SQN Asset Finance sets out plan for future – On 30 April 2020, SQN Asset Finance Income announced that it would bring forward the triennial continuation vote from November 2020 and propose separate continuation resolutions for each share class. Here comes the detail.
Summary of the Proposals
(a) Proposed Ordinary Class Continuation Vote
If the Ordinary Class Continuation Vote is passed, KKV will continue to manage the Ordinary Portfolio in accordance with the existing policy, save that no new investments will be made (other than further investment in existing assets that require additional capital or existing undrawn commitments) prior to the 2021 Continuation Vote.
However, if the Ordinary Class Continuation Vote is rejected, the Board will formulate proposals to be put to Ordinary Shareholders as soon as is reasonably practicable but, in any event, by no later than six months after the EGM, for the Ordinary Portfolio to be placed into managed wind-down with the aim of enabling Ordinary Shareholders to realise their holdings in the Company. It is expected that any managed wind-down would be on an orderly-basis.
(b) Proposed C Class Continuation Vote
If the C Class Continuation Vote is passed, KKV will continue to manage the C Portfolio in accordance with the existing policy, save that no new investments will be made (other than further investment in existing assets that require additional capital or existing undrawn commitments) prior to the 2021 Continuation Vote.
However, if the C Class Continuation Vote is rejected, the Board will formulate proposals to be put to C Shareholders as soon as is reasonably practicable but, in any event, by no later than six months after the EGM, for the C Portfolio to be placed into managed wind-down with the aim of enabling C Shareholders to realise their holdings in the Company. It is expected that any managed wind-down would be on an orderly-basis.
(c) Amendments to the Articles
The proposed 2020 Continuation Vote and 2021 Continuation Vote require certain amendments to the Articles which currently provide for a continuation vote to be proposed at every third AGM (i.e. the next one being in November 2020). Accordingly, the Board proposes to amend the Articles to move the date of the next continuation vote to 2021. If the 2021 Continuation Vote is passed for either share class, the next triennial continuation vote will be at the annual general meeting in 2024.
In addition, the Board proposes certain other non-material amendments that are set out in more detail in the Circular.
(d) Change of Name
In connection with the appointment of KKV and the termination of the appointment of SQN Capital, the Board considers it appropriate for the Company to change its name from “SQN Asset Finance Income Fund Limited” to “KKV Secured Loan Fund Limited”. Accordingly, the Company is seeking Shareholder approval for the Change of Name.
Directors’ views
The Directors believe that the Proposals are in the best interests of the Company and its Shareholders as a whole. The triennial continuation vote gets brought forward from November 2020 to July 2020; the 2021 Continuation Vote gives shareholders a new backstop date; no new investments means the timeframe for any future managed wind-down will not have been notably impacted; excess cash diverted to buybacks and capital returns should help tackle the discount; each class of Shareholder (Ords and Cs) can determine its own future; and appointing KKV maintains the managers’ knowledge of the portfolio.