Digital 9 Infrastructure (DGI9) has provided a company update on its recent and ongoing activities. The key highlights from the report were:
- Considerable investor interest in equity syndication
- Continued evaluation of additional complementary sources of growth capital
- Reaffirmed target aggregate dividend of 6.0 pence per ordinary share for the year ending 31 December 2023
- Operating cash flow dividend cover to be substantially achieved by 31 December 2024
- Announcement of an upcoming investor presentation relating to its recent activities on 19 July 2023
The company also provided an update on its balance sheet and liqiudity position, outlined below:
“In line with the investment manager’s active asset management plan, several key initiatives to optimise the capital structure and balance sheet of the group have been undertaken including: As announced on 5 June 2023, signing a new $100 million (£80 million) green term loan debt facility with an uncommitted $50 million (£40 million) accordion provision for Verne Global Iceland. The facility will be used to help fund Verne Global’s growth capital expenditure pipeline, partly repay outstanding shareholder loans owed by Verne Global to the Group and refinance Verne Global’s existing bridge loan facility.
“As announced on 5 July 2023, the successful refinancing by the Arqiva Group of £262 million of its senior debt. The refinancing consisted of £345 million of oversubscribed new issuances, the proceeds of which will be used for repayment of existing facilities for £262 million and provide Arqiva with an additional £83 million for general corporate purposes.
“The ongoing Syndication, which the company expects will generate significant cash proceeds, will be used to partly pay down the RCF and fund growth capital expenditure in investee companies.
“The board reaffirms it is targeting an aggregate dividend of 6.0 pence per ordinary share for the year ending 31 December 2023. The initiatives above are believed to be accretive to dividend cover, however for the avoidance of doubt, and as stated before, further capital being invested into the investee companies is not forecast to be required to achieve a future period dividend covered by the operating cash flow of the investee companies. This is expected to be substantially achieved by 31 December 2024 as a result of the continued maturity of the high-growth platforms (particularly data centres and subsea fibre), the reduction and ultimate expiry of the accretion payments made by Arqiva (in relation to its inflation linked swaps) and the future forecast IRU sales from the company’s investment in EMIC-1.
“The board has considered reducing the above target of 6.0 pence per Ordinary Share for the year ending 31 December 2023 and understands some shareholders would support such a reduction. However, on balance, the board considers it appropriate to maintain the target given: the route to a covered dividend outlined above; the income requirements of many shareholders; and the relatively limited absolute sum that would be saved by reducing the 6.0 pence target.
“At 30 June 2023, the group had c.£78.3 million of cash available and also has £18.8 million remaining undrawn of the £375 million RCF, excluding the accordion tranche of up to £125 million.”