Chenavari Capital Solutions has announced its intention to cease making any further investments with immediate effect and from 1 January 2017 will commence a realisation period which will include the return of unencumbered cash balances to shareholders. Further announcements will be made prior to each individual return of cash.
Background
Prior to its initial public offering in 2013, they said they would return any unencumbered cash and such cash balances as arise from time to time as a result, predominantly, of investments maturing in accordance with their terms or otherwise. In December 2015, the company held an extraordinary general meeting at which the approval of shareholders was obtained for a proposal to extend the investment period for up to 12 months to 31 December 2016. No further extension to the investment period will be sought and Chenavari intends to commence a realisation period with effect from 1 January 2017, during which it will return to shareholders any unencumbered cash and such cash balances as arise from time to time as a result, predominantly, of investments maturing in accordance with their terms or otherwise.
Apart from cessation of new investments, no change to the Company’s investment policy is proposed.
It is anticipated that the first return of cash to shareholders will take place no later than 30 April 2017, but there can be no assurances to this effect.
Update on the existing portfolio
The Investment Adviser maintains a Base Case, an Upside Case and a Stress Case for each investment in the portfolio, depending on its characteristics and underlying collateral. The cases are derived from a combination of: initial cases derived at the time of investment from analysis of the transaction’s structure and the underlying portfolio data, regular tracking of the performance of the transaction’s underlying collateral pool and market implied factors such as credit spreads or the performance of other similar deals. As of 30 October 2016, the Investment Adviser’s indicative estimates of the internal rates of portfolio return, calculated on the invested capital of the Company, are:
- 12.15% if all investments perform in line with the “Base Case”;
- 16.91% if all investments perform in line with the “Upside Case”; and
- 3.51% if all investments perform in line with the “Stress Case”.
Based on the cash flows used to calculate the Base Case internal rate of return above, it is expected that the current portfolio will be substantially realised (assuming no assets are sold or otherwise disposed of) and over 90% of the projected cash proceeds returned to investors before the end of 2020.
CCSL : Chenavari to switch to realisation mode