City Natural Resources revamp includes change of name – City Natural Resources has just published its interim results. The announcement contains the results of review that the fund’s board has undertaken as the fund’s CULS approach maturity.
Dividends from capital
The Board believes that the level of dividends paid has been a key feature in the company’s growing appeal to private investors but thinks the investment manager should be focused on maximising the net asset value total return to shareholders without being constrained by the objective of generating sufficient revenues to cover dividend payments. Therefore, the Board will allow the company to pay dividends out of capital reserves (which shareholders approved at the annual general meeting in 2012). Accordingly, following the repayment of the CULS, the Board intends to use capital reserves, when required, to maintain or, potentially, increase the dividend level. this will make it easier to predict future dividends. Each of the first three quarterly dividends will represent 22.5% of the target. For the current financial year, the company is targeting a maintained aggregate dividend of 5.6 pence, but intends to rebalance the third and fourth dividend payments to 1.26 pence and 2.62 pence.
Revolving credit facility
Following preliminary discussions with a number of banks, the Board is confident that, in current market conditions, the company will be able to obtain a multicurrency revolving credit facility on attractive terms, which, in conjunction with cash resources, will be sufficient to fund the repayment of the CULS. Relative to the CULS, the benefits of a revolving credit facility include flexibility to draw down and repay during the life of the facility according to market conditions and lower fixed costs, which, in turn, should increase the revenue available for distribution as dividends.
Change of name
The Board has decided to change the company’s name to CQS Natural Resources Growth and Income plc with effect from 3 April 2018. The Board believes the new name better represents the investment objective and that there will be marketing benefits in adopting the Investment Manager’s CQS brand.
CYN : City Natural Resources revamp includes change of name