Valeria Martinez, Investment Week, 29 September 2023:
Digital 9 Infrastructure (DGI9) shares fell by nearly 40% on Thursday (28 September), as shareholder confidence and hopes for the successful turnaround of the troubled trust dwindle.
The share price plunge followed the board scrapping its 6p dividend target for the 2023 financial year and not declare a dividend for the second quarter, due to ongoing liquidity and balance sheet pressures.
In light of this, the board said it would begin a formal consultation with its shareholders, starting on 2 October, which would engage on the dividend policy and the future direction of the trust.
The trust also said it had made significant progress in the syndication of one of its holdings – Verne Global – with the terms expected to be announced in the fourth quarter of the year.
Given the “wide range” of possible outcomes across near term events such as the syndication and medium-term outlook “uncertainty” on operating cash flows and dividends, Peel Hunt, DGI9’s corporate broker, downgraded its rating from ‘outperform’ to ‘under review’…
In a research note, Numis analyst Colette Ord said that while there had been “positive news” that a syndication is nearing, if a little later than expected, there is still “no clarity on what this realistically means for the returns that DGI9 can make going forward”…
Meanwhile, James Carthew, head of investment companies at QuotedData, said that although the dividend omission was not anticipated, it seemed like a “sensible response” by the board to the liquidity problems it faces.
“In hindsight, the previous management team overcommitted the company to supporting a number of capital hungry growing businesses, thinking that DGI9 would be able to carry on issuing vast amounts of equity,” he said.
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