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NB Distressed still in distress

NB Distressed Debt's run-off continues

NB Distressed still in distress – NB Distressed Debt Investment Fund has published results for the year end 31 December 2020. The fund is in wind-up mode and so the focus is on maximising proceeds from the portfolio and getting that back to investors. There are three principal share classes – ordinary shares (NBDD), extended life shares (NBDX) and new global shares (NBDG).

As at 31 December 2020, the company had returned a total of $132.8m or 106.7% of NBDD investors’ original capital of $124.5m, $274.8m or 76.5% of NBDX investors’ original capital of $359.4m and £45.2m or 40.8% of NBDG investors’ original capital of £110.8m.

In 2020, $1.9m was spent on buying back NBDX shares and £1.6m was spent on buying back NBDG shares. In addition,  a further capital distribution of $10.5m to NBDX shareholders and £10.5m to NBDG shareholders was paid on 10 July 2020 (these numbers are included in the totals above). Buybacks were discontinued from November 2020 onwards in favour of handing back cash at asset value.

The Ordinary class of shares will be the first to commence the final wind up process, followed by the Extended share class and then the New Global share class. The Extended and Global classes will continue to distribute until their net assets are reduced to approximately $35m and £9m respectively. The final distribution of the Ordinary share class was planned for 2020, but the delay to the realisation of the final assets owing to the ongoing global pandemic has delayed this expectation to 2021. The wind up of the other two classes will take a little longer but they hope to complete the realisation process in the next couple of years.

The Ordinary NAV per share decreased by 7.3% for the year ended 2020, driven by lower prices in the investments in light of the COVID-19 crisis and realised losses in exits of public equities. At 31 December 2020, 60% of NBDD’s NAV was invested in distressed assets, and $5M in US Government securities which represented a further 40% of NAV, with minimal cash. The portfolio consisted of 6 issuers across 5 sectors. During the year, Exide Technologies filed for Chapter 11 bankruptcy, taking $1.1m off the NAV.

The Extended Life NAV per share decreased by 14.9% for the year ended 2020. At 31 December 2020, 96% of NBDX’s NAV was invested in distressed assets, and $2.8M in US Government securities which represented a further 4% of NAV. The NAV per share decrease was principally due to losses in public equities and unrealised losses in the existing portfolio with the impact of COVID-19. With the exit of the public equities, the NBDX portfolio consists of 13 issuers across 9 sectors. The largest sector concentrations were in surface transportation, containers & packaging, shipping, lodging & casinos, and financial intermediaries. Again Exide Technologies hit the NAV – in this case taking off $9.7m.

The New Global NAV per share decreased by 31.9%. At 31 December 2020, 90% of NBDG’s NAV was invested in distressed assets, and $2M in US Government securities which represented a further 7% of NAV (including cash receivables and net payables held in subsidiaries) with 3% held in cash. With the exit of the public equity investments, the portfolio consisted of 7 issuers across 6 sectors. The largest sector concentrations were in lodging & casinos, commercial mortgage, surface transportation and shipping. The Exide Technologies hit was £4m.

NBDD / NBDX / NBDG : NB Distressed still in distress

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