Value and Income planning for its future – Value and Income has arranged a seven year secured term loan of £22m. £20.9m of this will be charged interest at a fixed rate of 3.1% a year (this works out at 3.3% a year after all the expenses connected with securing the loan are included in the cost). The £1.1m balance incurs interest at a floating rate of Libor plus 2.35%.
The net proceeds will be held on deposit until 31 March 2021 to refinance the company’s £15m 11% First Mortgage Debenture Stock 2021 (which expires on that date). It may also be used to support the acquisition of further UK properties and equities in accordance with the investment policy.
The net effect of this refinancing will be a total net cost to the company’s income account of 1.35 pence per share from now until 31 March 2021 and a prospective net benefit of 2.90 pence per share per annum from 1 April 2021.
[Losing the expensive debenture stock will be very beneficial for shareholders in the trust. They have gone after the refinancing very early. However, it looks as though the directors decided it made sense to lock in lower rates now rather than running the risk that finance would not be available closer to the maturity date of the debenture (which may turn out to have been a sensible decision – read our note on Henderson Diversified to see why the world’s debt markets may be going through a period of strain. As to why they didn’t lock in low interest rates for more than seven years, the answer is in the next part of the announcement.]
Under the Articles of Association, shareholders will vote in 2024 on the future direction of the company, including an opportunity for anyone who wishes to realise their investment in full, at Net Asset Value less costs, by 31 March 2027.
VIN : Value and Income planning for its future