Blackstone Loan Financing Limited (BGLF) says that it has entered into a conditional agreement for the sale of 100% of the Profit Participating Notes (PPNs) to an entity that is an affiliate of its manager. The transaction is subject to shareholder approval and certain other conditions but, if it proceeds, BGLF says that the deal would result in a significant acceleration of its managed wind-down process. Blackstone has agreed that its affiliated shareholders in BGLF will abstain from voting on the resolution to approve the proposed transaction as a matter of good governance.

BGLF’s board says that it has consulted with a number of the company’s major shareholders on the deal and that these shareholders (together with the directors’ own holdings), representing approximately 28% of voting rights (and not including Blackstone-affiliated shareholders), have indicated their support for the deal.

BGLF also says that, following the sale of the company PPNs, it intends to distribute a substantial portion of its remaining net assets in the form of a further compulsory redemption of shares without delay. Then, as soon as reasonably practicable thereafter, BGLF will, subject to shareholder approval, be delisted from the London Stock Exchange and any further residual net assets will be distributed to shareholders and the company will be dissolved.

Key highlights of the proposed transaction

BGLF has listed what it sees as the key highlights of the deal as follows:

• Delivers on request for liquidity which was supported by over 99% of voting shareholders in September 2023.
• Provides a significant acceleration of return of capital compared to the existing managed wind-down process. The existing modelling projects that c.58% of remaining cashflows will not be returned until 2027 or later, and c.26% until 2029 or later.
• Gross proceeds of €304m from cash sale of 100% of the company’s PPNs to the purchaser. The expected gross proceeds from the proposed transaction, inclusive of cash already received by BGLF shareholders since the managed wind-down was approved in September 2023, represents more than 130% of the last reported mark-to-market NAV and approximately 100% of the last reported mark-to-model NAV at the time the managed wind-down was approved.
• Inclusive of the planned distribution of other net assets of BGLF (in part, via the dividend declared in October (to be paid on 6 December 2024) and the upcoming second redemption), the proposed transaction represents total value to shareholders of approximately €338m (as illustrated in the table below). In total, at the current number of shares in issue, this represents:
  • €0.808 per share;
  • a premium of 15.8% to the three-month volume weighted average price of €0.6984 per share and a premium of 7.8% to the closing price of €0.7500 per share as at 20 November 2024 (being the latest practicable date prior to the publication of this announcement, the “Latest Practicable Date”);
  • a premium of 30.4% to the volume-weighted average price since the board’s approval of the managed wind-down in September 2023; and
  • a discount of 9.9% to the company’s latest mark-to-model NAV of €0.8970 per share and a discount of 4.3% to the company’s latest mark-to-market NAV of €0.8451 per share.

Comments from Steven Wilderspin, chair of BGLF

“The proposed sale of all of the Company’s PPNs accelerates and fulfils the current managed wind-down of BGLF, providing shareholders with an opportunity for immediate liquidity against an estimated timeline to 2030 for the redemption of the Company’s underlying CLO investments held in BCF through the existing managed wind-down process, and a saving of associated ongoing running costs. It also provides an opportunity for shareholders to secure an attractive implied premium to current and historical share prices, and greater than 100% return of capital compared to the valuation at the time of the shareholder-mandated wind-down. We are also pleased with the level of indicative support from certain of our major shareholders, who were consulted prior to this announcement.”