The forbearance exposure at FirstHoldCo poses significant threats and dangers to its shareholders. The company’s forbearance exposures are linked to syndicated loans across various industry sectors, which are being restructured to align with cash flow profiles of respective obligors. However, this exposure poses several risks.
CardinalStone expects FirstHoldCo’s loan loss provisioning to reach N450.6 billion in FY’25, representing a 5.7% year-over-year increase. This could negatively impact the company’s profitability and, in turn, affect shareholder returns.
The planned recapitalization effort aims to bolster FirstHoldCo’s capital base, but there are risks associated with the execution and timing of this effort. Any delays or shortfalls in the capital raise could exacerbate the company’s financial challenges.
The uncertainty surrounding dividend payments could impact shareholder confidence and returns. Although FirstHoldCo has assured investors that it plans to sustain dividend payments in 2025 and beyond, the company’s ability to do so will depend on its financial performance and regulatory compliance.
FirstHoldCo’s forbearance exposure and recapitalization efforts may attract regulatory scrutiny and potentially damage the company’s reputation. This could lead to a loss of investor confidence and negatively impact shareholder value.
Overall, the forbearance exposure at FirstHoldCo poses significant threats to its shareholders, including potential losses due to loan defaults, reduced dividend payments, and reputational damage. Shareholders should closely monitor the company’s progress in addressing these challenges and take steps to manage their risk exposure accordingly.
