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QuotedData’s morning briefing 9 January 2023

QuotedData's Morning briefing

In QuotedData’s morning briefing 9 January 2023:

  • Downing Strategic Micro-Cap (DSM) has announced a cash exit facility, share buybacks, and subsequent strategic review. The board has previously announced its intention to offer shareholders a 50% share redemption opportunity in May 2024 at NAV. Should the cash exit facility be fully subscribed and, as a result, the Company becomes sub-scale, the board intends to conduct a strategic review. This review would consider putting to shareholders a continuation vote, or, alternatively, a potential roll-over into another suitable investment company, possibly coupled with a cash exit. If a continuation vote were proposed and not passed, the DSM would be placed into a wind down strategy with the objective of realising the remainder of DSM’s portfolio in an orderly manner.
    Given that cash currently represents 15.7% of the DSM’s NAV, the board has concluded, due to the current double discount (the combination of trust’s discount and that of its underlying investments), that shareholders will also benefit from share buybacks. The exact amount of cash that will be committed to share buybacks will be determined by market conditions, investment opportunities uncovered by the manager and the ongoing liquidity analysis, to ensure that DSM remains well placed to identify a pool to fund the cash exit facility.
  • Nippon Active Value Fund (NAVF) announced on Friday that it is to commence a tender offer for T&K TOKA, in conjunction with Hikari Acquisition K.K. and Michael 1925 LLC. The group intend to offer ¥1,300 per share for up to 4,911,564 common shares in T&K TOKA. Toka is a manufacturer of inks, resins and associated products and is listed on the Tokyo Stock Exchange. The tender is conditional upon at least 4,007,064 Toka common shares being tendered. The offer will cease after 30 business days on 20 February 2023. As at 30 September 2022, Toka had approximately 22.4 million common shares in issue, excluding shares held in treasury. NAVF aims to purchase 59.3% of the target tendered shares.
  • Baker Steel Resources (BSRT) announced on Friday that, following the satisfaction of all conditions, it has completed the sale of its 24.2% shareholding in Bilboes to the Caledonia Mining Corporation. BSRT will receive 800,000 shares in Caledonia and a 1% Net Smelter Royalty (NSR) in exchange.  Based on Thursday’s close price of £10.40 per share for Caledonia shares, BSRT’s share consideration is valued at £8.0 million after allowing for an 8% discount to half the shares which are subject to a 6-month lock-up. NSR will be valued based on the BSRT’s policy of a development risk adjusted economic model.

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