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Pollen Street announces interim advisory agreement with Waterfall Asset Management

Pollen Street Secured PSSL

Pollen Street saga announces interim advisory agreement with Waterfall Asset Management – There have been more announcements involving Pollen Street Secured Lending’s (PSSL) future this afternoon, summarised below (you can access our most recent coverage of PSSL’s future, including Honeycomb’s proposed merger attempt by clicking here and here):

  1. At 12:40 pm, Honeycomb (HONY) said: “HONY remains convinced of the strategic rationale of combining both companies to create the leading UK speciality finance investment trust. HONY believes that the proposed merger on a NAV for NAV basis, resulting in an exchange ratio of 0.9335 new HONY ordinary shares in exchange for each PSSL ordinary share, provides significant value creation potential for both sets of shareholders, providing an opportunity for both sets of shareholders to realise NAV over time in more normalised markets. However, recognising that certain PSSL shareholders may have a preference for upfront liquidity, HIT will provide an attractive liquidity opportunity following completion of the merger.”
  2. At14:30 pm, PSSL announced the following:  
    1. “The board has progressed discussions with a number of potential replacement investment managers and has now concluded on the preferred successor. The board announces that it has today entered into an interim advisory agreement with Waterfall Asset Management, the preferred successor, for the provision of advisory services which includes providing the board with proposals for the transfer of the management of the company’s portfolio of investments to a replacement investment manager. It is expected that Waterfall will be confirmed and appointed as the replacement investment manager as soon as practicable.”
    2. “As previously announced, the board continues to review all options in the event that the possible cash offer by funds advised by Waterfall for the entire issued, and to be issued, share capital of PSSL does not proceed and shareholders’ attention is drawn to the announcement made on 7 August 2020 generally and including in relation to the approach received from HONY. The board also notes the further announcement released by HONY today. The board continues to believe that a recommendable cash offer from Waterfall would represent the best outcome for shareholders and it does not believe the HONY possible offer compares favourably in value or liquidity terms. The board also notes that the company’s largest shareholder, Invesco Asset Management, has agreed a further extension of its irrevocable undertaking to 21 October 2020. In the event that a recommended binding offer is not put forward to the company’s shareholders for consideration, the Board is likely to recommend a change of investment policy to provide for an orderly run-off of the company’s portfolio and return of capital to shareholders. The board believes that the expected appointment of Waterfall as investment manager will facilitate a transparent run-off process at materially lower management and performance fees than under the existing investment management agreement.” 
  3. Waterfall Asset Management responded to PSSL’s announcement with one of its own, at 14:45 pm:
    1. “Waterfall welcomes today’s announcement by PSSL regarding its appointment as preferred successor manager following a competitive and rigorous selection process. Waterfall looks forward to working with the board to deliver their mandate to provide shareholders with the enhanced liquidity that they are seeking and manage the fund in a transparent manner at materially lower management and performance fees than under the existing investment management agreement.” 
    2. “Separate announcements will be made in due course in relation to Waterfall’s all-cash possible offer announced on 25 February 2020 (click here to read our coverage of this). Waterfall confirms that it remains committed to pursuing the possible offer and believes its appointment today is a material enhancement in its ability to progress to a firm offer.”

PSSL/HONY: Pollen Street saga announces interim advisory agreement with Waterfall Asset Management

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