normal.
Until that time, the company is implementing a series of cost-cutting measures to improve its liquidity in the coming months.
The company has cut 31 employees from its team, which is approximately a 20 per cent reduction. Furthermore, the company’s management have reduced their salaries by 20 per cent and compensation its directors has been halted.
Barry Shafran, Chesswood’s President and CEO, believes the reductions are necessary, given the present circumstances.
“In these unprecedented times, we are temporarily reducing our dividend, in anticipation of the effects of COVID-19 on the performance of Chesswood’s portfolios.
“Our Board will make decisions about future dividends during this extraordinary period on a monthly basis as the effects of COVID-19 emerge and management and the Board can assess their impact,” he said.
Chesswood Group Limited (CHW) is down 9.81 per cent, with shares trading for $3.40 at 9:47am EST.