Review of Statement
This statement represents a couple of things for me.
1. RES board didn't have to send this Memo, so the communication at this early stage (next letter was not expected yet) is actually quite refreshing. I believe the board understands our frustration, but at the same time, as per all finance, it is out of their control. RES board could have easily sent a note at the end of this month stating the same. I hope they continue the communication, and with that in mind, we should not jump to conclusions.
2. RES board may have lost a little patience, as noted by their comment to pursue the next alternative and also by requesting a timeline from the existing syndicate. i.e. Our board feels they are losing face with shareholders as their reputation is on the line every time they place a date publicly. I saw this several notices ago, whereby they didn't want to give dates.
Strangely, the lack of transparency is how a loan assessment works due to the many variables that most people just do not see in the background. Remember a bank is working on many potential deals at any given time. Not all of them go ahead, and they are also a business that are also attempting to profit from loan deals. The banks have their own internal processes, and unfortunately they do not care for our timelines, so queue jumping is not a thing that is done regularly.
That being said, pursuing alternative funding is a essential to any financing, and if we are looking for flaws it may have been this. i.e. we should have reviewed several alternatives from the outset.
My View
For what it is worth, I remain very positive.
Ignore the past ten years as there are many factors that impact the delays, and review we need to focus on the facts as the present now.
We submitted/ tabled the required documents last week for the bank to review. This is a big decision, and as per above comment, the bank has its own review and internal processes to follow. This is not a drop everything and look after RES world, so the bank reviewing would do due diligence, then forward this outcome of the assessment to the senior members, if not the entire board. The senior members of this bank would have schedules and for all we know, they may be on two weeks annual leave, sick leave, overseas organising funding for other deals etc. i.e. 2-4 weeks would not be seen as extraordinary for senior members of a bank to be able to meet and review important deals. I believe it will be a tight schedule to have something information to us prior the annual meeting. I think the board members of RES really hope this to save their own reputation, but I am not sure they have any say.
Slow Loan Processing
The reality, we are all expecting that a submitted/ tabled loan is approved in 4 weeks. In Australia, this cannot be done now with a simple residential lend, due the many variables such as compliance, valuations, senior credit approvals, third party approvals, delays, staff absentees etc. I am discussing residential loans, for RES, are talking about a commercial loan, bigger dollars and more variables. So given the one month timeline only, I am not concerned at all.
Going Forward
As per my comments above, the questions I have sent last week are important any way we look at this, even once the loan is approved, finance can go pear shaped, particularly when you have multiple lenders. One lender is a pain in the A... but three lenders as a syndicate introduces many more variables. Hopefully we get some response soon.
Summary
It would very difficult to believe that we can't get finance across the line.
It is not difficult to understand these delays.
This is standard, normal, and all on track!
