The board of Digital 9 Infrastructure (DGI9) has announced that following the conclusion of its strategic review, announced in November 2023, it has decided to propose a managed wind-down. The decision was made in consultation with DGI9’s financial advisers, as well as taking into account feedback received from a large number of shareholders and institutional investors. The board will publish a circular in the coming weeks in order to convene an AGM to seek shareholder approval for a change in its investment policy necessary to implement the wind-down.
The board intends to immediately commence sale preparations for the company’s wholly-owned assets ahead of launching competitive processes later this year. With respect to its stake in Arqiva, the board has decided to defer a sale process for the time being as it believes it is likely to take longer to realise than the other investments held by the trust.
The board expects to use the proceeds from the wind-down to repay the reaming outstanding balance of its revolving credit facility (RCF), following completion of the sale of the Verne Global group of companies. Once the RCF has been repaid, the board will review the potential allocation between the repayment of the indebtedness to the vendor in respect of the DGI9’s acquisition of Arqiva in October 2022 and distribution to shareholders. The board also note that liquidity constraints prevent it from being able to implement a share buyback scheme at this stage.
[QD comment : “It’s sad to see a trust as unique as DGI9 infrastructure go, as it and Cordiant offer something genuinely different within the trust space, however given the board’s predicament it is entirely understandable. The trust has been trading on a c.70% discount since December, one of the widest of any investment trust. It would likely take more than market sentiment to reverse this. If they did not pursue a wind down the board would still have been forced to sell down assets to implement a buyback scheme. Given the illiquidity of their assets they would likely, as with their previous sale of Verne, be forced to sell their higher quality assets to raise capital in a timely manner. This would be a double-edged sword however, and investors would further question the validity of their remaining holdings, compounding their woes. The board have effectively been left with a damned if you do, damned if you don’t situation, where a full wind-down was likely the only practical path to maximising shareholder value. One remaining hope might be that a bidder emerges for the whole company, but given the disparate nature of its assets, that seems unlikely.“]