Elanor’s Debt Breaches Spark Going Concern Alarm Despite Recapitalisation Efforts

Financial Results and Challenges

Elanor Investors Group (ASX, ENN) has disclosed a significant net loss of $157.8 million for the financial year ended 30 June 2024, a sharp increase from the $30.7 million loss reported in the prior year. This result was driven by substantial asset devaluations, impairment charges, and breaches of debt covenants on its secured facilities and corporate notes.

The group’s balance sheet reflects net assets of $204.4 million but a concerning net current asset deficiency of $211.8 million. The breaches of debt covenants triggered classification of all debt as current liabilities and raised material uncertainty about the group’s ability to continue as a going concern, as highlighted in the auditor’s unqualified opinion with an emphasis of matter.

Strategic Response, Asset Realisation and Refinancing

In response, Elanor initiated an orderly asset realisation program aimed at releasing co-investment capital and repaying debt. Key divestments include the sale of its 12.6% stake in the Elanor Commercial Property Fund for $23.9 million and the disposal of the Cougal Street property. Proceeds from these sales have been used to reduce senior secured debt and repay commercial arrangements.

On the refinancing front, Elanor secured a new $85 million secured term debt facility with Keyview Financial Group, replacing its previous $75 million facility. The new facility carries a higher interest rate and includes scheduled repayments through mid-2025. Despite this, the group defaulted on the Keyview facility due to cross defaults and missed repayment milestones, leading to an extension arrangement with conditional waivers granted until November 2025.

Recapitalisation and Strategic Alliance with Rockworth

To stabilise its balance sheet and reduce gearing, Elanor entered into binding terms with Rockworth Capital Partners in July 2025 for a $125 million recapitalisation package. This includes a $70 million senior secured debt facility at 7% interest, $55 million in perpetual subordinated capital notes with discretionary coupons, and 30 million unlisted warrants exercisable at $0.01.

The proceeds will be used to fully repay the Keyview facility, redeem existing corporate notes, settle commercial arrangements, and provide working capital. The recapitalisation is contingent on regulatory and securityholder approvals, with an Extraordinary General Meeting expected in November 2025.

As part of this alliance, Elanor plans to acquire Firmus Capital Pte. Ltd., a Singapore-based real estate investment manager with approximately S$658 million in assets under management, marking a strategic pivot towards Pan-Asian growth opportunities in retail, office, logistics, healthcare, and leisure sectors.

Leadership and Business Simplification

Amid these financial and strategic shifts, Elanor has undergone leadership changes with the retirement of CEO Glenn Willis and COO Paul Siviour in September 2024. Anthony (Tony) Fehon was appointed Interim Managing Director, and the board has commenced a search for a permanent CEO.

The group is also simplifying its business focus to core real estate sectors, retail, office, healthcare, industrial, and leisure, while executing cost management initiatives to improve profitability in its funds management platform.

Unwinding of Challenger Mandate and ESG Commitments

Elanor and Challenger Limited mutually agreed to unwind their strategic partnership announced in 2023. Elanor will continue managing Challenger’s real estate portfolio until October 2025, after which the 20.3 million ENN securities held by Challenger’s subsidiary will be cancelled.

On the sustainability front, Elanor is advancing climate-related financial disclosures aligned with Australian Sustainability Reporting Standards, focusing on energy efficiency, carbon management, and climate risk integration into its investment processes.