Eildon Capital Group has revealed a significant loan repayment default by Kings Investment, alongside a cautious outlook for its FY25 financials amid a sluggish Melbourne property market.
- Kings Investment misses $1.5 million loan repayment due March 2025
- Loan repayment extended to September 2025 with 16.5% compounding interest
- Outstanding loan balance now $12.4 million as of June 30, 2025
- Eildon Capital considering provisions due to slower-than-expected Melbourne market sales
- Board evaluating options for further investment and financial strategy
Loan Default and Extension
Eildon Capital Group (ASX, EDC) has disclosed a material setback in its mezzanine loan facility with Kings Investment, tied to the Kings-Newport Village project in Victoria. Originally, a $1.5 million repayment was due on March 31, 2025, but the borrower failed to meet this obligation. An extension was granted until September 30, 2025, with a steep 16.5% compounding monthly interest rate applied, reflecting the elevated risk profile of the loan.
Rising Outstanding Debt and Financial Implications
As of June 30, 2025, the outstanding loan balance has ballooned to $12.4 million. This increase underscores the compounding nature of the interest and the borrower's inability to reduce the principal. Eildon Capital’s board is actively considering various options to manage this exposure, including potential further investment or restructuring of the loan terms.
Market Conditions and Provisioning
The announcement also highlights broader challenges in the Melbourne property market, where sales velocity has been slower than anticipated. This market softness is expected to impact Eildon Capital’s loan portfolio, prompting the company to consider provisions against these loans. However, the exact amount of any such provisions has yet to be determined, leaving some uncertainty around the full financial impact on FY25 results.
Strategic Outlook
While the borrower’s current position limits near-term repayment prospects, Eildon Capital’s management remains engaged in assessing the best path forward. The board’s forthcoming decisions will be critical in shaping the company’s risk profile and financial health. Investors will be watching closely for updates on provisioning and any changes in the borrower’s repayment capacity.
Bottom Line?
Eildon Capital’s next moves on provisioning and loan management will be pivotal amid ongoing market headwinds.
Questions in the middle?
- What specific provisions will Eildon Capital set aside for the Kings Investment loan?
- How will the Melbourne property market’s slowdown affect Eildon Capital’s broader loan portfolio?
- What strategic options is the board considering to mitigate credit risk and protect shareholder value?