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JZ Capital revises plan to pay off zeros

JZ Capital has announced results for the year ended 28 February 2015 show that the fund generated a total return on net assets of 8.9%. They declared a second dividend of 17.5 cents per share for the six months ended 28 February 2015, compared to 16.0 cents for the period ended 28 February 2014. Having already paid a first interim dividend of 15.0 cents, this implies an annualised yield as at 28 February 2015 of 5.1%.

$219m was freed up from the portfolio from the sale of four US micro cap businesses and their remaining investment in Safety Insurance and they invested $226m. Notable contributions to the uplift in the asset value included 27 cents per share from the sale of Milestone Aviation and 22 cents per share from the sale of Dental Services Group.

During the period, the Company invested €3.2m in Fincontinuo, a leading independent consumer lending platform in Italy. The Company is investing alongside Avenue Capital and expects to invest a total of approximately €20m. The Company also invested an additional €2.4m in One World Packaging, a manufacturer of highly advanced biodegradable packaging. Post-period, the Company made its first investment in Denmark through the acquisition of S.A.C., a van leasing company, for €7.6m.

During the period, the Company invested US$11.7m to acquire its first property in Miami, located in the Wynwood neighbourhood, and post-period, a further US$16.4m to acquire three properties, one located in the Wynwood neighbourhood and two located in the Design District neighbourhood of Miami. As of May 2015, JZCP has invested approximately US$185.9m in 30 properties with an approximate total value of US$684.9m.

On the balance sheet, they have a short term loan of $50m due for repayment in June 2015, the $65.7m of CULS which they raised last year, the Zero Dividend Preference Shares due to be redeemed at £76.6m (c$118m) in June 2016, and $40m in a margin facility secured by their UK gilt and corporate bond holdings. Discussions are at an advanced stage for the procurement of a new long term loan agreement for $100m. Part of this will be applied in repayment of the short term loan of $50 m. In light of this new long term loan, the Board no longer intends to issue a second tranche of CULS.

The Company finished the year with $125m in cash net of margin loan and marketable securities, in excess of the amount required for the repayment of ZDPs in 2016. It is the plan of the Board and the Investment Adviser that the redemption of the ZDPs in June 2016 will, whilst allowing for a continued investment programme, be funded through a combination of existing liquidity, a programme of realisations principally of identified US micro cap investments and select refinancing of assets within the US real estate portfolio.

JZCP : JZ Capital revises plan to pay off zeros


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