Fair Oaks Inc21 Regulatory News (FAIR)

Fair Oaks Income Limited

14 November 2019

FAIR OAKS INCOME LIMITED (the "Company")

(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)

COMPANY UPDATE

The General Partner of FOMC II (the "Master Fund") and the Company's investment adviser ("Fair Oaks") have informed the Company of their intention, given the current value, opportunities and risks in the CLO market, to potentially increase the Master Fund's allocation to tactical investments in US CLO mezzanine notes, replicating the successful asset allocation decision in 2016.

The Master Fund's last primary US equity investment was completed over a year ago, reflecting Fair Oaks' belief that the return offered by primary US CLO investments has been below the Master Fund's target Furthermore, the cash received from investment exits in 2019 has been retained, thus increasing the Master Fund's scope to take advantage of tactical investments, as it did in 2016 by allocating to CLO mezzanine opportunities offering attractive risk-adjusted returns.

Fair Oaks has noted that the prices of US CLO B and BB mezzanine notes has fallen to levels not seen since 2016 and are currently offering yields to maturity of c14% and 10% respectively[1]. While these index-based figures may not currently be representative of the potential returns in higher quality notes, Fair Oaks believes that appropriate opportunities may present themselves in the short to medium term and if this is the case the Master Fund's allocation will be increased accordingly.

The Company announces that it intends to declare two further dividends of 0.7 US cents[2] in respect of the remainder of the year, in accordance with the policy of distributing substantially all of its net income, resulting in aggregate dividends for the year of 8.4 US cents which represents a yield on the current share price of c.11.4%[3]. The 2019 dividend has been impacted by, among other factors, the cash held by the Master Fund during 2019. In respect of the year ending 31 December 2020, the Company intends to declare twelve monthly dividends of 0.7 US cents[2]. To the extent that the Company's net income exceeds this level, such excess would be reflected in the Company's net asset value.

[1] Source: JP Morgan Post Crisis CLOIE Index as at 12-Nov-19

[2] These figures are targets only and not profit forecasts. There can be no assurance that these targets will be met. These target returns should not be taken as an indication of the Company's expected or actual current or future results. The Company's actual return will depend upon a number of factors. Shareholders and potential investors should decide for themselves whether or not the return is reasonable and achievable.

[3] Based on closing share price of $0.735 as at 13-Nov-19

LEI: 2138008KETEC1WM5YP90

Enquiries:

Fair Oaks Income Limited

Email: contact@fairoaksincome.com

Web: www.fairoaksincome.com

Fair Oaks Capital Limited

Investor Relations

DDI: +44 (0) 20 3034 0400

Email: ir@fairoakscap.com

Praxis Fund Services Limited

Ben Le Prevost

DDI: +44 (0) 1481 755524

Email: Ben.LePrevost@praxisifm.com

Numis Securities Limited

Nathan Brown, Corporate Broking

DDI: +44 (0) 20 7260 1426

Email: n.brown@numis.com 

Fair Oaks Income Limited

Fair Oaks Income Limited is a registered closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange (now the Specialist Fund Segment of the Main Market of the London Stock Exchange) on 12 June 2014.

The investment policy of the Company is to invest (either directly and/or indirectly through FOMC II LP) in US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing.