TIDMNBDD TIDMNBDX TIDMNBDG
RNS Number : 9076C
NB Distressed Debt Invest. Fd. Ltd
21 April 2017
21 April 2017
NB Distressed Debt Investment Fund Limited
Portfolio Update - Ordinary Shares
NB Distressed Debt Investment Fund Limited's ("NBDDIF") primary
objective is to provide investors with attractive risk-adjusted
returns through long-biased, opportunistic stressed, distressed and
special situation credit-related investments while seeking to limit
downside risk.
NBDDIF's holdings are diversified across distressed, stressed
and special situations investments, with a focus on senior debt
backed by hard assets. The portfolio is managed by the Distressed
Debt team at Neuberger Berman, which sits within what we believe is
one of the largest and most experienced non-investment grade credit
teams in the industry.
On 10 June 2013, the investment period of the NBDD Share Class
("NBDD") expired and the assets of NBDDIF attributable to the
Ordinary Shares were placed into the harvest period. To date,
$111.2 million (equivalent to 89% of original capital) has been
approved for distribution (income by way of dividend and capital by
way of redemption) to shareholders since the realisation phase for
this share class.
The Ordinary Share Class is one of three classes of shares in
NBDDIF. The others are the Extended Life Share Class and the New
Global Share Class, which both offered exposure to new
opportunities in this asset class beyond 10 June 2013. The Extended
Life Share Class was subject to an investment period which ended on
31 March 2015 and the New Global Share Class was subject to an
investment period which ended on 31 March 2017. Separate factsheets
are produced for those share classes.
Manager Commentary
NAV increased in the quarter due to continued progress with
restructurings and resolutions. However, liquidity in distressed
debt markets remains strained as investment banks continue to pull
back their proprietary investing activities due to regulatory
changes. As a result, we are seeing wider bid / ask spreads and a
greater mark-to-market impact on the portfolio. Ultimately, we
believe value in the investments within the portfolio will be
realised via liquidity events (i.e. sale to a strategic buyer,
refinancing or IPO). Access to capital markets significantly
improves once an asset or company's balance sheet has been
restructured and / or operations have been stabilised.
NBDD had three exits during the quarter, which generated a total
return (income and capital gains over the life of the investments
net of taxes) of $2.4 million. All three exits were final returns
of capital on three long-term private equity positions. NBDD
generated cash during the quarter of $1.6 million, consisting of
$0.6 million from exits and $1.0 million from portfolio activity
(principal repayments, distributions and dividends). The ratio of
total value (capital distributions, dividends and current NAV) to
original capital was unchanged at 119% of original capital at
quarter-end.
Portfolio Update
NBDD's NAV increased by 1.5% over the quarter. NBDD ended the
quarter with NAV per share of $1.0633 compared with $1.0478 at the
end of December. Unrealised gains in the secured bank debt of an
Australian energy investment and the private equity of a European
packaging company were offset by an unrealised loss in the private
equity of a U.S. utility company. The portfolio consists of 19
issuers across 12 sectors. Most investments were relatively flat
during the quarter but certain notable events are highlighted
below(1) :
-- Private equity of a lodging and casino company distributed
cash of $0.45 / share from cash generated from operations. This
represents the first distribution for this investment. We are
continuing to work towards a sale of this property.
-- Secured bank debt in a portfolio of Australian wind farms
rose during the quarter as local power prices and the company's
operating performance both improved. Post quarter-end, the company
announced plans to raise additional equity to fund new projects and
increase balance sheet flexibility, potentially to facilitate a
global refinancing of its debt facilities.
Significant Value Change (approximately 0.5% of NBDD NAV or +/-
$200,000)(2)
Industry Instrument Q117 Total Return Comment
------------- --------------- ------------------ -------------------------
Utilities Bank debt $0.4 million Operational improvements
at company
------------- --------------- ------------------ -------------------------
Containers Private equity $0.3 million Operational improvements
& packaging at company
------------- --------------- ------------------ -------------------------
Utilities Private equity ($0.2 million) Decline in energy prices
------------- --------------- ------------------ -------------------------
Exit 35
NBDD invested $1.5m to purchase a senior construction loan
secured by 99 condominium units located just south of Downtown
Chicago, Illinois. The lender group executed a deed-in-lieu with
the borrower and took possession of the underlying collateral. The
group engaged a nationally recognised real estate firm to act as
asset manager and broker for the remaining units, invested
additional capital to complete the units and common areas, and
rebranded the property. The remaining units were sold with proceeds
being used to return capital and profits to the lenders. Cash
received on the investment was $2.0 million with total return on
the investment for NBDD of $0.5 million over 67 months. IRR was 10%
and ROR was 34%.
Exit 36
NBDD invested $4.2 million in the secured bank debt of a U.S.
independent power producer with assets across the U.S. Due to
historically low natural gas prices, the company experienced
depressed cash flows that forced it to file a pre-packaged plan of
reorganisation, which exchanged secured bank debt into private
equity. Eighteen months after the filing, the company announced a
sale of substantially all of its assets to a U.S. energy retailer.
The transaction ultimately closed in February 2017 when the final
disbursements from escrow were paid to equity holders. Continued
low natural gas prices and resulting low power prices impacted the
sale price for the company. Total cash received on the investment
was $4.1 million and the total return for this investment was
($84,000) with an IRR of (1%) and a ROR of (2%)%. NBDD held the
investment for 69 months.
Exit 37
NBDD invested $4.7 million in the post-reorganised private
equity of an eastern U.S. combined cycle gas turbine power plant.
At the time of the purchase, NBDD believed that power prices in the
market would improve and the plant would be sold at an attractive
valuation above our purchase price. In August 2016, it was
announced that the plant was being sold to a large, public, U.S.
independent power producer. The bulk of the transaction proceeds
were paid in early 2016 while the final escrow release was received
in Q1 2017. Total cash received was $6.7 million and total return
on this investment was $2.0 million over a 74-month holding period,
resulting in an IRR of 8% and ROR of 45%.
Exit Cash Invested Cash Received Total Return Holding Period IRR ROR
----- -------------- -------------- --------------- --------------- ---- ----
35 $1.5 million $2.0 million $0.5 million 67 months 10% 34%
----- -------------- -------------- --------------- --------------- ---- ----
36 $4.2 million $4.1 million ($0.1 million) 69 months -1% -2%
----- -------------- -------------- --------------- --------------- ---- ----
37 $4.7 million $6.7 million $2.0 million 74 months 8% 45%
----- -------------- -------------- --------------- --------------- ---- ----
Distributions
There were no distributions during the first quarter. Total
distributions to date are $111.2 million.
Factsheet
An accompanying factsheet on the information provided above can
be found here
http://www.rns-pdf.londonstockexchange.com/rns/9076C_-2017-4-20.pdf
or on the Company's website www.nbddif.com. Neither the contents of
the Company's website nor the contents of any website accessible
from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
-S-
For further information please contact:
Neustria Partners +44 (0)20 3021 2580
Nick Henderson
Charles Gorman
Rob Bailhache
-----
Data as at 31 March 2017. Past performance is not indicative of
future returns. All comments unless otherwise stated relate to
NBDD.
Source: Bloomberg, except where otherwise stated.
1. Notable corporate events may or may not result in an increase
or decrease in the value of an NBDD investment or a change in
NBDD's NAV per share. Please note that an investment may experience
a change in value (positive or negative) during the quarter whether
or not it was subject to a notable corporate event. Not all events
involving existing investments are disclosed above. In addition,
certain corporate events may not have been disclosed due to
confidentiality obligations.
2. Industry categorisations determined by Neuberger Berman.
Total Return determined by the Administrator, and includes realised
and unrealised gains and losses, expenses, FX gains and losses, and
all income on investments according to US GAAP accounting.
This document is intended only for the person to whom it has
been delivered. No part of this document may be reproduced in any
manner without the written permission of NB Distressed Debt
Investment Fund Limited ("NBDDIF"). The securities described in
this document may not be eligible for sale in some states or
countries and it may not be suitable for all types of investors.
Prospective investors are advised to seek expert legal, financial,
tax and other professional advice before making any investment
decision. Securities in the fund may not be offered or sold
directly or indirectly into the United States or to U.S. Persons.
This document is not intended to be an investment advertisement or
sales instrument; it constitutes neither an offer nor an attempt to
solicit offers for the securities described herein. This document
was prepared using the financial information available to NBDDIF as
at the date of this document. This information is believed to be
accurate but has not been audited by a third party.
This document describes past performance, which may not be
indicative of future results. NBDDIF does not accept any liability
for actions taken on the basis of the information provided in this
document. This report includes candid statements and observations
regarding investment strategies. Individual securities, and
economic and market conditions; however, there is no guarantee that
these statements, opinions or forecasts will prove to be correct.
These comments may also include the expression of opinions that are
speculative in nature and should not be relied on as statements of
fact. The views and opinions expressed herein include
forward-looking statements which may or may not be accurate over
the long term. Forward-looking statements can be identified by
words like "believe", "expect", "anticipate", or similar
expressions. You should not place undue reliance on forward-looking
statements, which are current as of the date of this report. We
disclaim any obligation to update or alter any forward-looking
statements, whether as a result of new information, future events
or otherwise. While we believe we have a reasonable basis for our
appraisals and we have confidence in our opinions, actual results
may differ materially from those we anticipate. The information
provided in this material should not be considered a recommendation
to buy, sell or hold any particular security. Neuberger Berman is a
registered trademark.
(c) 2017 Neuberger Berman Ref: 97461
This information is provided by RNS
The company news service from the London Stock Exchange
END
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