The GCP Asset Backed Income board has been talking to shareholders about the way forward for the company. Feedback on the future strategic direction came from shareholders representing a majority of the total voting rights in the company. Whilst differing views have been expressed by shareholders, a majority indicated a preference for an orderly realisation or a potential sale. Whilst a minority of shareholders wanted the fund to continue, the board felt that if the others exited the company, it would shrink so far that it would no longer be of a viable size to provide sufficient liquidity and scale.
The board has reached the conclusion that shareholder value will be best served by a proposed orderly realisation and return of capital.
Shareholders will be given the opportunity to vote on a discontinuation of the company at the AGM on 15 May 2024. The board intends to recommend that shareholders vote for discontinuation of the company in its present form. It ony needs 50% of those voting to approve this proposal.
Then there will be an EGM to seek approval from shareholders to i) amend the investment objective and policy, ii) adopt new articles of association and iii) approve any related matters necessary to facilitate the orderly realisation.
The board advises that shareholders should not expect to see a liquidation of the company in the immediate future. Instead the focus will be on maximising value to shareholders.
The company currently has a cash balance of about £55m. This could be handed back as soon as reasonably practicable following the conclusion of the 2024 EGM. The proposals will enable the company to return capital to shareholders by way of compulsory partial redemptions of shares pro rata to their shareholding.
The board wants to keep paying the existing level of dividend (6.325p) whilst the company remains substantially invested, for as long as practicable. This is a target only and does not constitute a profit forecast.
The board will explore all avenues for optimising shareholder value including selling the company/portfolio.
The board wants to keep the existing manager in place for this process if it can and is negotiating terms.
Joanna Dentskevich and Colin Huelin do not intend to seek reappointment as non-executive directors at the 2024 AGM. One of these two will be replaced so that there are still three directors.
[QD comment: and another one bites the dust… GABI had unnerved some investors with a couple of loans that went wrong. The basic premise of the fund still seems fine to me though, and it seems reasonable that new loans made today would be on terms far more favourable to investors than many of those in the current portfolio. Does anyone else feel that yet again investors are selling at the bottom?]
GABI : GCP Asset Backed Income will recommend discontinuation
It is a shame, I would rather continue to hold and collect the dividend, even if it becomes a smaller company. Let’s hope we don’t get a fire sale and the NAV is just fictious.