12 Aug 2014 07:00
12 August 2014
Better Capital PCC Limited
Interim Management Statement
Better Capital PCC Limited (the "Company"), including its two cells, the Better Capital 2009 Cell (the "2009 Cell") and the Better Capital 2012 Cell (the "2012 Cell"), today issues its Interim Management Statement in accordance with FCA Disclosure and Transparency Rule 4.3 and relates to the period from 1 April 2014 to 11 August 2014 ("Review Period").
1 BECAP Fund LP ("Fund I") portfolio
As disclosed in the Company's Annual Results published on 30 July 2014, the material events and transactions during the period from 1 April 2014 to 30 July 2014 were:
1.1 In May 2014, Spicers received a £5.0 million investment to fund its working capital. The Fund II GP provided Fund I with a £2.5 million loan to support the transaction.
1.2 On 28 July 2014, Fund I disposed its interest in BECAP Spicers (Guernsey) Limited, a special purpose vehicle that owns Spicers, an office products distributor to BECAP12 SPV 15 Limited, a special purpose vehicle controlled by Fund II (see paragraph 2.2 below).
1.3 In June 2014, Gardner repaid £1.0 million to Fund I. The total repaid in the business's current financial year to 31 August 2014 is £5.2 million with good prospects for further repayments in the very near term.
There have been no material events or transactions in Fund I or the Fund I portfolio companies since 30 July 2014.
2 BECAP12 Fund LP ("Fund II") portfolio
As disclosed in the Company's Annual Results, the material events and transactions during the period from 1 April 2014 to 30 July 2014 were:
2.1 On 24 July 2014, Fund II committed and invested £90.0 million to acquire OfficeTeam, a leading UK supplier of office products and services.
2.2 On 28 July 2014, the Company announced Fund II's acquisition of the equity interest in Fund I's special purpose vehicle that owns Spicers, another office products distributor. A capital restructuring to effect the combination of OfficeTeam and Spicers is well progressed and once completed, it is intended that the ratio of Fund I and Fund II in the non-management ownership of the combined group will be 11.5 per cent. and 88.5 per cent. respectively. This allocation is derived from the realisable value of Fund I's interest in Spicers and the cash invested in OfficeTeam by Fund II. Although OfficeTeam and Spicers are now part of the same corporate group, the businesses currently continue to trade and operate independently of each other.
There have been no material events or transactions in Fund II or the Fund II portfolio companies since 30 July 2014.
3 Financial
3.1 2009 Cell Portfolio Summary & Reconciliation as at 30 June 2014
For the avoidance of doubt, the Fund I fair value investment in SPVs reported below is based on the fair market valuations as at 31 March 2014, as amended by any follow-on investments or repayments during the period from 1 April to 30 June 2014.
Sector | Fund I Project cost* | Fund I fair value investment in SPVs** | Valuation percentage of NAV | Valuation methodology | ||
£m | £m | |||||
Gardner | Aerospace Manufacturing | 35.4 | 114.0 | 49.18% | Earnings | |
Calyx | Information Systems | 33.0 | 20.0 | 8.63% | Earnings/ Revenue/ Gross Profit | |
Santia | Professional Services | 14.5 | 36.2 | 15.62% | Earnings | |
Omnico | Information Systems | 34.3 | 34.3 | 14.80% | Price of Recent Investment | |
Fairline | Marine Manufacturing | 25.0 | 16.8 | 7.25% | Earnings | |
Spicers | Stationery Wholesale | 9.4 | 11.1 | 4.78% | Assets | |
151.6 | 232.4 | 100.26% | ||||
Fund I cash on deposit | 1.3 | 0.56% | ||||
Loan from the Fund II GP | (2.5) | (1.08%) | ||||
Fund I & SPV combined other net assets | 0.0 | 0.00% | ||||
Provision for Better Capital SLP interest in Fund I | 0.0 | 0.00% | ||||
2009 Cell fair value of investment in Fund I | 231.2 | 99.74% | ||||
2009 Cell cash on deposit | 0.6 | 0.26% | ||||
2009 Cell current assets less liabilities | 0.0 | 0.00% | ||||
2009 Cell NAV | 231.8 | 100.00% | ||||
* Fund I holds its investments at cost in accordance with the terms of the Limited Partnership Agreement | ||||||
** The 2009 Cell fair values its investment in Fund I in accordance with the accounting policies as set out in Note 2 of the Annual Report
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3.2 2012 Cell Portfolio Summary & Reconciliation as at 30 June 2014
For the avoidance of doubt, the Fund II fair value investment in SPVs reported below is based on the fair market valuations as at 31 March 2014.
Sector | Fund II Project cost* | Fund II fair value investment in SPVs** | Valuation percentage of NAV | Valuation methodology | ||
£m | £m | |||||
Everest | Building products | 30.0 | 63.5 | 16.98% | Earnings | |
Jaeger | Retail | 47.5 | 47.5 | 12.70% | Price of Recent Investment | |
BECAP (Ireland) LP | Investment vehicle | - | - | 0.00% | Fair Value | |
City Link | Logistics | 40.0 | 40.0 | 10.70% | Price of Recent Investment | |
117.5 | 151.0 | 40.38% | ||||
Fund II cash on deposit | 221.3 | 59.19% | ||||
Fund II & SPV combined other net assets | 0.1 | 0.03% | ||||
2012 Cell fair value of investment in Fund II | 372.4 | 99.60% | ||||
2012 Cell cash on deposit | 0.8 | 0.21% | ||||
2012 Cell current assets less liabilities | 0.7 | 0.19% | ||||
2012 Cell NAV | 373.9 | 100.00% | ||||
* Fund II holds its investments at cost in accordance with the terms of the Limited Partnership Agreement | ||||||
** The 2012 Cell fair values its investment in Fund II in accordance with the accounting policies as set out in Note 2 of the Annual Report
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4 Better Capital LLP (the "Consultant") and provision of services
The Board of the Company recognises that Fund I is going through a difficult period. Significant reorganisation has been effected in the Consultant's provision of operating support for the portfolio with considerable change and strengthening of the Operating team. Very considerable focus has achieved improvements in portfolio cash flows, with profitability and forecasts also improving. More remains to be done, and the Board together with the Fund I GP are committed to restoring shareholder confidence.
5 General information
Better Capital PCC Limited (the "Company") is a limited liability, Closed-ended Investment Company, which was incorporated on 24 November 2009 in Guernsey and which, by special resolution of its members, converted to a protected cell company on 12 January 2012 and on that same date changed its name from Better Capital Limited to Better Capital PCC Limited. It has an unlimited life and is registered with the Guernsey Financial Services Company as a Registered Closed-ended Collective Investment Scheme. The registered office of the Company is Heritage Hall, PO Box 225, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY.
Upon conversion, the Company established the 2009 Cell to which it attributed its investment in Fund I which has a portfolio of investments in distressed businesses. It also established a new protected cell, the 2012 Cell, which issued new shares for investment through the 2012 Cell into Fund II which will invest in a portfolio of distressed businesses.
The 2009 and 2012 Cells have the investment objective of generating attractive total returns from investing (through Fund I and Fund II respectively) in portfolios of businesses which have significant operating issues and may have associated financial distress, with a primary focus on businesses which have significant activities within the United Kingdom and Ireland; such returns being expected to be largely derived from capital growth.
The 2009 Cell has committed an aggregate of £203.8 million in Fund I and received distributions totalling £25.7 million to date, and the 2012 Cell has committed an aggregate of £347.4 million in Fund II.
For further information, please contact:
Better Capital PCC Limited +44 (0)1481 716 000
Laurence McNairn (Administrator and Company Secretary)
Jon Moulton (Director)
Better Capital LLP +44 (0)20 7440 0840
Mark Aldridge (Chief Executive)
Bonnie Kraus (Investor Relations)
Powerscourt +44 (0)20 7250 1446
Justin Griffiths
Carmen Murray
Numis Securities Limited +44 (0)20 7260 1000
Nathan Brown
Oliver Hardy
This statement is a general description of the financial position and performance of the Company for the period from 1 April 2014 to 11 August 2014. It does not contain any profit forecast or net asset value forecast. Future performance and share price are likely to be affected by a number of factors, including (but not limited to) general economic and market conditions and specific factors affecting the financial performance or prospects of individual investments within the Company's portfolios.