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LONDON (Alliance News) - Chenavari Toro Income Fund Ltd on Monday said it is intending to repurchase at least 10% of its issued share capital per year for the next five years, with a 5% tender offer to occur in January or February.
This 5% offer will be the first of two for the year, with a second planned for later in the year at an as-yet unspecified date.
The first offer will be priced at 85% of Chenavari Toro Income Fund's net asset value per share on December 31. This NAV per share figure will be announced on or around Tuesday next week.
The shares acquired will be held as treasury shares. Following the tender offer, investors - who are not existing shareholders and have not participated in the offer - will be able take part in the re-issuance of treasury shares.
Since its initial public offering in May 2015, shares in Chenavari Toro Income Fund have traded at an average discount to net asset value of 13% per share. The fund said Monday that its shares now were trading at a 22% discount to net asset value and that this did not match the board's expectations.
Shares in Chenavari Toro Income Fund were up 1.5% at EUR0.77 on Monday.
"One of the underlying reasons for this persistent discount is the lack of liquidity in the company's shares, and more specifically the absence of sellers at current prices," the fund said.
In a bid to tackle this, Chenavari Toro Income Fund is implementing an annual liquidity process wherein shareholders are invited to tender their shares for repurchase, after which they are to be held as treasury shares.
"Following the announcement of the results of each such tender offer, a certain number of treasury shares would be made available for purchase by investors, willing to invest in size in the company, something which is not currently possible due to the company's historically low levels of liquidity," the fund said.