SQN.L Regulatory News (SQN)

16 June 2020

SQN Asset Finance Income Fund Limited

LEI: 2138007S3YRY3IUU4W39

Continuation Vote and Publication of Circular

The Board of SQN Asset Finance Income Fund Limited (the "Company") is pleased to announce details of the 2020 Continuation Vote and associated proposals. This follows the appointment of KKV Investment Management Ltd ("KKV") as its portfolio manager and International Fund Management Limited as AIFM, as announced on 8 June 2020.

A circular in connection with the Proposals (the "Circular") is expected to be posted to Shareholders later today.

Continuation Vote

On 30 April 2020, the Company announced that it would bring forward the triennial continuation vote from November 2020 and propose separate continuation resolutions for each share class (the "2020 Continuation Vote"). Furthermore, if the 2020 Continuation Vote is passed for either share class, the Board proposes a further continuation vote to be held no later than 31 August 2021 (for the relevant share class/classes) (the "2021 Continuation Vote"). If the 2021 Continuation Vote is passed for either share class, the Board proposes that the Company will revert to a triennial continuation vote, starting at its annual general meeting in 2024.

In the period prior to the 2021 Continuation Vote, no new investments will be made (save for further investment in existing assets that require additional capital or existing undrawn commitments), with any excess cash flow from the amortisation, repayment or realisation of assets prior to the 2021 Continuation Vote being returned to Shareholders either through the repurchase of Ordinary Shares or C Shares, as applicable, or, if the quantum is material, via a return of capital, as determined by the Board at that time.

The Company is committed, pursuant to its Articles to propose a continuation vote during 2020. The proposed 2020 Continuation Vote is intended to provide Shareholders with the opportunity to vote on the immediate future of the Company shortly following the appointment of KKV, rather than awaiting the Company's AGM in November 2020, providing some near-term clarity, at least over the next 12 months.

However, the Board believes that Shareholders will be better placed to fully assess the prospects for the Company next year providing time for KKV to focus on managing the Portfolios and fully assess the impact of COVID-19. In addition, while any managed wind-down would be on an orderly basis, in light of the current market environment, the Board believes that now does not present the optimal time for the Company to consider a managed wind-down. The Board therefore proposes to hold the 2021 Continuation Vote providing Shareholders the opportunity to consider the future of the Company next year, once there is expected to be greater clarity on the positioning of the Portfolios, enabling Shareholders to support the 2020 Continuation Vote with the confidence that they will be given a further opportunity to determine the future of the Company in the near term.

Given that no reinvestment will occur prior to the 2021 Continuation Vote, should Shareholders not support continuation in 2021, the timeframe for any future managed wind-down will not have been notably impacted.

In addition, the proposal to undertake a separate Ordinary Class Continuation Vote and C Class Continuation Vote, allows each group of Shareholders the opportunity to determine its own future.

Summary of the Proposals

(a) Proposed Ordinary Class Continuation Vote

If the Ordinary Class Continuation Vote is passed, KKV will continue to manage the Ordinary Portfolio in accordance with the existing policy, save that no new investments will be made (other than further investment in existing assets that require additional capital or existing undrawn commitments) prior to the 2021 Continuation Vote.

However, if the Ordinary Class Continuation Vote is rejected, the Board will formulate proposals to be put to Ordinary Shareholders as soon as is reasonably practicable but, in any event, by no later than six months after the EGM, for the Ordinary Portfolio to be placed into managed wind-down with the aim of enabling Ordinary Shareholders to realise their holdings in the Company. It is expected that any managed wind-down would be on an orderly-basis.

(b) Proposed C Class Continuation Vote

If the C Class Continuation Vote is passed, KKV will continue to manage the C Portfolio in accordance with the existing policy, save that no new investments will be made (other than further investment in existing assets that require additional capital or existing undrawn commitments) prior to the 2021 Continuation Vote.

However, if the C Class Continuation Vote is rejected, the Board will formulate proposals to be put to C Shareholders as soon as is reasonably practicable but, in any event, by no later than six months after the EGM, for the C Portfolio to be placed into managed wind-down with the aim of enabling C Shareholders to realise their holdings in the Company. It is expected that any managed wind-down would be on an orderly-basis.

(c) Amendments to the Articles

The proposed 2020 Continuation Vote and 2021 Continuation Vote require certain amendments to the Articles which currently provide for a continuation vote to be proposed at every third AGM (i.e. the next one being in November 2020). Accordingly, the Board proposes to amend the Articles to move the date of the next continuation vote to 2021. If the 2021 Continuation Vote is passed for either share class, the next triennial continuation vote will be at the annual general meeting in 2024.

In addition, the Board proposes certain other non-material amendments that are set out in more detail in the Circular.

(d) Change of Name

In connection with the appointment of KKV and the termination of the appointment of SQN Capital, the Board considers it appropriate for the Company to change its name from "SQN Asset Finance Income Fund Limited" to "KKV Secured Loan Fund Limited". Accordingly, the Company is seeking Shareholder approval for the Change of Name.

Benefits of the Proposals

The Directors believe, having taking into account the views of a range of major Shareholders, that the Proposals are in the best interests of the Company and its Shareholders as a whole, and should yield the following benefits:

· the 2020 Continuation Vote has the effect of bringing forward the triennial continuation vote from November 2020 to July 2020 allowing Shareholders the opportunity to determine the immediate future of the Company, following the change of portfolio manager, thereby providing clarity over at least the next 12 months;

· the 2021 Continuation Vote allows Shareholders that wish to support the 2020 Continuation Vote, the ability to do so with the confidence that they will be given a further opportunity to determine the future of the Company in the near term;

· the restriction of any new investments (save for further investment in existing assets that require additional capital or existing undrawn commitments) seeks to ensure that should Shareholders not support continuation in 2021, the timeframe for any future managed wind-down will not have been notably impacted;

· any excess cash flow from the amortisation, repayment or realisation of assets prior to the 2021 Continuation Vote being used to repurchase Shares or return capital to Shareholders should, to the extent there is excess cash flow, assist in mitigating the discount to NAV at which the Shares are trading;

· holding a separate Ordinary Class Continuation Vote and C Class Continuation Vote, both in 2020 and 2021, allows each class of Shareholder the opportunity to determine its own future;

· the appointment of KKV affords the continuity of knowledge of the Portfolios and key relationships with borrowers at a critical time of economic stress;

· a structure that provides enhanced governance within the portfolio management and risk management functions from the appointment of KKV as portfolio manager and IFM as AIFM;

· a fresh perspective through the addition of new senior personnel at KKV; and

· enhanced shareholder and board communication going forwards.

Extraordinary General Meeting

The Company is expected to publish a circular later today to convene an Extraordinary General Meeting ("EGM"), as well separate class meetings for holders of Ordinary Shares and C Shares.

The EGM and Class Meetings will be held at BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey GY1 1WA on 16 July 2020 with the EGM commencing at 10:00 a.m. BST and the Class Meetings being held thereafter.

In response to the wide spread of the Coronavirus (COVID-19), a number of measures have been implemented in a number of jurisdictions, including Guernsey. In particular, there is currently a requirement that all persons arriving in Guernsey from anywhere in the world must self-isolate for 14 days. Therefore, the Board strongly encourages Shareholders to exercise their voting rights by completing and submitting the Form of Proxy where possible to avoid the need to attend the EGM or the Class Meetings in person. The Board also strongly encourages Shareholders to submit their Form of Proxy as early as possible to ensure that their votes are counted at the EGM and the Class Meetings. If Shareholders wish to attend in person they should inform the Registrar as soon as possible so that appropriate safety arrangements can be put in place for attendees. Any admittance to the EGM or the Class Meetings will be subject to compliance with any restrictions and policies of the Registrar. In light of this request to not attend the EGM and Class Meetings, the Board shall accept and answer any questions relating to the business being dealt with at the EGM and Class Meetings in advance of the meetings. Any question should be submitted by emailing sqncosec@bnpparibas.com.

The Circular is expected to be posted to Shareholders later today and will shortly be available on the National Storage Mechanism website: https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website: https://kkvim.com/sqn-asset-finance-income-fund. The Circular will also be made available at the Company's offices at BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey GY1 1WA.

Terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the Circular.

For further information please contact:

Cautionary statements

This announcement may contain and the Company may make verbal statements containing "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company.

As a result, the actual future financial condition, performance and results of the Company may differ

materially from the plans, goals and expectations set forth in any forward-looking statements. Any

forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. The information contained in this announcement is subject to change

without notice and except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based.

Neither the content of the Company's website (or any other website) nor the content of any website

accessible from hyperlinks on the Company's website (or any other website) is incorporated into or

forms part of this announcement.