GLIF.L Regulatory News (GLIF)

14 Mar 2006 09:24

T2 Income Fund Limited14 March 2006 T2 Income Fund - year-end report March 14, 2006. T2 Income Fund Limited ("T2" or the "Company") announced todayupdated information regarding its first fiscal period of operations. T2 wasadmitted to trading on AIM on August 5, 2005. For the period from inceptionthrough December 31, 2005, the Company earned net investment income ofapproximately £218,000 and unrealized gains on investments (related to currencyfluctuations) of approximately £30,000. As of the end of the year, the net assetvalue per share was £0.97. This information is unaudited. During the last quarter of the year, the Company made its first two investments.On December 15, 2005 the Company invested £1,156,430 in senior second lien debtof Corel Corporation, a Canadian-based software company, specializing in officeproductivity software and graphic and imaging applications. The note bearsinterest at LIBOR (the tenor selected by the borrower from time to time) plus800 basis points and matures August 16, 2010. On December 30, 2005, the Company closed its second investment, consisting of£4.7 million senior secured first lien notes with warrants, in Peer 1 Network,Inc., a Canadian-based provider of outsourced Internet infrastructure andservices. The notes mature on September 1, 2008, and may be extended atborrower's option for an additional two years; the notes bear interest at LIBOR(the tenor selected by the borrower from time to time) plus 650 basis points. T2also received warrants to purchase 475,000 common shares (0.4%) of Peer 1Network Enterprises, Inc., the parent company, at a strike price of US$0.23 pershare. The Company earned approximately £649,000 in interest income through December31, 2005, primarily from short-term deposits; during the quarter cash depositswere bearing interest at rates of approximately 4.3% - 4.5%. The Company alsoearned closing fees of approximately £47,000 from the Peer 1 transactiondescribed above. Expenses from inception to December 31, 2005 were consistentwith budget, and totaled approximately £478,000, excluding formation expenses. While the Company remains pleased with the quality and number of investmentopportunities available to it since its listing, it has, for a variety ofreasons, chosen to not yet consummate many of those transactions thus far. Thereasons include transaction-specific due-diligence issues, pricing and equityterms that were unacceptable, and the Company's ability to achieve what itconsiders to be an appropriate risk/reward relationship in its investments. T2'sInvestment Adviser has since admission seen a significant number of investmentopportunities in profitable and growing technology companies. However, theCompany believes that a limiting factor in progressing certain of thosetransactions has been a more deliberate approach towards debt financing on thepart of some potential portfolio companies, which has led toslower-than-expected progress in the negotiation and completion of certaintransactions. At the same time, T2 has seen a range of technology companies (includingcompanies in the enterprise software, IT services and Internet sectors) forwhich debt financing represents an attractive and efficient alternative totraditional equity capital investment, and the Company remains focused onopportunities to make investments consistent with its mandate. Since the timeof its admission to trading on AIM in August 2005, the Company has reviewed morethan 30 transactions involving the debt securities of technology companies. TheCompany is currently involved in due diligence processes for 8 transactions,with a total value in excess of £20.0 million, although the Company continues tonote that there can be no guarantee that it will make these or similarinvestments. The Company has also been active in the syndicated loan market, in addition toindividually negotiated transactions. It is expected that over time, additionalinvestments will be identified in this market. In view of the above, it does not appear at this time that the Company willachieve the original projected yield of 7.2% for the four quarters ending June2006, reflecting the slower pace of investment. The Company's ability to paydividends will ultimately be based upon the pace of investment activity. The Company will make its financial statements available after the completion ofthe annual audit. The contents of this announcement include statements that are, or may be deemedto be "forward looking statements". These forward-looking statements can beidentified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should". They include the statement regarding the projected yield. By theirnature, forward looking statements involve risks and uncertainties and readersare cautioned that any such forward-looking statements are not guarantees offuture performance. The Company's actual results and performance may differmaterially from the impression created by the forward-looking statements. Theseforward-looking statements speak only as at the date of this announcement andthe Company undertakes no obligation to publicly update or reviseforward-looking statements, except as may be required by applicable law andregulation (including the AIM Rules). No statement in this announcement isintended to be a profit forecast. This information is provided by RNS The company news service from the London Stock Exchange