REG - GCP Asset Backed Inc - Return of Capital & Conclusion of Strategic Review

GCP Asset Backed Income FundAnnouncement

29/05/2024 14:15

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RNS Number : 3149Q  GCP Asset Backed Income Fund Ltd  29 May 2024

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OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

FOR IMMEDIATE RELEASE

29 May 2024

GCP Asset Backed Income Fund Limited

("GABI" or the "Company")

LEI: 213800FBBZCQMP73A815

Loan Repayment, Initial Capital Distribution, Conclusion of Strategic Review
and End of Offer Period

Loan Repayment

The Company is pleased to announce the receipt of £23.3 million in cash
proceeds from the repayment of a loan secured against a portfolio of student
accommodation projects in Australia (the "Relevant Loan"). This repayment
comprises £20.9 million in principal and £2.4 million in outstanding
interest and fees. The cash proceeds received represent 103% of the valuation
of the Relevant Loan at 31 March 2024.

The Relevant Loan was scheduled for repayment in December 2023. Following the
repayment of the Relevant Loan, the Company has achieved an IRR of 9.24% for
the investment.  This is a return that is accretive to dividend coverage
during the term of the loan and represents an attractive risk-adjusted return.
At 31 March 2024, the Relevant Loan accounted for 7.03% of the fair value of
the Company's portfolio of investments. The Relevant Loan was categorised by
the Investment Manager as a Watchlist loan and as such, based on the fair
value of the Company's portfolio of investments at 31 March 2024, represented
57% of the Watchlist loans. The Relevant Loan was also identified by the
Company as a conflicted asset and consequently, the repayment terms were
negotiated and agreed by the Company's Board of Directors (the "Board").

Additionally, the Company has secured and received a £4.0 million partial
repayment of a further conflicted loan secured against a student accommodation
asset in the UK. The Company is actively negotiating the redemption of the
remaining balance of this facility, which is expected to be aligned with the
wider refinancing of the loans secured against the relevant property, with
completion anticipated in Q3 2024.

Following these repayments, the Company's cash balance is expected to be
approximately £103 million. There remain no outstanding balances under the
revolving credit facility.

Initial Capital Distribution

The Board is pleased to update shareholders on the Company's first capital
distribution following the amendments to the Company's articles of association
approved by shareholders at the Extraordinary General Meeting held on 20 May
2024.

The Company intends to make an initial capital distribution totalling (after
expenses) at least £85 million to the Company's shareholders by way of a
compulsory partial redemption of ordinary shares at a price of 89.66875 pence
per ordinary share (the "First Compulsory Redemption"), being the net asset
value per ordinary share at 31 March 2024 of 91.25 pence, less the dividend of
1.58125 pence per ordinary share that has been declared in respect of the
period to 31 March 2024 and that is due to be paid to shareholders on 4 June
2024. The amount applied to the First Compulsory Redemption is after the
deduction of costs and expenses which are expected to be c. £45,000.

The First Compulsory Redemption will be effected pro rata to holdings on the
share register as at the close of business on 10 June 2024 (the "Redemption
Date"), being the record date for the First Compulsory Redemption, by applying
a redemption ratio which is currently anticipated to be 22.5 per cent. (the
"Redemption Ratio"). Fractions of ordinary shares produced by the Redemption
Ratio will not be redeemed, so the number of ordinary shares to be
compulsorily redeemed from each shareholder will be rounded down to the
nearest whole number of ordinary shares. In the event that the Company
receives any additional loan repayments in the period between the date of this
announcement and the Redemption Date, the Board may determine to increase the
size of the First Compulsory Redemption (and, accordingly, the Redemption
Ratio). Any such amendment will be announced by the Company at the appropriate
time, if applicable. On the basis of a Redemption Ratio of 22.5 per cent.,
approximately 94.8 million of the Company's issued shares will be redeemed on
the Redemption Date.

Payments of redemption monies are expected to be effected either through CREST
(in the case of ordinary shares held in uncertificated form) or by cheque (in
the case of ordinary shares held in certificated form) by 24 June 2024. Any
certificates currently in circulation will be superseded by a new certificate
which will be distributed to certificated shareholders by 24 June 2024.

The Company currently has 425,626,059 ordinary shares in issue (excluding
shares held in treasury). All of the ordinary shares redeemed on the
Redemption Date will be cancelled and accordingly will thereafter be incapable
of transfer by shareholders or reissue by the Company.

The Company's ordinary shares will be disabled in CREST after close of
business on the Redemption Date and the existing ISIN number, JE00BYXX8B08,
(the "Old ISIN") will expire. A new ISIN number, JE00BMFX6989, (the "New
ISIN") in respect of the remaining shares which have not been compulsorily
redeemed will be enabled and available for transactions from 8.00 a.m. on 11
June 2024. The share price TIDM, "GABI.L", will remain unchanged. For the
period up to and including the Redemption Date, shares will be traded under
the Old ISIN and as such, a purchaser of such shares may have a market claim
for a proportion of the redemption proceeds following the activation of the
New ISIN. CREST will automatically transfer any open transactions as at the
Redemption Date to the New ISIN.

Conclusion of Strategic Review and End of Offer Period

Since the Company's announcement on 13 December 2023 (the "Strategic Review"),
the Board has received several approaches from third parties (the "Potential
Offerors") regarding a sale of the entire issued share capital of the Company.
The Board determined that it was appropriate to provide several of the
Potential Offerors with access to detailed due diligence information. None of
the Potential Offerors made a proposal at a level which, in the Board's
opinion and taking into account advice from the Company's advisers and
shareholders' views on the value of the Company received during the Strategic
Review, would have been capable of recommendation to shareholders. The Company
is, therefore, no longer actively considering a sale of the shares of the
Company at this time.

The Board has also received a number of proposals relating to a sale of all or
substantially all of the assets of the Company (the "Asset Proposals").
Notwithstanding the conclusion of the Strategic Review, certain Asset
Proposals remain under consideration by the Board. There can be no certainty
that any of the Asset Proposals will result in a sale of all or substantially
all of the Company's assets. The Board would encourage any party interested in
acquiring any or all of the Company's assets to contact the Company's
Financial Adviser, Barclays Bank PLC, acting through its Investment Bank,
and/or the Company's Investment Manager, Gravis Capital Management Limited.

Alex Ohlsson, Chairman, commented:

"We are pleased to have concluded the Strategic Review process and that
following the receipt of a significant loan repayment, the Company can
immediately advance plans for an initial capital distribution to shareholders
of at least £85 million.  We would like to take this opportunity to thank
shareholders for their input into the Strategic Review."

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014, as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 (as amended) ("MAR"). Upon publication of
this announcement, the inside information is now considered to be in the
public domain for the purposes of MAR. The person responsible for arranging
the release of this announcement on behalf of the Company is Sophie Botterill,
Manager at Apex Financial Services (Alternative Funds) Limited.

Following this announcement, the Company is no longer considered to be in an
"offer period" as defined in the City Code on Takeovers and Mergers (the
"Code"), and the dealing disclosure requirements of Rule 8 of the Code will no
longer apply.

For further information:

 GCP Asset Backed Income Fund Limited                                           +44 (0)15 3482 2251

 Alex Ohlsson, Chairman

 Barclays Bank PLC, acting through its Investment Bank - Financial Adviser and  +44 (0)20 7623 2323
 Corporate Broker

                                                                              BarclaysInvestmentCompanies@barclays.com
 Adrian Beidas

 Callum West

 Stuart Muress (Corporate Broking)

 Gravis Capital Management Limited - Investment Manger                          +44 (0)20 3405 8500

 Philip Kent

 Anthony Curl

 Cameron Gardener

 Buchanan/Quill - Media Enquiries                                               +44 (0)20 7466 5000

 Helen Tarbet

 Henry Wilson

 George Beale

Notes to the Editor

About GABI

GCP Asset Backed Income Fund Limited is a closed ended investment company. Its
shares are traded on the Premium Segment of the Main Market of the London
Stock Exchange. Its investment objective is to undertake a managed wind-down
of the Company and realise all existing assets in the Company's portfolio in
an orderly manner.

The Company's portfolio comprises a diversified portfolio of predominantly UK
based asset backed loans which are secured against contracted, predictable
medium to long term cash flows and/or physical assets.

Rule 26.1 disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available (subject to certain restrictions relating to persons resident in
restricted jurisdictions)
at https://www.graviscapital.com/funds/gabi-strategic-review/literature
(https://www.graviscapital.com/funds/gabi-strategic-review/literature)  by no
later than 12 noon (London time) on the business day following the date of
this announcement. The content of the website referred to in this announcement
is not incorporated into and does not form part of this announcement.

Disclaimer

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is
authorised by the Prudential Regulation Authority and regulated in the United
Kingdom by the Financial Conduct Authority and the Prudential Regulation
Authority, is acting exclusively for the Company and no one else in connection
with the matters set out in this announcement and will not be responsible to
anyone other than the Company for providing the protections afforded to
clients of Barclays nor for providing advice in relation to any matter
referred to in this announcement.

 

 

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