21 Jan 2010 07:00
Greenwich Loan Income Fund Limited
Trading Update and Dividend Announcement
21 January 2010
Greenwich Loan Income Fund Limited ("GLIF" or the "Company") today issues the following trading update and dividend announcement relating to the quarter ended 31 December 2009:
Highlights
CLO interest payment
As announced on 18 January 2010, the Company received a full interest payment from T2 CLO I Ltd ("the CLO") of $2.5m for the fourth quarter of 2009. This takes the total interest received from the CLO in respect of 2009 to $8.3m, compared to $9.0m in respect of 2008.
Dividend
The Directors of GLIF have today declared an interim dividend of 1p per share for the fourth quarter of 2009. This reflects both the level of net income received by the Company during the year and the final quarter's interest payment. This is the third consecutive quarterly dividend payment. The dividend will be payable to shareholders on the register on 29 January 2010 and will be payable on 12 February 2010.
Manager's Comments
The fourth quarter of 2009 saw a continuation of the broad trends witnessed during the second and third quarters, with increased valuations and better liquidity across the syndicated corporate loan market. That stronger market has encouraged renewed activity within the primary market, with a range of new offerings which seem primarily aimed at re-financing existing facilities (as opposed to supporting new mergers and acquisitions or buyout activity). Against the backdrop of that stronger market, we note with interest the persistent and expanded liquidity premiums across this asset class. Consistent with our historic focus on middle market assets, we continue to believe that better relative value continues to be associated with middle-market loans. While we remain concerned that market prices for assets of the type we hold broadly may have outpaced the relevant underlying fundamentals (and while we maintain a relatively conservative investment stance on that basis) we believe these trends have placed the portfolio on considerably firmer ground compared with the 6-18 month prior period.
Fundraising
In October 2009, the Company raised £11m of additional capital through a placing of new shares. This was to allow the Company to take advantage of opportunities to buy notes issued by the CLO at a significant discount to their par value and to manage the assets within the Company's consolidated balance sheet, so as to optimise the interest received from the CLO by GLIF.
The Company continues to have discussions with note holders but as yet no additional CLO notes have been purchased. The market will be informed in a timely manner of any future purchase. The Company did use its capital to purchase an investment previously held by the CLO in December 2009, which improved the CLO test ratios, to the point that a full interest payment was received, and will increase the probability of receiving all future interest payments from the CLO.
Currency
The remaining cash from the fundraising and the Company's cash resources prior to the fundraise are held in US dollars, to ensure no currency mis-match between the asset class and the capital to be invested.
The Company has the ability to hedge its currency exposure but the Board does not feel it appropriate to hedge the currency at the current time, although it is kept under regular review.
New Opportunities
The Board of GLIF and the Investment Manager have been examining closely other opportunities within GLIF's core market, where the Company may add value for existing shareholders.
The syndicated loans of middle market companies are a highly specialized area of investment. The current environment has led many of the market participants to consider exiting, creating potential interesting opportunities for GLIF. The Company is looking at a number of opportunities that could be accretive to both the capital and income prospects of the business.
It is too early to predict whether any of these opportunities will come to fruition, but the Board of GLIF will only proceed if it can be satisfied that any transaction will materially benefit the existing shareholders, without materially increasing the risk profile of the business.
Portfolio
The figures below give a breakdown of the top ten holdings of the investment portfolio, both within and outside the CLO and a percentage split by sector. The percentages are based on principal amount, as at 31 December 2009, and do not include the cash within the CLO or within the Company.
| Top Ten Holdings | % of Portfolio | Sector |
| Cavalier Telephone | 4.0% | telecommunications |
| Koosharem (Select Remedy) 2nd lien | 3.1% | diversified/conglomerate services |
| Pegasus | 3.1% | hotels, motels, inns and gaming |
| First Data Corporation B-1 | 3.1% | banking |
| Ford | 3.0% | automobile |
| Proquest | 3.0% | healthcare, education, and childcare |
| Attachmate | 2.9% | electronics |
| Corel | 2.7% | electronics |
| Stratus Technologies 2nd Lien | 2.5% | electronics |
| Nuvox (Gabriel Communcations) | 2.4% | telecommunications |
| Sector Breakdown | |
| Healthcare, Education and Childcare | 15.3% |
| Electronics | 13.9% |
| Telecommunications | 10.9% |
| Diversified /Conglomerate Services | 10.1% |
| Printing, Publishing, and Broadcasting | 6.4% |
| Broadcasting and Entertainment | 5.7% |
| Banking | 5.6% |
| Hotels, Motels, Inns and Gaming | 4.4% |
| Leisure, Amusement, Motion Pictures, Entertainment | 3.8% |
| Grocery | 3.5% |
| Chemicals, Plastics and Rubber | 3.4% |
| Automobile | 3.0% |
| Diversified Natural Resources, Precious Metals and Minerals | 2.7% |
| Personal, Food and Miscellaneous Services | 2.0% |
| Machinery (Non-Agriculture, Non-Construction and Non-Electronic) | 1.7% |
| Cargo Transport | 1.5% |
| Mining, Steel, Iron and Non-Precious Metals | 1.5% |
| Personal and Non-Durable Consumer Products (Manufacturing only) | 1.4% |
| Farming and Agriculture | 1.2% |
| Buildings and Real Estate | 1.0% |
| Containers, Packaging and Glass | 0.9% |
Calendar of Announcements for 2010
During 2010, the Company intends to continue to improve the timeliness of its announcements compared to 2009.
Although there may be further ad hoc announcements during the year, the Board of GLIF expects the following announcements in 2010:
February: CLO test results and Q4 09 NAV
March: CLO test results
April: CLO test results, 2009 full year results and Q1 10 dividend
May: CLO test results, AGM and Q1 10 NAV
June: CLO test results
July: CLO test results and Q2 dividend
August: CLO test results and Q2 NAV
September: CLO test results and interim results 2010
October: CLO test results and Q3 dividend
November: CLO test results and Q3 NAV
December: CLO test results
January 2011: CLO test results and Q4 dividend
Contacts:
Geoffrey Miller
Greenwich Loan Income Fund Limited
+353 1 4433 466
Patrick ConroyGreenwich Loan Income Fund Limited +1 203 983 5282
Philip Secrett
Nominated Adviser
Grant Thornton Corporate Finance
+44 (0) 20 7383 5100
Jos Trusted
Singer Capital Markets Limited
+44 (0) 20 3205 7622
Ed Gascoigne Pees
Financial Dynamics
+44 (0) 20 7269 7132