Electra seeks to optimise value during managed wind down

Electra to make anther distribution

Electra Private Equity has announced its final results for the year ended 30 September 2018. The trust is conducting a managed wind down of its portfolio. Commenting on the results, Neil Johnson, the trust’s chairman, had the following to say, “From a market capitalisation of £1.2bn at the start of October 2015 we have now made and announced distributions to shareholders of over £2.0bn with remaining net assets of £0.2bn after announced distributions. The direction is now clear, and we will seek to optimise value in the remaining portfolio over an acceptable timeframe whilst managing our cost base accordingly.”

Operational highlights (including managed wind down)

The announcement highlights the following operational developments:

  • NAV at 30 September 2018 of £342m (892.4 pence per share)
  • Pro forma NAV of £202m (527.4 pence per share) following the £140m initial Special Dividend of FY19 being paid on 14 December 2018
  • Fully controlled assets (TGI, Hotter and SPC) have combined LTM maintainable EBITDA of £33.3m with Net Debt of £29m – including cash held centrally (post dividend)
  • Investment Policy and Objective changed at shareholder meeting in October 2018 with over 99% support
  • Strategy to conduct a managed wind down of the portfolio over a period of time, allowing optimisation of returns, the return of cash to shareholders, and ultimately the winding-up of the Company
  • Operating costs and Board composition being reduced to reflect the reduced scale and activities of the Company
  • Further dividend announcements will follow in the first quarter of 2019

Portfolio highlights

The announcement includes the following highlights regarding the portfolio:

  • Concentration of portfolio leads to volatility as difficult conditions in UK retail and casual dining impacted TGI Fridays (£124.6m) and Hotter Shoes (£6.8m). Both impacted by exceptional weather conditions in 2018 as well as underlying markets. Recovery plans for both businesses are in place intended to increase resilience and value prior to exits in an acceptable timeframe
  • Special Product Company (£7.3m) performing strongly in US cable and telecom infrastructure market whilst Sentinel (£4.1m) is experiencing a challenging end to a strong year as customers supply chains adjust to end user demand in UK building products sector
  • Tail assets continue to provide expected value realisations
  • Photobox sold post year end and Knight Square disposal expected to complete later this month.

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