TIDMSSIF
RNS Number : 8281N
SQN Secured Income Fund PLC
26 May 2020
SQN Secured Income Fund plc
(LSE: SSIF) (the "Company" or "SSIF")
Continuation Vote and Notice of General Meeting
The Board of SQN Secured Income Fund plc (LSE: SSIF) (the
"Company"), a specialist secured lending income investment trust,
announces that a circular (the "Circular") containing a notice
convening a general meeting (the "General Meeting") of the Company
to consider the continuation of SSIF has today been posted to
shareholders.
Introduction and background
SSIF is a closed-ended UK investment trust whose ordinary shares
are admitted to trading on the Specialist Fund Segment of the Main
Market of the London Stock Exchange. It was launched in September
2015 and since April 2017 has been managed by companies within the
SQN Group. Dawn Kendall joined the SQN Group in 2017 and was
appointed as the lead manager responsible for SSIF in April
2017.
The Company's investment objective is to provide Shareholders
with attractive risk adjusted returns, principally in the form of
regular, sustainable dividends, through investment predominantly in
a range of secured loans and other secured loan-based instruments
originated through a variety of channels and diversified by way of
asset class, geography and duration.
The Directors acknowledge that the Company has not, since
launch, scaled in the manner the Board, the manager and
Shareholders had hoped. The Directors have been considering the
future of the Company in the light of this. In addition, under the
articles of association of the Company (the "Articles"), as the
Company did not have a Net Asset Value of at least GBP250 million
as at 31 December 2019, the Directors are required to convene a
general meeting to propose an ordinary resolution to Shareholders
to approve the continuation of the Company as an investment trust
(the "Continuation Resolution"). If the Continuation Resolution
does not pass, the Directors are required under the Articles to
convene a further general meeting of the Company to be held within
90 days of the date of the General Meeting to consider a special
resolution to approve the voluntary winding up or other
reconstruction of the Company.
The purpose of the Circular is to explain to Shareholders why
the Board does not believe the Company can continue in its current
form indefinitely and why the Directors are recommending
Shareholders vote against the Continuation Resolution at the
General Meeting convened for 19 June 2020.
Future of the Company
Over the past few months, the Board has been considering the
future of the Company, and consulting with larger Shareholders, and
in particular has been discussing the available viable options for
addressing the challenges the Company faces, including size,
scalability, liquidity and the discount to NAV at which the Shares
have been trading. As a result of these discussions, the Board does
not believe the Company can continue in its current form
indefinitely and is recommending that Shareholders vote against
continuation of the Company.
Regardless of the outcome of the General Meeting, the Board
intends to undertake a strategic review into the future of the
Company and in particular intends to examine the likely returns to
Shareholders and timing of any managed wind down of the investment
portfolio compared to other options to return capital to
Shareholders or the creation of a more liquid investment in a
larger vehicle that would be listed on the London Stock Exchange.
The Board intends to consult on the possible strategic options both
prior to and following the General Meeting.
Shareholders should note that, if the Company enters a managed
wind down of its portfolio, the Company is unlikely to be able to
realise the full value of its investment portfolio and return the
proceeds to Shareholders for at least a period of between three and
four years, and possibly longer, given the illiquid nature of the
Company's investments.
As at 30 April 2020, the weighted average maturity of the
Company's loan book is 2.62 years, with the longest maturity being
5.88 years. The Company cannot demand early repayment of these
loans (except in the event of a borrower default) and has to await
the repayment of the loans in accordance with their terms. Further,
the Board anticipates that one of the effects of the Coronavirus
pandemic will be that many borrowers seek to extend the maturities
on their loans and/or request additional facilities as borrowers
respond to the impact of the pandemic on their operations. The
Company will need to consider providing such facilities, even
during a managed wind down, to preserve the value of loans already
advanced. Accordingly, there can be no certainty as to the value or
timing of the returns Shareholders will receive as a result of any
managed wind down process or other form of reconstruction.
Investment management arrangements
Further to the Board's announcement on 30 April 2020, it is the
Board's intention to appoint KKV Investment Management Ltd ("KKV")
as the Company's portfolio manager to coincide with the appointment
of KKV as portfolio manager of SQN Asset Finance Income Fund
Limited. The date of appointment is expected to be on or around 1
June 2020. KKV is a newly formed investment management company
under the UK Asset Management arm of Kvika Banki. Kvika Banki is an
Icelandic publicly traded specialist bank focusing on asset
management and investment services. KKV will be led by Dawn
Kendall, who will be the lead portfolio manager responsible for
SSIF. Under an agreement between KKV and SQN, it is intended that
the employees of SQN Capital Management (UK) Limited will transfer
to KKV at the same time as KKV is appointed portfolio manager of
SSIF and SQN Asset Finance Income Fund Limited.
The Board and KKV have agreed that the management of SSIF would
transfer to KKV on the same commercial terms as are currently in
place. The Board believes it is important to ensure the services of
Dawn Kendall and her team are retained in order to most efficiently
manage the Company's portfolio and to maximise Shareholder value
throughout any wind down or reconstruction process. KKV has
undertaken to negotiate in good faith with the Board appropriate
amendments to the management agreement to reflect the managed wind
down or reconstruction proposals that are developed as a
consequence of the strategic review and subsequently approved by
Shareholders and, as appropriate, to align KKV's management fees to
incentivise the maximum return to Shareholders.
General Meeting
The general meeting has been convened for 11.00 a.m. on 19 June
2020 to be held at the offices of Dickson Minto W.S., 17 Charlotte
Square, Edinburgh EH2 4DF. All Shareholders are entitled to attend,
speak and vote on the Continuation Resolution to be proposed at the
General Meeting, which will be proposed as an ordinary resolution.
An ordinary resolution requires a simple majority of Shareholders
entitled to vote and present in person or by proxy to vote in
favour in order for it to be passed. In the light of the
Coronavirus pandemic and Government guidance, including the rules
on physical distancing and avoiding public gatherings of more than
two people ("Lockdown Restrictions"), Shareholders are strongly
discouraged from attending the General Meeting and indeed entry
will be refused if the law and/or Government guidance so requires.
In such circumstances, the Company will make arrangements to ensure
that the minimum number of Shareholders required to form a quorum
will attend the General Meeting in order that the meeting may
proceed and the business concluded. The Board considers these
revised arrangements to be in the best interests of Shareholders in
the current circumstances.
The Board strongly encourages all Shareholders to exercise their
votes in respect of the General Meeting in advance by completing
and returning the Form of Proxy enclosed with the Circular. In
addition, CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may do so
for the General Meeting by using the procedures described in the
CREST Manual (available via www.euroclear.com/CREST ). This should
ensure that your votes are registered in the event that physical
attendance at the General Meeting is not possible or
restricted.
The Directors recommend voting against the Continuation
Resolution. Regardless of whether the Continuation Resolution is
passed, the Directors will convene a further general meeting of the
Company in order to consider a special resolution to approve the
voluntary winding up or other reconstruction of the Company. As
explained above, it is anticipated that an orderly wind down
process may take between three and four years and there can be no
guarantee as to the quantum or timing of returns to Shareholders as
a result of any such process.
The document will shortly be available for inspection on the
National Storage Mechanism website:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact:
SQN Asset Management Limited tel: +44 1932 575
Dawn Kendall 888
finnCap Ltd. tel: +44 20 7220
Corporate Finance: 0500
William Marle / Giles Rolls
Sales:
Mark Whitfeld
Kepler Partners LLP tel: +44 20 3384
Hugh van Cutsem 8790
Buchanan Communications tel: +44 20 7466
Charles Ryland/Henry Wilson 5000
This announcement contains information which, prior to its
disclosure, was considered inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014 (MAR). The person
responsible for arranging for the release of this announcement on
behalf of the Company is Kevin Robins of Elysium fund management
limited.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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