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Alcentra European Floating to wind up

Alcentra European Floating to wind up – The board of Alcentra European Floating Rate Income Fund says that, following  its March 2020 tender offer, it has conducted a comprehensive review of the outlook for the company. This review, conducted in consultation with the investment manager and broker, has been undertaken in tandem with extensive shareholder consultation.

Following this review, the board has decided that the company should be put into managed wind-down, with cash returned to shareholders in a timely and efficient manner.

Over the course of the last decade, as expectations of rising rates (a key requirement for dividend growth) gave way to expectations that rates would stay low for longer, the demand for floating rate listed funds diminished. As a result, the company’s shares moved to trading at a discount and it began returning capital to shareholders (for two years now). The board does not expect to see a reversal in this trend in the near future.

Right now, markets are in turmoil so the board and the manager think it best to aim for a balance between maximising the value received from investments and making timely returns of cash to shareholders. If shareholders feel strongly otherwise, the board is listening.

A circular to shareholders will be published soon. Then there will be an extraordinary general meeting at which the board will seek approval from shareholders to amend the investment objective and policy and approve any related matters necessary to facilitate a managed wind-down.

In light of these proposals, the board proposes to complete the March 2020 tender but suspend future quarterly tender offers. The company will continue to pay dividends to shareholders as appropriate.

The manager supports the board on this course of action and has confirmed that it will waive any entitlement to a fee arising on its termination as investment manager.

AEFS : Alcentra European Floating to wind up

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