9 Dec 2019 08:00
9 December 2019
Hadrian's Wall Secured Investments Limited
Company Update
The Board of Hadrian's Wall Secured Investments Limited (the "Company"), having consulted with shareholders representing a significant proportion of the Company's shares, has determined that the Company should not continue in its current form. The Board is now undertaking a strategic review of the options available to it with a view to maximising shareholder value, which might include putting the Company into run-off. In coming to this decision, the Board acknowledges that the challenges already facing the Company in terms of its size, scalability, limited secondary market liquidity and the discount to NAV at which the shares have been trading, are likely to be exacerbated by the recent news relating to Biomass Optimum Fuels Limited ("BOFL") and Biomass Premium Fuels Limited ("BPFL"). The outcome of the strategic review will be provided in due course.
The Board has asked Hadrian's Wall Capital Limited, the Company's investment adviser (the "Investment Adviser"), to look at the possible options for realising value from the Company's portfolio. These options might include sales of individual investment assets, mainly structured as loans and leases, or running off the portfolio in accordance with the existing terms of the investments or a combination of both. The Board recognises that the illiquid nature of the Company's investment assets means it could take some time to realise value from the portfolio.
In light of the above, the Board has instructed the Investment Adviser not to originate any new investments and to the extent that the Company has cash available to it, including as a result of ongoing loan repayments, such cash is expected to be used in the first instance to repay amounts outstanding under the Company's revolving credit facility and to meet any existing undertakings for follow-on funding to existing loans in the portfolio, not currently expected to exceed £4.0 million in aggregate. Thereafter the intention would be to return capital to shareholders. The Company may also consider repurchasing shares at a discount to NAV if appropriate.
NAV update
The board appreciates that recent events relating to BOFL and BPFL have raised questions concerning the carrying value of assets within the portfolio and in turn the robustness of the Company's NAV. The Board is therefore seeking additional assurance beyond the scope of the normal monthly review, as prepared by the Administrator based on information provided to it by the Investment Manager and the valuations provided to it by the Investment Adviser. This has resulted in a delay to the announcement of the Company's NAV per share as at 31 October 2019, which would otherwise have been expected to be released before the end of November, and which will now be announced in the next few days.
Dividend expectations
Having reviewed the revenue forecasts provided to it by the Investment Adviser, the Board expects to be able to meet, out of net income before taking account of IFRS 9 adjustments, the dividend target of 1.5 pence per share for the quarter to 31 December 2019. The ability to meet the dividend in Q1 2020 and beyond will depend, in part, on the outcome of the steps taken to realise value from the portfolio currently underway.
Board Update
In light of the fact that the Company is no longer continuing in its current form, the Board has decided that it is appropriate to change the composition of the Board in order to ensure that the Directors have the required skills necessary to maximise shareholder value. With this in mind, the Board is in the process of appointing Brett Miller as an additional Director of the Company. Brett has considerable experience in corporate finance, corporate governance, corporate restructurings and optimising financial capital structures, and has been instrumental in a number of fund realisations in recent years for closed end funds listed on the London Stock Exchange and AIM. Given the change of direction of the Company, Paul Craig has decided that it would be in the best interests of all parties for him to step down. The Board thanks Paul for his commitment and significant contribution to the Board and the Company since its launch in 2016.
LEI: 213800ABN7VKMVNOLG14
Contact Details
David Warr (Chairman)
Telephone 01481 737600
Winterflood Investment Trusts (Corporate Broker)Joe Winkley / Neil MorganTelephone 020 3100 0000
Forward-looking statements
This press release may contain forward-looking statements with respect to the Company's future financial performance and position. Such statements are based on current expectations, estimates and projections of the Company and information currently available to the Company. The Company cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. The Company accepts no obligation to update the statements contained in this press release, unless required by law.