Progress since admission

20 Dec 2005 07:01

T2 Income Fund Limited20 December 2005 T2 Income Fund - progress since admission December 20, 2005. T2 Income Fund Limited ("T2" or the "Company"), a newlyestablished closed-end Guernsey exempt investment company, announced today anupdate on progress since its admission to trading on AIM on August 5, 2005. T2has completed its initial transaction, a £1.1 million investment in securedsecond-lien term notes issued by a Canadian-based technology firm in thepackaged software publishing industry, bearing interest at 8% over LIBOR. Thetransaction was finalized on December 15, 2005. T2 has been generally pleased with the quality and number of investmentopportunities in profitable and growing technology companies available to itsince its initial public offering. It has however, for a variety of reasons,chosen not to pursue many of those potential transactions thus far, includingthree out of the five prospective portfolio opportunities referred to in the AIMadmission document. The reasons include transaction-specific due-diligenceissues, and the pricing and equity terms available which have made it notpossible to achieve terms that T2 considers to be an appropriate risk/rewardrelationship in its investments. The Board believes that a limiting factor inprogressing certain of those transactions has been the deliberative approachtowards debt financing on the part of some potential portfolio companies, whichhas led to slower-than-expected progress in the negotiation and completion ofcertain transactions. T2 has seen a range of technology companies (including companies in theenterprise software, IT services and Internet sectors) for which debt financingrepresents an attractive and efficient alternative to traditional equity capitalinvestment, and the Company remains focused on opportunities to make investmentsconsistent with its mandate. Since the time of its admission to trading on AIMin August 2005, the Company has reviewed 19 transactions involving the debtsecurities of technology companies. The Company is currently working on 7transactions, ranging in size from approximately £1.75 million to approximately£7.5 million, although the Company continues to note that there can be noguarantee that it will make these or similar investments. Of the five investmentopportunities described in the admission document, one of those investments isreflected in the recently finalized transaction disclosed above; the interestrate remained the same as anticipated although the principal amount of theinvestment was smaller than planned. One of the other original five deals isstill being actively pursued, while the other three deals have been eliminatedfrom consideration as a result of matters arising in due diligence. In view of the above, and reflecting the slower pace of investment than thatenvisaged in the AIM admission document, it is unlikely at this time that theCompany will achieve the original projected yield of 7.2% for the four quartersending June 2006. A further update will be given, together with a restatementof the projected yield for this period if appropriate, when progress has beenmade on the prospective transactions referred to above. In reference to the employee departures announced in September 2005, theCompany's investment manager believes that it continues to be adequately staffedand notes that it has recently hired a senior managing director with 27 years ofrelevant experience. Further, another experienced investment professional hasaccepted an offer to join the investment adviser as a vice president in January2006. This information is provided by RNS The company news service from the London Stock Exchange