NB Distressed Debt pushes on with shareholder returns in 2018 – NB Distressed Debt (NBDD) has published its annual report for the year to 31 December 2018. The company is made up of a number of different share classes: the Ordinary Share Class; the Extended Life Share Class; and the New Global Share Class. All three share classes are currently in “harvest periods.” This means that assets of the company are being realised to gradually return them to shareholders, mostly in the form of dividends. However, the company’s structure has an indefinite life to allow for flexibility for new share classes to be added if demand, market opportunities and shareholder approval supported such a move. At present, the company says that it has no current plans to create new share classes.
The company invests in 40 to 50 holdings diversified across distressed, stressed and special situations investments, with a focus on senior debt backed by hard assets. NBDD invests mainly in the US, which makes up three quarters of its holdings and the hotel and leisure industry is the main sector, accounting for 27% of its portfolio.
Exit timelines can be uncertain
Due to the nature of distressed debt and similar asset classes in which the company invests, it is not clear when the company will be able to make payments to shareholders. As an example, the volatility and uncertainty that affected markets in 2018 on the back of trade tensions and other key issues has meant that some exits by the company have been delayed to 2020.
In 2018, the NAV per share, adjusted for the impact of distributions during the year, decreased by 11.7%, principally driven by unrealised losses in two equity investments detailed below which were partly offset by unrealised gains in two equity investments and general FX hedging gains. During the harvest period, a larger percentage of NBDD’s investments are in reorganised equities, including public equities, which were affected by the market volatility at the end of the year.
In his statement to shareholders, NBDD’s chairman, John Hallam said: “By the end of 2018, the Company had returned a total of $124.8m or 100.24% of NBDD investors’ original capital of $124.5m, $215.3m or 59.9% of NBDX investors’ original capital of $359.4m and £18.2m or 16.4% of NBDG investors’ original capital of £110.8m.”
NBDD/NBDX/NBDG: NB Distressed Debt pushes on with shareholder returns in 2018