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QuotedData’s morning briefing 2 April 2020

In QuotedData’s morning briefing 2 April 2020

  • JZ Capital makes probably the least useful announcement we have seen to date on COVID-19 – highlights include “At this time, given the general levels of uncertainty, it is difficult to accurately gauge the potential impact of the COVID-19 outbreak on the company. However, the outbreak is currently having a negative impact on certain of the company’s portfolio companies, although the exact nature, extent and duration of that impact is not yet known and cannot be accurately assessed with certainty.
  • Duke Royalty says that up to the end of March, it had received all the royalty income it was expecting. However, it acknowledges that COVID-19 will depress both income and valuations. To counter this, Duke has ceased all new investments and has embarked on a cost-cutting exercise aimed at cutting its operational overheads by a quarter. Unsurprisingly, Duke has withdrawn its earnings guidance for the current financial year. On gearing, the company said “after paying its dividend announced 11 March 2020, it will have net debt of approximately £13m and a cash balance of £2.7m. Based on Duke’s internal 30% maximum loan to value limit, Duke currently has access to additional liquidity of approximately £18m. It should also be noted that the recent drop in UK interest rates has lowered the cost of Duke’s funding and that all the company’s debt is long term in nature with no amortisation payments due until September 2022. The company remains compliant with its debt covenants.” The decision to pay the planned June dividend will be assessed closer to the time.
  • Chenavari Toro had to adjourn its AGM as no proxy votes had been received. We cannot remember a case of that happening before. The meeting has been rearranged for 16 April.
  • Volta Finance has cancelled the dividend that was supposed to be paid on April 28. The €5.6m dividend would have been funded by cashflows from its CLO portfolio but it fears that these are drying up as CLOs are forced to suspend distributions (the rules that govern these structures trap cash inside them when certain covenants are breached). This follows on from Fair Oaks‘ suspension of its dividend for the same reason.

We also have news of a new investment by JLEN Environmental and COVID-19 updates from SEGRO and Safestore.

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