JPMorgan Senior Secured Loan has announced that it looks as though a 50% tender will be triggered. The Board says it wants to remind shareholders that when JPMorgan Senior Secured Loan was launched its prospectus included a commitment to make a redemption offer giving shareholders the opportunity to redeem up to 50 per cent. of their shares in the company if, during the period from 1st November 2015 to 31st January 2016 its shares traded at an average discount to the cum income net asset value of over 5 per cent.
Whilst its shares generally traded well just after it was launched, more recently they have tended to trade at a modest discount, reflecting wider market malaise. As a result it is now likely that the average discount over the relevant period will be in excess of 5 per cent.
The Board goes on to say that is mindful of the Company’s prospectus commitment and is in consultation with its advisers. A further announcement will be made shortly.
Extract from JPSL’s prospectus
Discount-Triggered Redemption Mechanism
The Articles incorporate a discount management provision. This provides that if, as at 31 January 2015 (the end of the Company’s first financial period) or as at the end of any subsequent financial period, the Shares have on average over the latest three calendar months of the relevant financial period (the “Discount Calculation Period”) traded at a discount in excess of 5 per cent. to the Net Asset Value per Share, the Directors will, subject to any legal or regulatory requirements, implement a redemption offer (the “Redemption Offer”). If a Redemption Offer is implemented each holder of Shares will be offered the opportunity to redeem up to 50 per cent. of their Shares (the “Basic Entitlement”). The discount to Net Asset Value will be calculated by reference to the middle market quotation of the Shares on the Daily Official List of the London Stock Exchange at the close of business on each trading day in the relevant Discount Calculation Period and the most recently published Net Asset Value per Share prior to the close of trading on such trading day. The Directors may structure a Redemption Offer to permit Shareholders to request the redemption of Shares in excess of their Basic Entitlement. In that event such excess redemption requests will be satisfied to the extent that other Shareholders request redemption of Shares in respect of less than the whole of their Basic Entitlement, pro rata to the amount in excess of the Basic Entitlement which each relevant Shareholder has requested to redeem (rounded down to the nearest whole number of Shares). Any Redemption Offer, and its terms, will be announced via a RIS announcement together with the procedure for redeeming Shares.
In implementing a Redemption Offer, the Directors will allocate to a redemption pool (the “Redemption Pool”) assets of the Company worth in aggregate (as at the Business Day immediately preceding the Redemption Date) an amount equal to the Net Asset Value (as at the same date) attributable to the Shares to be redeemed less one per cent. of such amount (which shall be retained for the benefit of the Company).
As the Portfolio is expected to consist of cash as well as Loans and bonds, the assets allocated to the Redemption Pool would, in that event, include a cash element as well as a share of the non-cash assets held in the Portfolio.
The proportion allocated to the Redemption Pool in cash would be pro rata to the cash held in the Portfolio, save to the extent that the Directors may choose to increase the proportion of cash if they consider that it would be equitable to both the Shareholders participating in the Redemption Offer (“Exiting Shareholders”) and those not participating in the Redemption Offer (“Continuing Shareholders”) to do so. In the event that the Directors, in their absolute discretion, determine it is necessary or desirable to retain cash for the Company’s working capital purposes, they may also decrease the proportion of cash allocated to the Redemption Pool. The Directors would select the non-cash assets for allocation to the Redemption Pool with a view to ensuring that, so far as is practicable, there is pro rata allocation of such assets between the Redemption Pool and the remainder of the Portfolio. The Directors may, however, choose an alternative allocation, or subsequently rebalance the Redemption Pool, if they consider that a pro rata allocation to be impracticable or that to do so would be equitable to both Exiting Shareholders and Continuing Shareholders.
An initial cash payment (where available) will be made to Exiting Shareholders following the closing of the Redemption Offer with further cash payments to be made, at the discretion of the Directors, once assets in the Redemption Pool are realised. The time it will take to realise the non-cash assets contained in the Redemption Pool and therefore to distribute redemption proceeds to Exiting Shareholders will depend on market conditions and how quickly the Investment Manager is able to sell such assets at prices it considers to be reasonable in the circumstances. The Directors expect, however, that in normal circumstances it should be possible to realise the assets comprised in a Redemption Pool and distribute the proceeds to Exiting Shareholders within three months of the Redemption Date.
The costs and expenses of implementing the Redemption Offer will be payable out of the Redemption Pool together with the Redemption Pool’s pro rata share of the ongoing costs and expenses of the Company and any costs and expenses of the Company attributable solely to such Redemption Pool until such time as the Redemption Pool has been fully realised and all redemption proceeds have been distributed. The Investment Manager may or may not seek to hedge currency risk at its discretion between the currencies in which the assets comprised in the Redemption Pool are denominated and Sterling. Exiting Shareholders may therefore be subject to unhedged currency exposure during the period from the Redemption Date until all of the assets comprised in the Redemption Pool have been realised.
JPSL : JPMorgan Senior Secured Loan 50% tender triggered