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Shell Summary for April 6, 2020

2020-04-06 20:28 ET - Market Summary

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by Stockwatch Business Reporter

The TSX Venture Exchange closed up 15.25 points to 399.19 Monday. Jeremy Edelman's first capital pool shell, Hampton Bay Capital Inc. (HPB: halted), has submitted a filing statement for its qualifying transaction, which is the acquisition of a Toronto company called Lendified Holdings Inc. The shell will roll back 1 for 1.88, leaving it with 8,414,627 shares issued, then issue 71,666,294 shares to its target's shareholders.

Lendified provides loans ranging from $5,000 to $150,000 to small businesses that are incorporated in Canada. Loan terms are two years or less. Its borrowers have each been operating for at least six months, with annualized revenue of at least $100,000. Lendified estimates that it has provided $80-million worth of loans since it began operating in 2015.

While business lending seems like a rather tedious business, Lendified clearly targets the high-risk end of the market. According to the shell's filing statement, Lendified had $21.9-million worth of active loans in its portfolio as of March 30, 2020. (Active loans exclude those that the company has already classified as bad debts.) Nearly all of Lendified's active borrowers have a risk rating between B and C, on a scale ranging from A to C-minus. These borrowers' interest rates are a staggering 29.99 to 39.90 per cent. More specifically, 41 per cent of Lendified's active loan portfolio, which works out to $9.04-million, is held by borrowers with a risk rating of C-plus and an interest rate of 36.72 per cent. The second-largest component of its portfolio, 27 per cent or $5.82-million, is held by borrowers with a risk rating of B-minus and an interest rate of 31.99 per cent. Most of Lendified's borrowers are in Ontario, Quebec, Alberta and British Columbia. Around 40 per cent of them are retailers, manufacturers and exporters, construction firms and contractors, and restaurants and caterers.

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