REG - Digital 9 Infrastr. - Conclusion of the Strategic Review

Digital 9 InfrastructureAnnouncement

29/01/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240129:nRSc1929Ba&default-theme=true

RNS Number : 1929B  Digital 9 Infrastructure PLC  29 January 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK'S
MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

29 January 2024

 

DIGITAL 9 INFRASTRUCTURE PLC

 

("D9" or the "Company" and, together with its subsidiaries, the "Group")

 

Conclusion of the Strategic Review, Proposed Change to D9's Investment Policy
and other Company Updates

 

 

Outcome of the Strategic Review

 

Further to the announcement on 27 November 2023, the Board of Directors of D9
(the "Board") has concluded its strategic review in respect of the Company
(the "Strategic Review").

 

Managed Wind-Down

 

Following careful consideration of the options available to the Company and
after consultation with its financial advisers, as well as taking into account
feedback received from a large number of shareholders and institutional
investors, the Board has determined that it would be in the best interests of
shareholders as a whole to put forward a proposal for a managed wind-down of
the Company (the "Managed Wind-Down").

 

The Board intends to publish a circular to shareholders (the "Circular") in
the coming weeks in order to convene a general meeting at which it will seek
approval from shareholders to amend the Company's investment objective and
policy. If approved, the Board will then endeavour to realise all of the
Company's assets in a manner that maximises value to shareholders.

 

Next steps for the wholly-owned assets (Aqua Comms, EMIC-1, Elio Networks and
SeaEdge UK1)

 

The Board intends to immediately commence sale preparations for the Company's
wholly-owned assets ahead of launching competitive processes later this year.
The Board is mandating advisers to assist with the preparation of these sale
processes.

 

Next steps for Arqiva

 

As part of the Strategic Review, various options for realising the stake in
Arqiva have been considered on a preliminary basis by the Board. After careful
consideration of Arqiva's business plans and current market conditions, the
Board believes that the maximisation of the value of D9's stake in Arqiva is
likely to take longer to realise than the other investments held by the
Company. As such, while D9 will continue to consider and be open to all
options for Arqiva which are value-accretive to shareholders, the Board has
decided to defer a sale process for D9's stake in Arqiva for the time being.
The Board will continue to explore various options including capital markets
alternatives.

 

Amendments to Investment Objective and Policy

 

The implementation of the Managed Wind-Down will require amendments to the
Company's investment objective and investment policy ("Investment Policy").
Such amendments are subject to the approvals of the Financial Conduct
Authority (the"FCA"), shareholders pursuant to Listing Rule 15 and the
revolving credit facility (the "RCF") lenders. The RCF lenders and FCA have
been notified of the proposed new Investment Policy. The Board intends to
publish the Circular by the end of February (or as soon as possible thereafter
following receipt of approvals from the RCF lenders and FCA) to convene a
general meeting at which it will seek approval from shareholders of the
proposed new Investment Policy by way of ordinary resolution.

 

The proposed new Investment Policy will be one of effecting an orderly
wind-down of the Company with a view to maximising the value received from the
Company's assets and making any returns to shareholders, once the RCF has been
repaid. The Company will not make any new investments save that investments
may be made in existing portfolio companies when considered appropriate to
maximise value for shareholders.

 

Shareholders should note that during the Managed Wind-Down, the Company
intends to maintain its investment trust status and listing. Maintaining the
listing would allow Shareholders to continue to trade Shares during the
Managed Wind-Down.

 

The Board could reconsider the listing status of the Company following
completion of the Managed Wind-Down depending on the actions chosen for Arqiva
and the Verne Global earn-out at that time.

 

Shareholder returns

 

The Board expects to use the proceeds from the Managed Wind-Down to repay the
amount of the RCF that will be outstanding following completion of the sale of
the Verne Global group of companies ("Verne Transaction") 1  (#_ftn1) .

 

Once the RCF has been repaid, the Board will review the potential allocation
of any remaining proceeds between the repayment of the indebtedness to the
vendor in respect of the Company's acquisition of its interest in Arqiva in
October 2022 and distribution to shareholders. No further dividend
distributions are planned in respect of the year ended 31 December 2023 and
none are foreseen in the medium term. To the extent possible, it is intended
that any cash distributions to shareholders will take the form of returns of
capital.

 

Further, the Company's liquidity constraints prevent it from being able to
give consideration to the implementation of a program to buy back shares in
the market at this stage.

 

Consequences of the amendments to the Investment Policy not being approved

 

The Board considers the Managed Wind-Down as likely to provide the best
opportunity to maximise value for shareholders going forward. However, in the
event that the amendments to the Company's Investment Policy which are
required to facilitate the Managed Wind-Down are not approved by shareholders:

 

·      the Board and the Investment Manager will continue to comply with
the Company's current Investment Policy; and

·      the Board will work with its financial advisers to identify
alternative options for the future of the Company.

 

Charlotte Valeur, Interim Independent Chair of D9, said:

 

"Throughout the strategic review process, the Board's primary objective has
always been to maximise shareholder value going forward. Having carefully
considered a number of options, we have ultimately concluded that a Managed
Wind-Down of the Company is likely the best route to achieve this objective
and seek to address the discount to NAV that impacts our shareholders.

 

The Board will assess the progress of the proposed asset sales on an ongoing
basis and will continue to monitor other potential opportunities to realise
income and capital value for shareholders as they arise. We will also continue
to engage in active dialogue with our shareholders throughout this process."

 

A further announcement will be made when the Circular is published.

 

Relationship with Triple Point Investment Management LLP ("TP")

 

The company is party to an investment management agreement (the "IMA") with
TP, which supports the management of the Company's portfolio of investments
and the provision of certain other ancillary services to the Company. The
terms of the IMA include a provision that "The Company or the Investment
Manager shall be entitled to terminate this Agreement upon giving to the other
party not less than twelve (12) months' prior written notice of termination,
such notice not to expire before the fourth anniversary of the date of
Admission (the "Initial Period")". The fourth anniversary of the date of
admission is 31 March 2025. The Company has advised TP that, subject to any
required consents, it presently intends to give notice to terminate the IMA
under the above provision, with any such notice of termination to be issued on
the later of 31st March 2024 or the closing of the Verne transaction (the
"Notice Date"). The Verne transaction is scheduled to receive all the required
approvals by the end of Q1 2024. Pending the Notice Date, the Company is
actively exploring with TP whether the Company and TP might agree revised
commercial terms that would be in the best interests of the Company and its
shareholders given its future needs in the context of the other matters set
out in this announcement.

 

Verne Global update

 

Verne Global Transaction

 

The Verne Global sale, announced on 27(th) November, 2023, is progressing
towards completion with all required approvals expected to be received by the
end of Q1 2024. The unconditional Finnish merger control clearance from the
Finnish Competition and Consumer Authority has been received. All other
completion workstreams, including those related to financing, are being
advanced and on track within the expected timeline.

 

A further update will be provided in due course.

 

Deferred Consideration Payment

 

The new power agreement is being progressed and on track with the expected
timeline. The US$25 million (approximately £20 million) deferred
consideration payment will be payable on the earlier of (i) 15 business days
after a new power agreement is entered into (subject to closing) and (ii) the
later of 26 April 2024 and four weeks after closing.

 

Portfolio Update

 

The Board will release a trading update in the coming weeks, ahead of the
publication of full year results for the year ended 31 December 2023.

 

As part of its reporting of the results for the year ended 31 December 2023,
the Board has mandated an independent valuer to guide the Directors'
assessment of the fair value of its assets under International Financial
Reporting Standards, including the Verne Global potential earn-out payment of
up to $135m.

 

Shareholder Webinar

 

A webinar will be held on Monday 5 February 2024 at 12 noon GMT. Further
details will be provided closer to the date. Questions can be submitted by
email to: chair@d9board.com up to 5.00pm on the day prior to the webinar.

 

ENDS.

 

 

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

 

 

 Triple Point Investment Management LLP                               +44 (0)20 7201 8989

 (Investment Manager)

 Diego Massidda

 Ben Beaton

 Arnaud Jaguin

 Goldman Sachs International (Lead Financial Adviser)                 +44 (0) 20 7774 1000

 Alexandre Lucas

 Owain Evans

 Fabrice Francois

 Alexander Tingle

 J.P. Morgan Cazenove (Financial Adviser and Joint Corporate Broker)  +44 (0)20 7742 4000

 William Simmonds

 Jérémie Birnbaum

 Jonty Edwards
 Peel Hunt (Joint Corporate Broker)                                   +44 (0) 20 7418 8900

 Luke Simpson

 Huw Jeremy

 

The person responsible for making this notification is Helen Richardson,
Company Secretary.

 

About Digital 9 Infrastructure plc:

Digital 9 Infrastructure plc (DGI9) is an investment trust listed on the
London Stock Exchange and a constituent of the FTSE All-Share, with the ticker
DGI9. The Company invests in the infrastructure of the internet that underpins
the world's digital economy: digital infrastructure.

 

The Investment Manager is Triple Point Investment Management LLP ("Triple
Point") which is authorised and regulated by the Financial Conduct Authority,
with extensive experience in infrastructure, real estate, and private credit,
while keeping ESG principles central to its business mission. Triple Point's
Digital Infrastructure team has over $300 billion in digital infrastructure
transaction experience and in-depth relationships across global tech and
global telecoms companies.

 

The number 9 in Digital 9 Infrastructure comes from the UN Sustainable
Development Goal 9, which focuses the fund on investments that increase
connectivity globally and improve the sustainability of digital
infrastructure. The assets DGI9 invests in typically comprise scalable
platforms and technologies including (but not limited to) subsea fibre, data
centres, terrestrial fibre and wireless networks.

 

Since IPO in March 2021, DGI9 has invested in the following data centres,
subsea fibre and wireless network assets (other than Verne Global):

 

n Aqua Comms, a leading owner and operator of 20,000km of the most modern
subsea fibre systems - the backbone of the internet - with a customer base
comprising global tech and global telecommunications carriers;

n Arqiva, the only UK national terrestrial television and radio broadcasting
network in the United Kingdom - providing data, network and communications
services, as well as a national IoT connectivity platform;

n Elio Networks (previously Host Ireland) a leading enterprise broadband
provider that owns and operates Fixed Wireless Access networks;

n EMIC-1, a partnership with Meta on a 10,000km fibre system from Europe to
India;

n SeaEdge UK1, a data centre and landing station for the North Sea Connect
subsea cable, part of the North Atlantic Loop subsea network, improving
connectivity between the UK, Ireland, Scandinavia and North America.

The Company's Ordinary Shares were admitted to trading on the Specialist Fund
Segment of the Main Market of the London Stock Exchange on 31 March 2021. The
Company's ordinary shares were admitted to the premium listing segment of the
Official List of the Financial Conduct Authority and to trading on the premium
segment of the Main Market on 30 August 2022.

 

For more information on the Investment Manager please
visit www.triplepoint.co.uk
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Furldefense.com%2Fv3%2F__http%3A%2Fwww.triplepoint.co.uk__%3B!!O2kDR7mm-zSJ!q-IhiRmOFrs2QYD7gmr9EcM8ukutg1_xde5Fce9GgBpHkvhSc3nlYhW7glbEiZG--1yRCrGc2K4WAjub3ANF%24&data=05%7C01%7CHelen.Richardson%40triplepoint.co.uk%7C736257c2b4244d9b148e08dbce910edc%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C638330894771285360%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=2SpCRgIybR8ARfciJBsE4bOmxNcDDFvRX9K9FehSEto%3D&reserved=0)
. For more information, please visit www.d9infrastructure.com
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Furldefense.com%2Fv3%2F__http%3A%2Fwww.d9infrastructure.com__%3B!!O2kDR7mm-zSJ!q-IhiRmOFrs2QYD7gmr9EcM8ukutg1_xde5Fce9GgBpHkvhSc3nlYhW7glbEiZG--1yRCrGc2K4WArD5RA1-%24&data=05%7C01%7CHelen.Richardson%40triplepoint.co.uk%7C736257c2b4244d9b148e08dbce910edc%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C638330894771285360%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=%2Fd%2FuhyGQHTb%2Ft4t2e4NW5UNYk%2FYmW1xyb%2B%2BalYftf5I%3D&reserved=0)
.

 

Important Notices

 

Goldman Sachs International, which is authorised by the PRA and regulated by
the FCA and the PRA in the United Kingdom, is acting exclusively for D9 and no
one else in connection with the matters referred to in this announcement and
will not be responsible to anyone other than D9 for providing the protections
afforded to clients of Goldman Sachs International, or for providing advice in
relation to the matters referred to in this announcement.

 

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove") and which is authorised in
the United Kingdom by the PRA and regulated in the United Kingdom by the PRA
and the FCA, is acting as financial adviser exclusively to Digital 9
Infrastructure plc and no one else in connection with the Strategic Review and
will not regard any other person as its client in relation to the Strategic
Review and will not be responsible to anyone other than Digital 9
Infrastructure plc for providing the protections afforded to clients of J.P.
Morgan Cazenove or its affiliates, nor for providing advice in relation to the
Strategic Review or any other matter or arrangement referred to herein,
including, but not limited to, the Verne Transaction.

 

 

 1  (#_ftnref1) Please refer to the Company's announcement on 27 November 2023
regarding the Board's intended use of proceeds from the Verne Transaction and
related matters.

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDSEUSMUELSEIF