(Alliance News) - Pollen Street Secured Lending PLC on Tuesday said it has received a possible 900 pence per share cash offer from funds advised by Waterfall Asset Management LLC.
Shares in Pollen Street were up 6.6% at 883.00 pence in morning trading. The 900p offer represents an 8.7% premium over its Monday closing price of 828.00p.
Pollen Street Secured Lending, which invests in credit assets from non-bank lending platforms, additionally said it has given 12 months' notice to terminate its investment management agreement with PSC Credit Holdings LLP.
The reason for the termination, Pollen Street Secured Lending explained, was that: "Since PSC Credit Holdings (the manager) was notified of this approach on 8 January 2020 the board has been unable to obtain from the manager all of the company's own documentation and information, which has been requested, to allow the board to make its own proper assessment of what due diligence materials to pass on to the potential offeror."
Furthermore, Pollen Street Secured Lending believes there is "a position of conflict of interest" regarding the offer.
Pollen Street Secured Lending also cited "a number of other serious governance issues" with PSC Credit, including its publishing of information about the company's dividend without the knowledge or permission of the board, including a factsheet from PSC Credit stating that it had recommended a 15 pence per share per quarter dividend to Pollen Street's board.
The company has declared an unchanged 12.0p per share dividend for the fourth quarter of 2019 and said it requires "further evidence" that increases the quarterly dividend would be "sustainable" and is seeking to increase its revenue reserve.
Simon King, Pollen Street Secured Lending's chair, said: "This decision to give notice to terminate has been taken after very serious consideration.
"In the face of a possible offeror's interest in exploring a recommended offer for the company, the manager has not, in the board's unanimous view, given the assistance which is reasonably to be expected in such circumstances. The board believes that, while portfolio performance has been satisfactory, it is not acceptable to withhold company information from the board, publish very material information about the company without board approval and fail to confirm compliance with clear and important instructions from the company, its client.
"Accordingly, the board considers that it is appropriate to give the manager 12 months' notice of termination (whilst reserving the company's rights) and to explore alternative arrangements for the company."
As at February 25, Pollen Street Secured Lending had 86.3 million shares in issue, of which 12.1 million were held as treasury shares. Its total number of voting rights, therefore, was 74.2 million. Based on the 74.2 million figure, the 900p cash offer is worth GBP667.8 million.
Waterfall also noted that it has received an irrevocable undertakings from Invesco Asset Management Ltd, Pollen Street Secured Lending's largest shareholder with a 25% stake.
Pollen Street Secured Lending said it "would be minded to recommend the offer" given its value, provided a firm intention to make the offer is announced. It has confirmed this to Waterfall.
By Anna Farley; annafarley@alliancenews.com
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