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Pollen Street saga continues

Honeycomb Pollen Street Secured Lending HIT PSSL Money bee

Pollen Street saga continues – Yesterday, Pollen Street Secured Lending’s board published a press release in which it rebuffed the merger proposal from Honeycomb. It also said that it intended to announce a replacement manager for the trust very shortly. The board said that the terms of the management agreement would provide significantly lower management and performance fees.

Waterfall’s latest deadline for making an offer is today. In the event that a recommended offer is not completed, the board is likely to recommend a change of investment policy to provide for an orderly run-off of the portfolio and return of capital to shareholders.

This is what the board had to say about the merger

The Board of PSSL notes the announcement released yesterday evening by HIT regarding a possible merger. This announcement constitutes the fourth proposal received from HIT in recent weeks and the Board notes that it differs from the most recent written proposal which it received on 29 July 2020 and was in the process of considering.

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 latest proposal from HIT, which equates to a see-through price of 711.8 pence per PSSL ordinary share (representing a discount of 5.1 per cent to the closing mid-market price of 750 pence per PSSL ordinary share on 6 August 2020 and of 25 per cent to PSSL’s published NAV per share (cum income) of 948.5p on 30 June 2020), compares favourably in value terms. Accordingly it also does not believe that the latest HIT proposal is likely to command sufficient support from PSSL shareholders.

The Board further notes that the previous proposals received from HIT included specific information in relation to the proposed structure of the transaction and the price and quantum of a partial cash alternative which were not included in HIT’s announcement. Over the course of three written proposals made to PSSL in recent weeks, HIT had improved the partial cash alternative but not to a level at which the Board believes the overall proposal either compared favourably with the proposal received from Waterfall or was likely to command sufficient support from PSSL shareholders.

The Board notes that PSSL’s investment manager (PSC Credit Holdings LLP) and HIT’s investment manager (Pollen Street Capital Limited) are both part of the Pollen Street Capital group.”

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