QuotedData’s morning briefing 13 October 2022

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In QuotedData’s morning briefing 13 October 2022:

  • Riverstone Credit Opportunities Income (RCOI) has announced that it has reached an agreement to extend its EPIC Propane, a sponsor-backed infrastructure company that provides propane purity offtake transportation to the Gulf Coast export market. EPIC Propane is part of the broader EPIC Midstream system that includes over 1,695 miles of crude oil and natural gas liquids pipelines. The loan’s maturity has been extended to September 2026 and the optional prepayment feature has been amended to add a two-year make-whole provision, with RCOI realising around $1m profits from the extension. As part of the amendment, the loan was converted to a sustainability linked loan and all of the economics associated with the original transaction were realised, including the exit premium. Additionally, as part of the amendment, RCOI’s allocation to the loan was reduced from $14.8m to $13.9m in order to comply with the Company’s diversification policies. The newly amended term loan will receive a Secondary Party Opinion from Sustainable Fitch to confirm the terms of the loan are aligned with the Sustainability-Linked Loan Principles.  EPIC’s sustainability strategy places a large focus on leak detection and reduction, supported by 1,695 miles of leak detection fibre installed along its pipelines, which collects real-time data from the pipeline 24 hours per day. The sustainability performance target for the transaction is the reduction of reportable releases from its pipelines, including both natural gas liquids and crude oil. All other material economic terms remain the same.
  • BioPharma Credit (BPCR)has declared an interim dividend in respect of the financial period ending 5 October 2022 of $0.0625 per ordinary share, payable on 18 November 2022 to ordinary shareholders on the register as at 21 October 2022. BPCR has chosen to designate the entire amount of this interim dividend as an interest distribution and shareholders in receipt of such a dividend will be treated for UK tax purposes as though they have received a payment of interest, which will result in a reduction in the corporation tax payable by BPCR. The $0.0625 dividend comprises an ordinary dividend of $0.0175 and a special dividend of $0.0450. BPCR says that it is currently on track to pay and continues to target a 7 cent. base annual dividend per ordinary share.
  • Mercantile (MRC) has published its interim results for the six months to 31st July 2022, during which it provided an NAV total return (with debt valued at par) of -13.2%, behind its benchmark’s -7.8%. The underperformance was chiefly driven by stock selection, although gearing, which averaged 10.3%, also detracted given the declining market. At a portfolio level, performance was primarily hindered by MRC’s holdings in the consumer discretionary sector, in companies such as Watches of Switzerland, Dunelm and Jet2 (although the manager says that the operational performance of Watches of Switzerland and Dunelm has remained encouraging). The manager says that portfolio highlights in the first half of this year felt limited, but the performance of MRC’s longstanding investment in Telecom Plus was pleasing (it has been a beneficiary of the changing landscape in the energy supply market). In addition, another long-term holding, in asset manager Brewin Dolphin, was subject to an agreed takeover by Royal Bank of Canada (RBC), which came at a “handsome premium”. The manager says that, in view of the deterioration in the economic outlook, some notable changes were made to the portfolio in the first half. The most material of these is the reduction in the portfolio’s exposure to the consumer discretionary sector, offset by increases in the telecommunications and energy sectors. The portfolio’s exposure to energy has been increased both directly, by investing in energy producers, and indirectly, by investing in those companies that provide goods and services to the energy industry and indeed those that distribute it. MRC’s very large underweight to the real estate sector has been maintained (MRC does not have any real estate holdings) as the manager expects valuations to come under pressure in an environment of potentially rapid increases to interest and thus the discount rates upon which property valuations are based.
  • CLS Holdings (CLI) has sold Sentinel House in Coulsdon, Greater London, for £7.0m. Sentinel House, which was acquired by CLS in 2012, consists of 3,211 sqm (36,711 sq ft) of office space over three floors with ancillary car parking. The sale was at a price 4.5% above the 30 June 2022 valuation, and releases capital to strengthen CLS’s liquid resources. The lease to tenant, IHS Global Limited, will expire at the end of 2022.

We also have Oakley Capital’s partial sale of Wishcard.

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