SQN will hand back £40m – While the board is pleased with the performance of the underlying investments made to date in SQN Asset Finance Income‘s C Share portfolio and the investment discipline in developing the portfolio, the speed of deployment has been slower than anticipated. At the date of this letter, approximately GBP66 million of the C Share proceeds has been invested with a further GBP20 million of commitments expected to be funded in May 2018 and a significant proportion of the outstanding commitments of GBP36 million expected to be funded prior to the end of June 2018.
In light of the current investment level of the C Share pool and near term pipeline, the board and the investment managers have determined that excess cash of GBP40 million could be made available within the C Share class. The board is seeking to distribute the excess capital to the holders of C Shares in a cost efficient manner. Having received professional advice, the board believes that it would be in the best interests of the company and its shareholders to return such surplus cash to holders of C Shares by means of a one-off compulsory redemption of a proportion of C Shares pro rata amongst all the holders of C Shares on the C Share register at the close of business on 25 May 2018.
The redemption price will be 100.31p – equal to 98.32 pence per C Share, which is the aggregate of: (i) the net asset value of 97.28 pence per C Share as at 31 March 2018 (after adjusting for the March 2018 dividend to be paid prior to the Redemption Date); and (ii) a contribution from the Investment Managers to the Company for the benefit of the C Shares equivalent to 1.04 pence per C Share expected to be redeemed, plus 1.9876 pence per C Share in dividends.
The costs associated with the Capital Return are not expected to be material.
The investment managers agreed to make a contribution of £425,455, which is equivalent to their management fees on the excess capital since admission of the C Shares to 31 March 2018.
The C share conversion is being delayed again while they try to sort out the Suniva situation.
SQN / SQNX : SQN will hand back £40m