In QuotedData’s morning briefing 21 June 2023:
- CK Bidco provided an update on the level of acceptances received following the announcement on 9 May 2023 of an all-cash offer made by CK Bidco for the entire issued and to be issued share capital of Civitas (CSH). The company announced that, as at 20 June 2023, CK Bidco had received valid acceptances in respect of 5,070,863 Civitas shares, representing approximately 0.83 % of the existing issued share capital of Civitas (excluding treasury shares). [We have previously suggested that the offer should be rejected by shareholders as it undervalues the company’s assets.]
- Digital 9 Infrastructure (DGI9) announced that the Arqiva Group has entered into an inflation collar on its inflation-linked swaps. Through annual accretion payments on these swaps, Arqiva has historically been exposed to Retail Price Index (RPI) fluctuations, with high RPI figures resulting in sizeable cash outflows. The recently implemented collar is a bespoke instrument that restricts the swaps’ RPI exposure within a fixed range of 2.5% to c.6.0%. This means that if future RPI figures exceed expectations, effective RPI will be capped in each case at c.6.0%, in turn effectively capping the corresponding accretion payment. This limits the downside exposure of Arqiva’s cash flows and improves visibility over DGI9’s future dividend cover. The collar applies only to Arqiva’s inflation-linked swaps and has no impact on the indexation of Arqiva’s recurring revenues, of which c.65-70% are directly linked to inflation without cap. These revenues are underpinned by long-term contracts with blue-chip customers including the BBC, ITV, Channel 4, Sky, Discovery, and Thames Water. The key terms of the collar are:
- The collar applies to 100% of the RPI exposure of Arqiva’s inflation-linked swaps.
- The collar caps the impact of RPI on Arqiva’s accretion payments, starting in 2024, at c.6.0% until the swaps’ expiry in 2027. This significantly limits downside risk for Arqiva should RPI exceed expectations.
- The collar has a floor of 2.5% that, until the swaps’ expiry in 2027, would increase the effective accretion payment were RPI to fall below such levels.
- The collar is a bespoke instrument relating only to the inflation-linked swaps and has no impact on Arqiva’s uncapped inflation-linked revenues.
- Arqiva pays no arrangement fees for the collar. Instead, a small margin is incorporated into the cap.
- The first accretion payment to be impacted by the collar will be June 2024.
We also have results from AEW UK REIT and GCP Infrastructure