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20 Oct 2020 15:56
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20 October 2020
ABERDEEN STANDARD ASIA FOCUS PLC ("the Company")
Legal Entity Identifier (LEI): 5493000FBZP1J92OQY70
New long-term fixed rate borrowing
The Board of Aberdeen Standard Asia Focus PLC (the "Company") today announces that it has agreed terms (through the acceptance of a conditional offer that is subject to diligence and agreement of legal documentation) to extend and secure the Company's long-term borrowings through the issuance of a £30 million 15 year Senior Unsecured Loan Note (the "Loan Note") at an annualised interest rate of 3.05%. The Loan Note will be unsecured, unlisted and denominated in sterling. The Loan Note shall rank pari passu with the Company's other unsecured and unsubordinated financial indebtedness.
The Company intends to use the proceeds of the Loan Note to repay, and cancel in full, the Company's £20 million Revolving Credit Facility ("RCF"), of which £11.2million is currently drawn. The remainder will be available for the Company's investment manager, Aberdeen Standard Investments (the "Manager"), to invest on behalf of the Company.
An additional £35 million will also be available for drawdown by the Company for a five-year period.
The Board's current intention would be to only draw this down to repay any of the Company's existing Convertible Unsecured Loan Stock, either at their redemption in 2025, or before. This will be kept under review. The minimum drawdown would be in tranches of £10m and the exact terms of such a borrowing would be agreed at the time of drawdown. The Company will pay no fees on this facility, other than minimal legal fees.
The Board believes that it is in the long-term interest of the Ordinary shareholders to take advantage of the current low interest rates prevailing in today's market to extend, and secure, the Company's debt profile beyond the CULS redemption date. It will provide the Manager with greater flexibility and additional cash resources to take advantage of investment opportunities that are expected to arise over the coming period.
Asia remains the principal engine for growth in the world and one of the most exciting regions for true active investing in smaller companies. Since the Company's inception 25 years ago, the opportunity to uncover tomorrow's leading businesses and to access domestic growth remains as strong as ever. The region's dynamism has accelerated in recent years and, as a result, the Company's portfolio has evolved, with a gradual but very conscious shift in invested capital away from more mature businesses that have proven their success to more nascent opportunities in areas such as technology, healthcare and industrials.
Once the initial drawdown is completed (expected to be 1 December 2020) and the RCF has been repaid, the Company's borrowings are expected to total approx. £66.7m, providing an extra approx. £18.7m of cash for investment.
The Board considers that the existing low interest rate environment creates an attractive opportunity to secure fixed rate, long-dated financing with the intention of enhancing long-term total returns for shareholders. The Company remains committed to the use of gearing as one of the principal advantages of the Company's investment trust structure.
Hugh Young, Aberdeen Standard Investments, said:
"Great opportunities exist today in small companies in the Asian region. This rearrangement of the Company's gearing facilities gives us the continued ability to invest for the long-term in this exciting area of the market that will continue to dominate the world's growth most particularly in the post COVID-19 world."
Nigel Cayzer, Chairman said:
"The change in the structure of the Company's gearing will strengthen the Company's balance sheet and provide greater certainty with regard to its borrowings over an extended period. This will enhance the Manager's ability to invest for the longer term into this exciting region."
Contacts
Aberdeen Standard Investments
William Hemmings 020 7463 6223
Charles Mearns 0131 528 4132
Panmure Gordon 020 7886 2500
Michael Bateman
Oliver Packard
Sapna Shah