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14 May 2019 07:00
THIS ANNOUNCEMENT IS NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES (INCLUDING TO U.S. PERSONS, AS SUCH TERM IS DEFINED UNDER REGULATION S OF THE US SECURITIES ACT OF 1933, AS AMENDED, THE "SECURITIES ACT"), CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
14 May 2019
Sequoia Economic Infrastructure Income Fund Limited ("SEQI" or the "Company")
Increase in Revolving Credit Facility and possible equity issue
SEQI, the specialist investor in economic infrastructure debt, is pleased to announce that the Company has materially deployed or committed the proceeds of its multi-currency Revolving Credit Facility of £150 million (the "RCF"). As at 30 April 2019, the Company had outstanding drawings on its RCF of £113.9 million and cash of £25.5 million, resulting in net leverage of £88.4 million. In addition, the Company had undrawn commitments and additional investments in settlement, collectively valued at £84.2 million.
The Company's Board of Directors (the "Board") further notes that Sequoia Investment Management Company (the "Investment Adviser"), continues to see an attractive pipeline of opportunities which are currently available for investment. To remain substantially fully invested and to avoid cash drag, the Company intends to finance available investment opportunities through the further use of leverage, with the intention to pay down such leverage in due course through a future equity issue.
Increase in size of Revolving Credit Facility to £200 million
In light of the Company's increased scale, its deployment level and its pipeline of opportunities, the Board has increased the size of the RCF by entering into a £50 million incremental accordion tranche, resulting in a total capacity of £200 million under the RCF. The lending group remains unchanged.
The tenor of the RCF will be extended by one year to 6 December 2021, with a borrowing cost of 210 basis points over LIBOR. An arrangement fee and a commitment fee on the undrawn portion of the RCF will be payable. If the average utilisation of the RCF is lower than certain thresholds, additional fees may be due.
The RCF imposes an interest cover test and a loan to value test on the Company and is secured by, inter alia, a charge over the bank accounts of the Company, a charge over the shares in Sequoia IDF Asset Holdings S.A. (the "Subsidiary") held by the Company and a charge on the assets of the Subsidiary. In accordance with the Company's Investment Policy, any borrowings undertaken by the Company will not exceed 20 per cent. of the value of the assets of the Company less its liabilities.
Possible equity issue
Notwithstanding the increase in the RCF, the Company's current pipeline of investment opportunities is greater than the amount of undrawn leverage currently available. Taking into account these opportunities, the Board is pleased to announce that the Company is considering a further issue of equity.
To the extent that the Board resolves to proceed with a capital raise, any issue of shares will be at a price per share that is accretive to NAV and is expected to include a material level of pre-emption rights for the Company's existing shareholders. Any such capital raise, including its structure, timing, size and approval by the Board, will be subject to the Company's level of deployment and net leverage, prevailing market conditions and regulatory approvals.
The information contained in this announcement may constitute inside information. The person responsible for the release of this announcement on behalf of the Company is Praxis Fund Services Limited.
Further details will be announced in due course.
LEI: 2138006OW12FQHJ6PX91
For further information please contact:
Sequoia Investment Management Company +44 (0)20 7079 0480
Steve Cook
Dolf Kohnhorst
Randall Sandstrom
Greg Taylor
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Neil Winward
Mark Bloomfield
Gaudi Le Roux
Praxis Fund Services Limited (Company Secretary) +44 (0) 1481 755530
Matt Falla
About Sequoia Economic Infrastructure Income Fund Limited
The Company is a Guernsey registered closed-ended investment company that seeks to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. The Company is advised by Sequoia Investment Management Company Limited.
Important Notices
Neither this announcement nor the information contained herein is for release, publication or distribution, directly or indirectly, in or into the United States, South Africa, Canada, Australia, New Zealand or Japan or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction. The securities referred to herein have not been and will not be registered under the relevant securities laws of any such excluded territory.
This announcement does not contain, constitute or form part of an offer for sale of, resale of, transfer of or delivery of or the solicitation of an offer to purchase directly or indirectly, securities in the United States or to, or for the account or benefit of a U.S. Person (as defined in Regulation S of the Securities Act). The securities referred to herein have not been, and will not, be registered under the Securities Act or any other applicable securities laws of, or with any securities regulatory authority of, any state or other jurisdiction of the United States, and may not be offered, sold, resold, transferred or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, any U.S. Person absent registration or an applicable exemption from the registration requirements of the Securities Act. Although the issuer does not intend to register any part of the proposed offering in the United States, any public offering in the United States would be made by means of a prospectus that could be obtained from the issuer and would contain detailed information about the company and management, as well as financial statements. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended, and neither International Fund Management (the "Investment Manager") nor the Investment Adviser will be registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended. Consequently, investors will not be entitled to the benefits and protections of the U.S. Investment Company Act of 1940, as amended or the U.S. Investment Advisers Act of 1940, as amended. The shares of the Company will be offered and sold only to non-US persons outside the United States in reliance on Regulation S under the Securities Act. There will be no offer of the Company's securities in the United States. The distribution of this document may also be restricted by law in other jurisdictions.
This announcement does not constitute or form part of, and should not be construed as, any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any ordinary shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.
The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, South Africa, Canada, Australia, New Zealand or Japan or to, or for the account or benefit of, any national, resident or citizen of the United States, Canada, Japan, Australia, New Zealand or South Africa. There will be no offer of the ordinary shares in the United States, Canada, South Africa, Japan, Australia or New Zealand.
Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such as "aim", "anticipate", "believe", "could", "intend", "estimate", "expect", and words of similar meaning, include all matters that are not historical facts. These forward-looking statements involve risks, assumptions and uncertainties that could cause the actual results of operations, financial condition, liquidity and dividend policy and the development of the industries, which the Company's businesses operate to differ materially from the impression created by forward-looking statements. These statements are not guarantees of future performance and are subject to known and uncertain risks, uncertainties and other factors that could cause actual results to differ material from those express or implied by such forward-looking statements. Given those risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by the UK Financial Conduct Authority, the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no-one else in connection with the potential equity issue. Stifel will not regard any other person as its client in relation to the potential issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the potential issue, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
Neither Stifel nor any of its directors, officers, employees, advisers, affiliates or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or its subsidiary, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.
The Company is incorporated in Guernsey and has been registered as a registered closed-ended collective investment scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. It is suitable only for professional or experienced investors, or those who have taken appropriate professional advice.
Regulatory requirements which may be deemed necessary for the protection of retail or inexperienced investors, do not apply to listed funds. By investing in the Company you will be deemed to be acknowledging that you are a professional or experienced investor, or have taken appropriate professional advice, and accept the reduced requirements accordingly.
You are wholly responsible for ensuring that all aspects of the Company are acceptable to you. Investment in listed funds may involve special risks that could lead to a loss of all or a substantial portion of such investment. Unless you fully understand and accept the nature of the Company and the potential risks inherent in it you should not invest in the Company.
Further information in relation to the regulatory treatment of listed funds domiciled in Guernsey may be found on the website of the Guernsey Financial Services Commission at http://www.gfsc.gg/The-Commission/Pages/Home.aspx.