18 Aug 2010 07:00
Greenwich Loan Income Fund Limited
NAV Update for the Quarter Ended 30 June 2010 and Acquisition from CLO
18 August 2010
Ø NAV per share of 80.1p as at 30 June 2010 (75.9p at 31 March 2010)
Ø Acquisition of 1.75% of the equity of Stratus Technologies Bermuda Holdings, Ltd. from the CLO
Greenwich Loan Income Fund Limited ("GLIF" or "the Company") announces that as at 30 June 2010, its preliminary unaudited net asset value (NAV) per share was 80.1p. This compares to the unaudited NAV of 75.9p per share as at 31 March 2010.
In addition to the movement in the value of existing assets and liabilities within the balance sheet, a holding of 1.75% of the equity of Stratus Technologies Bermuda Holdings, Ltd. ("Stratus") was received within T2 CLO I Ltd ("the CLO") during the quarter, in exchange for a variation in the terms of Stratus's loan that is held by the CLO.
This equity came at no cost to the CLO and accounted for 1.3p per share of the rise in GLIF's NAV. The net positive move in the value of GLIF's assets and liabilities, the receipt of the Stratus equity, and the slight US dollar strengthening against the pound, positively impacted the sterling NAV of the company.
The weighted average market bid for the Company's portfolio at 30 June 2010 was 90.4% of par and 78.6% for the liabilities. This compares to figures of 90.7% of par and 80.3% respectively, as at 31 March 2010.
As previously described to shareholders, under International Financial Reporting Standards (IFRS), the consolidated results of operations for the Company include the impact of carrying its investments and its liabilities at fair value. Shareholders should be aware that the realisation of the Company's assets at the full NAV is unlikely. The NAV, as calculated in accordance with IFRS, reflects the theoretical fair value of the liabilities of the CLO but, because the market is rather illiquid, it may be difficult for the Company to acquire any or a significant portion of those liabilities.
The other two values customarily calculated to provide further clarity as to the dynamics within the value of the Company are as follows:
- the unaudited value based upon assets at market value and liabilities at par was 39.4p per share as at 30 June 2010, compared to 38.9p per share as at 31 March 2010.
- the value based upon CLO assets as calculated for interest diversion purposes, remaining assets at market value, and liabilities at par was 49.6p per share as at 30 June 2010, compared to 52.2p as at 31 March 2010.
The Company also today announces the acquisition of the equity holding in Stratus from the CLO (the "Acquisition"). The consideration for the Acquisition was US$1.7million for 1.75% of the equity of Stratus. The Acquisition will be funded from the Company's cash resources, and will settle as soon as possible. The Board of GLIF used an independent valuation provided by a third-party valuation firm to establish a fair value at which to bid for this asset.
While on a consolidated reporting basis there is no net impact on the Company's balance sheet, the Acquisition will improve the CLO's over-collaterisation ("OC") level for the purposes of its interest diversion tests and will increase the amount of cash available for investment within the CLO. The Stratus equity was valued at zero for OC purposes.
As there is no impact of the Acquisition on the consolidated balance sheet, the company's IFRS NAV will not be affected, nor will the value of the assets and liabilities. However, because of the increase in OC within the CLO, the value calculated based on the CLO assets at their interest diversion test level, remaining assets at market value and liabilities at par will increase by $1.7 million, or approximately 1.3p per share at the current US dollar / sterling exchange rate.
The Board intends that the Stratus equity will be held at the Company's acquisition cost of $1.7 million until such time as there is a liquidity event, unless there is a material deterioration in the prospects for Stratus Technologies.
In addition to the investment acquired from the CLO by GLIF, the Company has also received warrants in Koosharem Corporation, due to Koosharem's restructuring, at no cost. The Board of GLIF intends to hold these warrants at nil value until such time as there may be a liquidity event that would establish what value, if any, can be attributed to these warrants.
The Chairman of GLIF, Geoff Miller, commented: "We believe that an increase in the level of OC within the CLO does give a greater probability that future interest payments are received. It also allows more of the monies raised in October 2009 to be put to work for the good of the Company.
"Various negotiations with the CLO's note holders for GLIF to purchase certain notes issued by the CLO are ongoing, but at present the expectations of the note holders are far in excess of the notional market values of the notes and remain significantly above the level that the Company is prepared to pay. Therefore the acquisition announced today was a good way to deploy the funds available within GLIF and ensure that the assets within the CLO are entirely invested in senior secured loans to optimise the return received by GLIF from the CLO.
"The equity holding of Stratus and the warrants of Koosharem may not be the only non-loan assets held by GLIF in the future, either due to further restructuring within portfolio companies or if GLIF's ongoing search for value enhancing acquisition opportunities includes some non loan assets. However, the majority of the Company's assets in the future are likely to remain in the loan market and the merits of any holdings outside of the loan market will be viewed at all times relative to GLIF's stated goal of a good level of income and an assured level of capital for shareholders. This may be served from time to time by holding other assets in addition to the core loan portfolio."
Further statistics on the assets of both GLIF and the CLO can be found on the Company's website www.glifund.com, as well as the latest investor presentation.
End
Contacts:
Geoffrey Miller Greenwich Loan Income Fund Limited +353 1 4433 466
Patrick Conroy Greenwich Loan Income Fund Limited +1 203 983 5282
Philip SecrettNominated AdviserGrant Thornton Corporate Finance +44 207 383 5100
James Maxwell Singer Capital Markets Limited +44 (0) 20 3205 7622
Ed Gascoigne Pees Financial Dynamics +44 (0) 207 269 7132
Notes to Editors About Stratus Technologies Bermuda Holdings, Ltd.
The company provides fault tolerant products, servers and services that achieve and sustain high levels of reliability for companies that need 99.999% up time (equivalent to less than 5 minutes down time annually in continuous operation) to run mission critical systems.
It serves a range of global businesses including 8 of the world's top 10 banks, 9 of the top 10 pharmaceutical companies and fourteen of the 20 largest telecommunications service providers.
Stratus Technologies is a privately held company, owned primarily by Investcorp, Intel Capital, MidOcean Partners, and NEC and is incorporated in Bermuda.
Source: www.stratus.com
Koosharem Corporation
The company is a privately owned temporary staffing business that trades under the name Select Remedy. It is a leading provider of temporary staffing services in the United States and is the largest provider of temporary staffing services in California.
Through a network of company-owned and franchise agent offices, Select offers a wide range of temporary staffing solutions across 45 states. It has expanded rapidly its revenue and market share through numerous acquisitions and organic growth in recent years.
Source: www.selectstaffing.com