GCP Asset Backed Income Fund announced it has commenced a strategic review following the company’s announcement on 18 September 2023 that it had ceased merger discussions with GCP Infrastructure Investments Limited and that the board would propose a continuation vote at its AGM to be held in May 2024.
The decision to commence the strategic review follows extensive engagement by the company with its shareholders in connection with the merger discussions with GCP Infra, through which shareholders expressed views on both the proposed merger and the future of the company. Further, the board is mindful of the importance of market liquidity to many shareholders, the discount to asset value at which the company’s shares trade and the limited scope for growing the company under current market conditions. The board also notes the opportunity for GABI to lend to borrowers in the prevailing higher interest rate environment.
Details of the review are outlined in full below:
The Board will consider all options for the future of the company with the aim of maximising value for shareholders including, but not limited to:
– undertaking some form of consolidation, combination, merger or comparable corporate action;
– selling the entire issued share capital of the company;
– selling all or substantially all of the assets of the company;
– a continuation of the company under its current investment policy, alongside potential cash exit opportunities for shareholders, including as a one-off event and/or at regular intervals and which may be conducted by way of one or more share repurchases, tender offers and/or the creation of a new realisation share class which would return capital to holders of those shares as investments are realised over time; and
– an orderly wind-down of the company.
As part of the Strategic Review, the company will seek shareholder feedback to inform the board’s decision-making process. Key shareholders will be contacted in early January 2024, ahead of which further information relating to the options set out above will be announced by the company.
During the strategic review, the company’s existing investment policy and strategy will continue to be applied. As announced on 20 October 2023, no new investment activity is planned ahead of the 2024 AGM. In addition, no material amendments or extensions of facilities to existing borrowers will be made without the board’s prior consent. Gravis Capital Management Limited, the company’s investment manager, will continue to work to maximise value for the company.
In October 2024, three of the company’s directors will have served on the board for a period of nine years. Accordingly, subject to the outcome of the strategic review, the board will recommence its process of succession planning once the strategic review is complete.
On 6 October 2023, the board received a non-binding proposal from a US-listed investment company to acquire the entire issued share capital of the company. The proposal comprised a cash offer at a level of 68 pence per share in the company, paired with an alternative pursuant to which shareholders could elect to receive US listed shares in the possible offeror for each share held in the company, with an exchange ratio to be set at a point prior to any firm offer announcement to equate to a value of 76 pence per share. The proposal was unanimously rejected by the board, following which on 27 November 2023 a second conditional and non-binding proposal comprising a cash offer at a level of 72 pence per share in the company, paired with a share alternative offer at a level of 78 pence per share was received. The board agreed to provide the possible offeror access to confirmatory due diligence. Prior to accessing such information, on 11 December 2023 the possible offeror notified the company that it would be withdrawing its proposal.
Strategic review for GCP Asset Backed Income