TIDMBGLF
RNS Number : 4046K
Blackstone Loan Financing Limited
25 August 2023
25 August 2023
Blackstone Loan Financing Limited
(the "Company")
Proposed managed wind-down of the Company , associated
amendments to the investment objective and policy and changes to
the Company's share capital
Publication of Circular and Notice of Extraordinary General
Meeting
As announced by the Company on 23 June 2023, and after extensive
consultation with its advisers, the board of directors (the
"Board") has decided to put forward proposals to shareholders for
the implementation of a managed wind-down of the Company (the
"Managed Wind-down").
A circular (the "Circular") to convene an extraordinary general
meeting (the "Extraordinary General Meeting" or "EGM") containing
details of the proposals in respect of the Managed Wind-down is
expected to be published today and a copy of will be submitted to
the National Storage Mechanism and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . The
Circular will also be available on the Company's website:
https://www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited/
. This announcement provides a summary of the information set out
in the Circular and Shareholders should refer to the Circular for
full details of the Proposals.
Background to the Managed Wind-down
The performance of the Company has proved resilient over its
nine-year life, which has spanned a variety of market conditions.
Its strong performance has been supported by its underlying
investments, which have provided shareholders with uninterrupted
cashflows and high current income, despite experiencing many
periods of volatility. Since inception to 30 June 2023, the
Company's annualised total return on a NAV basis is 7.86 per
cent.
However, in formulating the Managed Wind-down proposals, the
Board took into account a number of factors, including the
prevailing discount to Net Asset Value at which the company's
ordinary shares (the "Shares") have been trading, the market
capitalisation of the Company, the liquidity of the Shares and the
Company's structure. Furthermore, while the Company's share price
continues to trade at a discount to NAV per Share, reinvestment
into the Blackstone Corporate Funding DAC ("BCF") portfolio at NAV
is not accretive to BGLF Shareholders and the ability to grow
through further share issuance is limited. The Board therefore
determined that an orderly return of the net proceeds of the
realisation of the Company's investments on an available funds
basis and subject to certain applicable regulatory and contractual
constraints (as further described in the Circular) will be in the
best interest of its Shareholders as a whole.
In order to do this, the Company is seeking Shareholder approval
by way of ordinary resolution (the "Resolution") to:
-- amend the Investment Objective and Policy to facilitate the Managed Wind-down;
-- convert the Shares into ordinary shares redeemable at the
option of the Company ("Redeemable Shares"), to allow for the
proceeds of realising assets in accordance with the Managed
Wind-down to be returned to Shareholders by way of pro rata
compulsory redemptions of the Redeemable Shares; and
-- enable the issue of a share in a new non-redeemable share
class in the Company with appropriately deferred rights (the
"Deferred Share") to ensure compliance with a mandatory requirement
of the Companies (Jersey) Law 1991,
(together, the "Proposals"). Further details relating to the
Proposals outlined above are set out in the Circular published
today.
Details of the proposed Managed Wind-down
The Company obtains its investment exposure via Blackstone
Corporate Funding DAC ("BCF"). BCF is an Irish designated activity
company established on 16 April 2014 which, amongst other things,
provides risk retention capital solutions for certain European CLOs
managed by Blackstone Ireland Limited (the "Investment Adviser")
and US CLOs managed by Blackstone CLO Management LLC ("BCM").
BCF invests directly and indirectly in a portfolio predominantly
made up of senior secured loans and bonds, CLO loan warehouses and
CLO securities (including, in relation to the European CLOs for
which BCF acts as "originator" and certain US CLOs for which BCM
acts as "manager-originator", in each case for purposes of the
EU/UK risk retention rules, up to 100 per cent. of the total CLO
equity tranche and/or CLO securities in an amount equal to 5 per
cent. of each tranche of the relevant CLO).
The funding sources of BCF include profit participating notes
issued via a profit participating note issuing and purchase
agreement dated 1 July 2014 (as amended and restated from
time-to-time) between, amongst others, BCF, the Company and LuxCo
(a wholly owned subsidiary of the Company) (the "LuxCo PPNIPA", and
the profit participating notes issued thereunder, the "LuxCo
PPNs"). The LuxCo PPNs rank subordinate to certain other
obligations of BCF.
The LuxCo PPNs are subscribed for by LuxCo which, in turn,
provides the Company with exposure to the portfolio of BCF through
the issue of cash settlement warrants to the Company.
The Board proposes to implement the Managed Wind-down by
returning to Shareholders the net proceeds from the realisation of
the Company's investment in BCF in an orderly manner by way of the
compulsory redemption of Redeemable Shares (in respect of proceeds
received from BCF attributable to the early redemption, maturity or
sale of underlying investments or pursuant to a disposal for cash
of the LuxCo PPNs). The Company also intends to continue to pay
dividends to Shareholders (in respect of any other amounts other
than redemption proceeds deemed to be received from BCF) provided
the Company generates sufficient income (see below for further
information on dividends).
As part of the Managed Wind-down, the Company (through LuxCo)
will deliver a redemption request in accordance with the terms of
the LuxCo PPNs. Such redemption request will take effect only after
expiry of the requisite notice period of at least 90 days as set
out in the terms of the LuxCo PPNs. Consequently, BCF will continue
its investment activity as normal (including by participating in
the issue of new CLOs) during such period up until the redemption
request takes effect (expected to be in late December 2023). At the
expiry of the notice period, a pro rata portion of the assets and
investments of BCF (including its indirect investments held through
BCM) will be placed into a redemption pool (the "Redemption Pool").
As the assets in the Redemption Pool redeem or are realised, the
proceeds thereof, net of any actual or reasonably anticipated
liabilities, costs, expenses, debt service of BCF and BCM and LuxCo
and any actual or reasonably anticipated costs, liabilities, margin
or collateral requirements related to hedging transactions entered
into by BCF, will be utilised to redeem the LuxCo PPNs.
The availability of such proceeds will be subject to, amongst
other things, the regulatory and contractual risk retention
requirements which apply to BCF and BCM (which include a
requirement that BCF reserves capital for the purchase of assets
which it will then transfer to invested CLOs in order to ensure, on
an on-going basis, that it has provided the majority of the assets
of each CLO, as required from a regulatory perspective) and the
occurrence of the redemption of the CLO investments held by BCF and
BCM, which will not occur until the final redemption or refinancing
in whole (also known as a "CLO Reset") of the relevant CLOs.
Shareholders should note that, upon a CLO Reset, BGLF will not
instruct BCF to reinvest its capital in the Redemption Pool into
the relevant CLO, regardless of any contractual entitlement it may
have to do so.
Having consulted with the Investment Adviser, the Board
anticipates that the redemption of the CLO investments held in BCF
and BCM, which may include CLO investments held in excess of
regulatory risk retention requirements, will require a period of at
least 7 years. However, this is indicative only and it should not
be considered a guarantee of the Company's actual portfolio
liquidity profile. Due to the illiquid nature of the assets to
which the Company is indirectly exposed, there can be no certainty
of the length of time it may take to complete the Managed
Wind-down. In certain circumstances there may be a CLO reset at an
earlier date, providing proceeds for the redemption of the LuxCo
PPNs. However, there is no guarantee as to this eventuality as it
is based on, amongst other commercial factors, market conditions
and the availability of refinancing capital.
Under the Resolution, the Board is seeking Shareholder approval
to convert the Shares, which are currently non-redeemable, into
Redeemable Shares, so as to better facilitate the return of capital
to Shareholders pursuant to the Managed Wind-down.
Under the Proposals, the return to Shareholders of the net
proceeds realised pursuant to the Managed Wind-down would be
effected primarily by way of the compulsory redemptions of
Redeemable Shares. In respect of each such round of redemptions, a
given percentage of the Redeemable Shares in issue would be
redeemed from all Shareholders (pro rata between the holders of
such shares as at the relevant Redemption Record Time) on the
applicable Redemption Date for the applicable Redemption Price per
share, each as determined at the Directors' sole discretion.
Shareholders wishing to receive redemption payments in Sterling
should note that a separate redemption currency election mandate
form will need to be submitted in respect of each Redemption Date
(please see the Circular published today for further details).
Shareholders should also note that, following the issuance of
the Deferred Share, the Company will no longer meet the
requirements for being an "excluded security" for the purposes of
the FCA's definition of "non-mainstream pooled investments".
Accordingly, the promotion of the Redeemable Shares will be subject
to the FCA's restriction on the promotion of non-mass market
investments.
Amendments to Investment Objective and Policy
For the Company to follow the Managed Wind-down process, it will
be necessary to amend the Company's Investment Objective and
Policy. If the Proposals are approved by Shareholders, the
Company's revised Investment Objective will be to realise all
existing assets in the Company's portfolio in an orderly manner,
and the revised Investment Policy will be to effect an orderly
realisation of its assets by redeeming and/or by disposing for cash
the profit participating instruments issued by BCF and held by the
Company (indirectly through a subsidiary). The full text of the
proposed Investment Objective and Policy is in the Circular
published today.
Dividends
If the Resolution is approved at the EGM (or any adjournment
thereof):
-- in respect of the financial year ending 31 December 2023, the
Board intends to continue with the previously communicated dividend
policy; and
-- in respect of the financial year commencing 1 January 2024
and thereafter, the Board intends (following such consultation with
its advisers as it may consider appropriate) to continue to
distribute as dividends the interest payments (and any other
amounts other than redemption proceeds) deemed to be received from
BCF during the Managed Wind-down on a quarterly basis, having
regard to any amounts which the Board deem prudent to retain.
However, as the Company's underlying assets are realised over time
and the Portfolio diminishes in size, the Board, in consultation
with the Investment Adviser, may decide it is in the best interests
of Shareholders to cease payments of dividends and to use all
proceeds received from BCF for the redemption of the Redeemable
Shares and the return of capital to shareholders.
Should the Managed Wind-down be approved by Shareholders, the
Board intends to terminate the Company's dividend reinvestment plan
('DRIP'), with confirmation of such termination to be announced by
the Company in due course.
Extraordinary General Meeting
To become effective, the Resolution must be approved by a simple
majority of the votes cast by Shareholders who, being entitled to
vote, are present in person or by proxy at the EGM. The Notice
includes the full text of the Resolution.
The formal Notice convening the Extraordinary General Meeting,
to be held at the offices of BNP Paribas S.A. Jersey Branch, IFC 1,
The Esplanade, St Helier, Jersey JE1 4BP at 10 a.m. on 15 September
2023, is set out in Part II of the Circular. The Notice includes
the full text of the Resolution.
Action to be taken by Shareholders
Shareholders are requested to return a Proxy Appointment by one
of the following methods: (i) in hard copy form by post, by courier
or by hand to Link Group, Central Square, 29 Wellington St., Leeds,
LS1 4DL; (ii) via the Registrar's app LinkVote+ which can be
downloaded on the Apple App Store or Google Play; (iii) online via
www.signalshares.com; or (iv) in the case of CREST members, by
utilising the CREST electronic Proxy Appointment service, in each
case so as to be received by Link Group as soon as possible and, in
any event, not less than 48 hours before the time at which the
Extraordinary General Meeting (or any adjournment thereof) is to
begin. In calculating such 48 hour period, no account shall be
taken of any part of a day that is not a Business Day. Completion
of a Proxy Appointment will not preclude a Shareholder from
attending, speaking and voting in person at the Extraordinary
General Meeting.
Recommendation
The Board considers that the Proposals are in the best interests
of the Shareholders taken as a whole and accordingly, the Board
unanimously recommends that Shareholders vote in favour of the
Resolution at the Extraordinary General Meeting. The members of the
Board who are Shareholders intend to vote in favour of the
Resolution at the Extraordinary General Meeting in respect of their
own holdings of Ordinary Shares amounting to 791,593 Ordinary
Shares in aggregate, representing approximately 0.1788 per cent. of
the issued share capital of the Company. The Investment Adviser has
conveyed to the Board that it is supportive of the proposals.
Expected timetable of events
The anticipated dates and sequence of events relating to the
implementation of the Proposals are set out below:
Latest time and date for receipt of 10 a.m. on 13 September
Proxy Appointments for the Extraordinary 2023
General Meeting
Record date for participation and 5.00 p.m. on 13 September
voting at the Extraordinary General 2023
Meeting
Extraordinary General Meeting 10 a.m. on 15 September
2023
Announcement of result of the Extraordinary 15 September 2023
General Meeting
Capitalised terms used but not defined in this announcement will
have the same meaning as set out in the Circular.
Enquiries :
BNP Paribas 01534 709189 / 813967
Singer Capital Markets
James Maxwell / Alaina Wong (Corporate
Finance)
Alan Geeves / Sam Greatrex (Sales) 020 7496 3000
Winterflood Investment Trusts
Neil Langford / Haris Khawaja (Corporate
Finance)
Darren Willis (Sales) 020 3100 0000
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END
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