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Traded Life Interests prepares for liquidation as it sells most of portfolio

Alternative Asset Opportunities PCC Limited has made an announcement about Traded Life Interests.  On 23 June 2016 it announced that it was exploring the possibility of a sale of the portfolio. The Board is pleased to announce today that is has conditionally agreed to sell 71 of the Company’s 80 policies for a total cash consideration of $40.0 million. The Proposal, if approved, will result in the amendment of the current investment objective and policy of the Company in order to implement the Disposal.  The Company will remain a listed investment trust, but with the sole purpose of completing the Disposal and returning cash to Shareholders. It is expected that following completion of the Disposal the Company will soon thereafter put forward proposals for a members’ voluntary winding up (liquidation) or other restructuring and further details will be sent to Shareholders in due course.

The value of the Company’s portfolio as at 31 July 2016 amounted to $43.3 million. In light of the proposed offer by Vida of $40.0 million for 71 of the 80 policies in the portfolio, the Board, in conjunction with its advisers, has reappraised whether it should continue to hold the policies to maturity or whether it should take the opportunity to dispose of the portfolio, by selling 71 policies to Vida and seeking to conclude agreements for the sale of the remaining nine policies as soon as practicable. In reaching its decision to recommend the Proposal, which will result in the completion of the Disposal, the Board was influenced by several key factors, including:

  • the premium of approximately 7.1 per cent. of Vida’s offer over the most recent book valuation of those policies to which the offer relates;
  • the significant premium of the resulting NAV following the offer over the prevailing share price;
  • the relatively slow level of maturities the Company has experienced;
  • the current weakness of Sterling, which means that the proceeds in Sterling terms are likely to be materially better than they would have been in the first half of 2016;
  • the uncertainty over whether further COI increases will be applied and whether any action to mitigate them will be successful;
  • the decreasing number of policies remaining in the Company’s portfolio; and
  • the running costs of the Company which, as the policies mature and the Company’s asset base shrinks, become a higher proportion of NAV.

The Company’s market capitalisation is now approximately $39.7 million (GBP29.9 million at GBP1:$1.33). The monthly running costs of the Company are approximately $875,000, of which some 91 per cent. represents the cost of the premiums, but the overheads of the Company become harder to justify as further policies mature and the size of the Company shrinks. The sale price of the Disposal represents a premium of approximately 7.1 per cent. to the book valuation of those policies comprising the Disposal as at 31 July 2016.

The deal will need shareholders’ approval so there will be a vote and we expect the company will post the full circular here shortly.

TLI : Traded Life Interests prepares for liquidation as it sells most of portfolio

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