New leaders at Callidus Capital Corp. are expected to set out their strategy Thursday for the distressed lender, which has seen its share price fall sharply after announcing a string of loan losses and cutting its dividend.
Toronto-based Callidus, controlled by financier Newton Glassman, is scheduled to hold a conference call Thursday on quarterly financial results hosted by Patrick Dalton, who was named interim CEO in late October. Mr. Dalton, 49, has two decades of experience in private credit markets and is filling in for Mr. Glassman, who the company said is on an extended medical leave following back surgery.
The appointment of an interim CEO is part of a changing of the guard at the company.
Callidus chief credit officer James Rogers will leave the company early in 2019, the company announced in late October. Mr. Rogers has been at Callidus since 2016. In a press release, the company said he is leaving to “pursue opportunities closer to his family in the United States.”
Mr. Rogers’s responsibilities will be handed to Jim Hall, 71, who rejoined Callidus in October as a senior vice-president. He worked for the company from 2014 to 2017 as a vice-president and portfolio manager.
When Callidus appointed Mr. Dalton, lead director Tibor Donath said the interim CEO would “advance our strategy, drive growth in our portfolio and unlock value from our assets.” Prior to joining Callidus, Mr. Dalton worked at U.S. private lenders, including Fifth Street Asset Management, Gordon Brothers Finance Co. and Apollo Investment Corp.
Callidus went public in 2014 when parent Catalyst Capital Group Inc., a private-equity firm also controlled by Mr. Glassman, sold Callidus shares at $14 each.
The company’s shares changed hands Wednesday in the $1.65 range, reflecting the fact that Callidus has lost money for seven consecutive quarters, including a $40.8-million loss in the most recent quarter and $171.6-million of red ink in 2017, when the company took a $217.4-million provision against bad loans. Callidus halted its common share dividend in July.
Callidus executives have been saying since 2016 that they are working on a transaction to take the company private. Mr. Glassman previously stated that he was pursuing a deal that valued the company between $18 to $22 a share, based on a valuation by National Bank Financial. The company is expected to update the privatization concept as part of its conference call on Thursday.
Mr. Dalton is expected to outline plans Thursday for both building the loan portfolio at Callidus and working out troubled credits. So far this year, Callidus has made one new loan for $125-million. Last year, Callidus made two loans for a total of $54-million.
While Callidus’s share price fell last year, compensation for top executives at Callidus jumped to a total of $5.9-million in 2017 from $3.7-million the previous year, as the company awarded deferred compensation and retention payments to president David Reese. He took home $4.7-million last year, compared to $2.7-million in 2016.
In April, Callidus said in a regulatory filing that it was in talks with its own lenders to extend the term on its $50-million secured debt facility until March, 2019, in exchange for additional financial support from Catalyst. The private-equity fund currently owns about 72 per cent of Callidus.
Toronto-based Catalyst describes itself as one of Canada’s largest private-equity funds and has raised several billion dollars from institutional investors and wealthy individuals. Catalyst is currently running four large funds, the oldest of which originally pledged to cash in investments and pay out clients by 2016. That deadline was subsequently moved to 2019.
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