TIDMCCSL
RNS Number : 6245R
Chenavari Capital Solutions Limited
13 December 2016
Chenavari Capital Solutions Limited (the Company)
13 December 2016
This announcement contains inside information
Return of capital
The Company today announces its intention to cease making any
further investments with immediate effect and from 1 January 2017
will commence a realisation period which will include the return of
unencumbered cash balances to Shareholders.
Further announcements will be made prior to each individual
return of cash to Shareholders.
Background
Prior to its initial public offering in 2013, the Company stated
that, following 31 December 2015, it would return to Shareholders
any unencumbered cash and such cash balances as arise from time to
time as a result, predominantly, of investments maturing in
accordance with their terms or otherwise.
In December 2015, the Company held an extraordinary general
meeting at which the approval of Shareholders was obtained for a
proposal to extend the investment period for up to 12 months to 31
December 2016.
Realisation Period
This extended investment period now being nearly at a close, the
Company has determined that no further extension to the investment
period will be sought and that it intends to commence a realisation
period (the "Realisation Period") with effect from 1 January 2017,
during which it will return to Shareholders any unencumbered cash
and such cash balances as arise from time to time as a result,
predominantly, of investments maturing in accordance with their
terms or otherwise.
Apart from cessation of new investments, no change to the
Company's investment policy is proposed.
The precise mechanism for any return of cash to Shareholders
will depend upon the relevant factors prevailing at the time and
will be at the discretion of the Board, but may include a
combination of capital distributions, share repurchases and
redemptions. The amount and frequency of such distributions will be
at the Company's absolute discretion. It is anticipated that the
first return of cash to Shareholders will take place no later than
30 April 2017, but there can be no assurances to this effect.
It is the Company's current intention to maintain the admission
to trading of the Shares on the Specialist Fund Segment of the
London Stock Exchange (the "Admission") until further notice. Any
proposal to cancel the Admission would only be completed with the
approval of Shareholders at an extraordinary general meeting.
The Company will continue to publish monthly net asset values
and factsheets.
During the Realisation Period, it is inevitable that the
Company's portfolio will become less diversified as assets are
realised and the proceeds returned to Shareholders. Shareholders
and prospective investors should note that this may increase the
risk of an investment in the Company.
Update on the existing portfolio
The Investment Adviser maintains a Base Case, an Upside Case and
a Stress Case for each investment in the portfolio, depending on
its characteristics and underlying collateral. The cases are
derived from a combination of: initial cases derived at the time of
investment from analysis of the transaction's structure and the
underlying portfolio data, regular tracking of the performance of
the transaction's underlying collateral pool and market implied
factors such as credit spreads or the performance of other similar
deals.
As of 30 October 2016, the Investment Adviser's indicative
estimates of the internal rates of portfolio return, calculated on
the invested capital of the Company, are:
-- 12.15% if all investments perform in line with the "Base Case";
-- 16.91% if all investments perform in line with the "Upside Case"; and
-- 3.51% if all investments perform in line with the "Stress Case".
Shareholders should note that, due to the diversification of the
portfolio's holdings, it is unlikely that all investments would
perform in line with either the Upside or Stress case.
Under the Base Case, it is estimated that investment cash flows
during 2017 will be as detailed below, but there can be no
assurances to this effect.
-- Q1 2017 - GBP6.9m
-- Q2 2017 - GBP7.3m
-- Q3 2017 - GBP5.3m
-- Q4 2017 - GBP8.3m
Based on the cash flows used to calculate the Base Case internal
rate of return above, it is expected that the current portfolio
will be substantially realised (assuming no assets are sold or
otherwise disposed of) and over 90% of the projected cash proceeds
returned to investors before the end of 2020.
The Company may hold back the payment of cash proceeds during
the Realisation Period until a material amount is available for
distribution to Shareholders to avoid the cost and administrative
burden of distributing small amounts.
Indicative internal rates of portfolio return are dependent on
the underlying Base Case, Upside Case and Stress Case asset
assumptions that are made by the Investment Adviser. These include,
but are not limited to, predictions of default, prepayment,
recovery, amortisation, interest rates, asset spread, portfolio
replenishment and issuer optional redemptions. The figures are
calculated on invested capital of the Company and do not reflect
indications of NAV total return. The figures are based on long-term
performance projections of the investment strategy and market
conditions at the time of modelling and are therefore subject to
change. There is no guarantee that any indicative rates of returns
can be achieved. Investors should not place any reliance on such
target return in deciding whether to invest in the Company. Stress
Tests present a set of hypothetical scenarios that assume changes
for one or more market variable in order to assess the effect on
the portfolio. The results shown represent estimated gross
performance of the portfolio under the market conditions stated and
do not reflect any management or performance fees or other
expenses. The Investment Adviser has made assumptions that it deems
reasonable and used the best information available to calculate the
rate of return case estimates. If a different set of assumptions
were used in these calculations, there could be a material
difference in the calculated estimates. Please refer to the
prospectus dated 23 September 2013 for risk factors. Hypothetical
performance results have many inherent limitations, some of which
are described below. No representation is being made that any
account will or is likely to achieve profits or losses similar to
those shown. In fact, there are frequently sharp differences
between hypothetical performance results and the actual results
subsequently achieved by any particular investment programme.
Further information in relation to the Company is available
at:
http://www.chenavaricapitalsolutions.com/
Enquiries:
Kirstie McLaren
Chenavari Investment Managers
Email: ccslir@chenavari.com
Telephone: +44 20 7259 3600
This information is provided by RNS
The company news service from the London Stock Exchange
END
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