TIDMSQN
RNS Number : 6024A
SQN Asset Finance Income Fund Ltd
30 May 2019
30 May 2019
SQN Asset Finance Income Fund Limited
Progress on Suniva Investment
and
Update on C Share Conversion
SQN Asset Finance Income Fund Limited (the "Company"), the
leading diversified equipment leasing fund listed in the UK, is
pleased to announce significant progress on the Suniva investment
and an update regarding the C Share conversion.
Following the last update provided in the Company's release of
half-year financial accounts in March, the following positive
developments have occurred:
- Litigation with the co-debtor-in-possession ("DIP") lender has
reached a satisfactory conclusion.
- The property tax dispute has been resolved in a favourable manner for the Company.
- Suniva has exited bankruptcy.
- Two new asset leases have been entered into for a term of two
years and fifteen years respectively.
- The new owners of Suniva have committed a substantial amount
of capital to pursue the distribution of already collected US
tariffs to Suniva.
- Rights under the DIP loan (which amount has already been
written off in the Company's books) have been sold for $2.5
million.
- Court proceedings against the Guarantor have progressed
favourably for the Company and direct settlement discussions have
begun.
Executed Settlement Agreement
In conjunction with the court-approved plan of reorganisation,
the Company has entered into a settlement agreement with the
consortium of three hedge funds which now own Suniva. The new
owners have committed to recapitalise Suniva and vigorously pursue
distributions of the substantial tariffs already collected under
the various US trade cases.
Under the terms of the agreement, the Company has entered into a
two-year lease with the first quarterly payment of $120,000 due in
July 2019. During the term of this lease, the new owners of Suniva
have committed to infuse $15 million to $20 million for the sole
purpose of collecting the tariffs. The second lease with a term of
up to 15 years, will be repaid by a percentage of the tariffs
received by Suniva. The new owners of Suniva are strategically
positioned in a way that leads them to believe that the two-year
term of the first lease should be a sufficient amount of time to
facilitate distribution of the tariffs.
As part of the agreement, the Company also has the right to work
with a third-party operator, subject to the approval of the new
owners, to utilise the equipment as another source of recovery
proceeds. A third-party operator has been identified and a
non-binding term sheet has been executed but progress has been
slower than expected.
In addition, the Company has sold the rights granted to it under
the DIP financing for $2.5 million.
Guarantee
Court proceedings have commenced in New York for enforcement of
the guarantee. All rulings to date have been favourable to the
Company. Counsel on both sides have encouraged direct settlement
discussions between the Company and the Guarantor. The initial
meeting between the parties took place in New York in April 2019.
An invitation has been extended for the Company to go to China to
continue negotiations. This meeting is expected to take place in
June 2019. Prior to that, both parties intend to work remotely to
enter into a framework agreement for a settlement.
C Share Conversion
Despite these positive developments, there remains uncertainty
as to the timing and sources of recovery. Given the current
momentum on the settlement discussions with the Guarantor and the
progress in realising value from the Suniva assets, the Board
expects a greater level of clarity over the valuation within a
reasonable timeframe. Accordingly, it is proposing that the
conversion of the
C Shares be delayed until an agreement is reached with the
Guarantor or the court orders an enforcement action which will
quantify the amount of the recovery from the guarantee and allow
the Company to assess the timing and the amounts required from the
other recovery sources, if any, to achieve a full recovery. In the
meantime, the C Shares continue to perform well with a high degree
of diversification and a covered dividend.
The Company, as advised by the Investment Managers, continues to
believe that a combination of the all these initiatives should
generate sufficient proceeds to recover the Group's current
principal balance outstanding over time.
General Meeting, Ordinary Class Meeting and C Class Meeting
In order to effect the C Share Conversion Extension, the Board
is proposing to amend the Company's Articles to extend the date on
which the C Shares in issue will convert into New Ordinary Shares
(the "Proposal").
The Proposal is subject to Shareholder approval to amend the
Company's Articles at a General Meeting. The Resolution will be
proposed as a special resolution.
As the Proposal involves an amendment to the Articles and
certain amendments to the rights attaching to the C Shares, it is
also necessary for each class of the Company's shares to approve
the Proposal at a separate class meeting of the holders of the
Shares of the respective class. At each such class meeting a
special resolution will be proposed.
The General Meeting, the Ordinary Class Meeting and the C Class
Meeting will each be held at BNP Paribas House, St Julian's Avenue,
St Peter Port, Guernsey GY1 1WA on 17 June 2019 at 2.00 p.m., 2.05
p.m. and 2.10 p.m., respectively.
The Proposal will only proceed if the resolutions proposed at
each of the General Meeting, the Ordinary Class Meeting and the C
Class Meeting are passed by Shareholders. In the event that any one
or more resolutions does not pass, then Conversion will occur by
28th June 2019, as previously approved by Shareholders.
Publication of Circular
A circular in connection with the Proposal (the "Circular") will
today be posted to Shareholders. A copy of the Circular will
shortly be submitted to the National Storage Mechanism and will be
available for inspection at http://www.morningstar.co.uk/uk/NSM and
also at the Company's webpage
http://www.sqncapital.com/managed-funds/sqn-asset-finance-income-fund.
Terms used in this announcement shall, unless the context
otherwise requires, bear the meanings given to them in the
Circular.
For further information please contact:
SQN Capital Management, LLC
Jeremiah Silkowski
Neil Roberts 01932 575 888
Winterflood Securities Limited 020 3100 0000
Neil Langford
Chris Mills
Buchanan
Charles Ryland
Vicky Hayns
Henry Wilson 020 7466 5000
Notes to Editor
The Company invests in equipment lease and asset finance
arrangements across a diverse portfolio of assets and industries
predominantly in the UK, Northern Europe and US. The Company
focuses on business-essential, revenue-producing (or cost saving)
equipment and other assets with high in-place value and long
economic life relative to the investment term.
The Company's Investment Managers are SQN Capital Management,
LLC, a Registered Investment Advisor with the United States
Securities and Exchange Commission and its subsidiary, SQN Capital
Management (UK) Limited. The principals responsible for managing
the portfolio are Neil Roberts and Jeremiah Silkowski.
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contact rns@lseg.com or visit www.rns.com.
END
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