February 2020

Cordiant Digital Infrastructure’s IPO succeeded – its subscription shares will start trading on 16 February 2021 – read the story here

CC Japan Income shareholders approved the issue of its subscription shares – we wrote about this here

January 2020

CC Japan, which announced in November that it was considering an issue of subscription shares, has published a circular convening a meeting on 15 February 2021 to approve the issue. These would be issued on the basis of one subscription share for every five ordinary shares held on 18 February 2021. The subscription price will be equal to the unaudited published NAV per ordinary share as at the close of business on 15 February 2021, plus a one per cent. premium, rounded up to the nearest whole penny. This will be announced on 16 February 2021.  Subscription share rights may be exercised on the last business day of each calendar quarter, between the last business day in May 2021 and the last business day in February 2023.

Cordiant Digital Infrastructure is a new IPO, which, if it succeeds will come with subscription shares on a one for eight basis (one subscription share for every eight ordinary shares bought at IPO). These would be exercisable at any time between 1 March 2021 and 28 February 2026 but at escalating prices (a headline price compounding at 9% a year, which is the same as the fund’s target returns, less the dividends that have been accrued up to the date of the exercise):

Where the Subscription Date is:                                     Headline Subscription Price (p)
between 1 March 2021 and 31 August 2021                     100.00
between 1 September 2021 and 28 February 2022          109.00
between 1 March 2022 and 28 February 2023                  118.81
between 1 March 2023 and 29 February 2024                  129.50
between 1 March 2024 and 28 February 2025                  141.16
between 1 March 2025 and 28 February 2026                  153.86

So, say that the trust paid a dividend of 1p in its first year and 2.5p in its second year, the exercise price at the start of year three would be 118.81p -1p -2.5p = 115.31p.

December 2020

• Golden Prospect managed to exercise all of its subscription shares – read our news story here
• GLI Finance completed its restructuring – extending the maturity date on its zeros by two years but with the promise of a tender offer for them next year. we have removed it from the sheet for now as we have no clue what the NAV is.

November 2020

UIL has redeemed its 2020 ZDPs at their full entitlement.

GLI Finance has been busy repurchasing its zeros ahead of their redemption date in December. The company has 20,791,418 ZDP shares in issue, of which 12,009,030 are held as treasury shares leaving 8,782,388.

CC Japan is mulling an issue of subscription shares.

New ZDPs from Premier Global Infrastructure

PGIT Securities 2020 has published a circular in connection with proposals for the reconstruction and voluntary winding-up of PGIT Securities 2020 and for a rollover option for ZDP shareholders into ZDPs issued by PMGR Securities 2025.

Under the proposals, PGIT Securities 2020 will be wound up on 30 November 2020. ZDP shareholders who are on the register as at 6.00 p.m. on 20 November 2020 will be entitled to elect:

• to roll over some or all of their investment into New ZDP Shares issued by PMGR Securities 2025, a newly incorporated subsidiary of the Parent (the “Rollover Option”); and/or
• to receive cash in the liquidation in respect of all or part of their investment in PGIT Securities 2020.

New ZDP shares are also being made available under the placing. Shareholders who are considering applying for further New ZDP shares in the placing should contact their broker or N+1 Singer.

The New ZDP shares:

• will have a repayment date of 28 November 2025 and will effectively rank as to capital in priority to the ordinary shares;
• provide for a pre-determined level of capital growth equivalent to a gross redemption yield of 5.0 per cent. per annum based on the issue price of a new ZDP share of 100p (subject to the Group having sufficient assets at the relevant time), which represents an increase from the gross redemption yield of 4.75 per cent. provided for by the existing ZDP shares; and
• subject to the Group having sufficient assets at the time and assuming the scheme is effective on 30 November 2020, will carry the right to be paid the 2025 final capital entitlement of 127.6111p in cash on 28 November 2025.

The issue price will be 100 pence per new ZDP share. Accordingly, if an existing ZDP shareholder were to elect for the rollover option, where there is no scaling back, they would receive 1,256 new ZDP shares for every 1,000 existing ZDP shares held on the effective date (entitlements will be rounded down to the nearest whole number).

Valid elections to participate in the rollover option were received in respect of 8,648,877 existing ZDP shares. Accordingly, as the maximum issue size was not exceeded there will be no scaling back.

27 November: Further to the announcement on 3 November 2020, the Placing closed at 1:00pm yesterday. The Company is pleased to announce that pursuant to the Placing, PMGR Securities 2025 plc has raised a total of £3.35m from new ZDP shareholders at the issue price of 100 pence. This is in addition to the Rollover elections made by the Existing ZDP Shareholders as announced on 23 November 2020.

14,217,339 New ZDP Shares in PMGR Securities 2025 plc are expected to be issued to satisfy Existing ZDP Shareholders who opted for the Rollover Option and to new ZDP shareholders who have participated in the Placing.

GLIF refinancing

The board of GLI has announced proposals for a fundraising, a refinancing of the Group’s liabilities and a restructuring of the business to focus its resources on delivering the strategy of Sancus BMS Group.

In summary:

• Proposed firm placing and open offer to raise up to £4m at 2.25p, of which £2.95m has been underwritten by Somerston Group, GLI’s largest shareholder.
• Proposed refinancing of the group’s existing bonds by way of a bond issue, with attaching warrants, of up to £15m, for which commitments of £8.2m have been received including £6m from Somerston Group.
• Proposed continuation of the group’s ZDP shares, with extension of the final capital repayment to December 2022.
• Extension of, with potential further extension and increase to, the group’s credit facility with Honeycomb Investment Trust (“HIT”).

The ZDP maturity date is currently 5 December 2020, on which date the holders of ZDP shares are entitled to receive 141.152p for each ZDP share that they hold.

If the proposals are adopted, the ZDP shares:

• will have a repayment date of 5 December 2022;
• are intended to provide ZDP shareholders with a level of capital growth at a rate of 8 per cent. per annum;
• subject to the company having sufficient assets at the time to satisfy the solvency test set out under Guernsey company law, will carry the right to be paid the 2022 final capital entitlement of 164.64 pence in cash on 5 December 2022; and
• will continue to benefit from the protection afforded by the Cover Test.

October 2020

With less than two months to go before the final expiry of the Geiger Counter and Golden Prospect subscription shares, Geiger Counter’s are well out of the money – the ordinary share price would need to rise by more than 50% before the subscription shares would be worth exercising. Geiger Counter’s shares are trading on a premium. It seems unlikely that the subscription shares will be worth anything. By contrast, Golden Prospect’s share price is 58p – quite a way north of the exercise price of 46.14p. In addition, its shares are trading on a sizeable discount. Golden Prospect has a decent chance of expanding by £13.1m, adding 40% to its market cap. This seems like a well-deserved opportunity for a trust that is the fourth best-performing over a year (up 79% over 12 months ended 1 October).

UIL says that £60.4m (representing the redemption price of 154.9p per 2020 ZDP Share in respect of the 39.0m 2020 ZDP Shares in issue) has been transferred to the company’s registrars and CREST agent, Computershare Investor Services PLC. This will enable settlement of redemption monies on Friday 30 October 2020. Trading in the 2020 zeros was halted on the morning of 29 October.

July 2020

Further to its announcement of 12 June 2020, EJF Investments announced that it had raised gross proceeds of £6.0m  by placing 6,000,000 new zero dividend preference shares at a price of 100 pence per 2025 ZDP share. The 2025 ZDP shares have a gross redemption yield of 7.0%, with a final capital entitlement of 140 pence per 2025 ZDP share on the repayment date of 18 June 2025. The 2025 ZDP Shares will have an initial cover of 16 times and a final cover of at least 12 times. The minimum cover amount for the 2025 ZDP Shares will be 3.33 times and the dividends minimum cover amount for the 2025 ZDP Shares will be 2.0 times.

June 2020

EJF Investments has convened an EGM to approve the issue of its new 2025 zero dividend preference shares. The meeting is being held on 16 June. A copy of the circular is available here.

May 2020

EJF Investments is considering a new issue of zeros – “to raise additional capital for a target Investment, created through what the manager believes to be a current market dislocation, expected to produce an attractive return and be accretive to the company’s NAV.

Subject to market conditions and there being sufficient investor appetite for the new ZDP Shares at agreeable terms, the company would seek to raise approximately £6.0 million through the issue of the new ZDP shares with a proposed gross redemption yield of circa. 5.75% and a maturity of approximately five years. The issue of the new ZDP shares will rank behind the company’s existing 2022 ZDP Shares in the event of a winding-up of the company. The issue would be subject to shareholder approval by ordinary resolution to be considered at a general meeting.”

NAV’s have recovered some of the falls from last month. Some trusts that publish NAVs infrequently are playing catch up however. RM Secured lending was one of these but its zeros are still well-covered.

April 2020

Markets have been crashing and there have been some big moves in NAVs and therefore asset covers for zeros. The UK small cap trusts are amongst the worst affected by this. It is worth bearing in mind that some of the trusts in the sheet do not publish NAVs more than once a month, if that. The figures for GLI Finance, EJF, JZ Capital and NB Private Equity are out of date.

JZ Capital announced that its secondary sale of interests in US private equity investments has been delayed. Perhaps this wasn’t a surprise but it puts a spanner in the works for the trust’s attempts to shore up its balance sheet in the wake of its property write offs.

February 2020

UIL announced that it was selling its largest investment. The deal does not have much effect on the NAV, however and so ZDP covers are little changed.

January 2020

JZ Capital clarified the reasoning behind its 90 cent per share write down in the value of its property exposure when it announced its NAV on 20 December 2019: “Currently, the Borrower, in which JZCP is an investor, is in negotiations with the Lender on the Design District assemblage to sign a non-binding term sheet for a Forbearance Agreement, which will relieve the Company of more than $30 million in expected carrying costs for the Design District in late 2019 and calendar year 2020. The Borrower is contemplating signing a non-binding term sheet by December 31, 2019 and a definitive Forbearance Agreement by late January 2020. As currently contemplated, the Lender will take approximately 40-60% of the equity of the Borrower upon execution of the Forbearance Agreement. Although no term sheet or definitive agreement has been executed, the Board has decided to take an approximate 50% markdown as of November 30, 2019 against JZCP’s equity value in the Design District as of August 31, 2019, in anticipation of entering into this Forbearance Agreement. A markdown of this nature was contemplated within the range included in the announcement made by the Company on October 30, 2019. Alongside the Lender, the Borrower contemplates attempting to sell the property with an ultimate anticipated sale date by the end of Q2 2020.”

The asset values of Aberforth Split Level, Acorn Income and Chelverton UK Dividend all leapt on the Tory election win, improving the cover on their zeros.

December 2019

On 2 December, Fidelity Asian Values announced that it had issued 3,081,455 shares at 392.75p in connection with the exercise of its subscription shares. 8,021,575 shares remain unexercised and an independent trustee will decide what happens to them. The share price and the subscription share price are very close to each other (although the shares are trading at a discount to NAV). The trustee has until 13 December to decide what to do – if it can place new shares at a price higher than the subscription share price, it will do so and give subscription shareholders the proceeds, but it won’t pay out less than £5 per holder.

Geiger Counter and Golden Prospect’s 2019 subscription share exercise opportunity were both well under water.

Anyone interested in JZ Capital’s zero dividend preference shares should read our news item from 27 November 2019.

October/November 2019

Subscription shares – Fidelity Asian Values

A number of subscription shares are due to mature on 29 November 2019. Fidelity Asian Values has unfortunately seen a sharp drop in its share price since July (trade wars and the problems in Hong Long have been weighing on the Asian market). The share price of the ordinary shares is trading very close to the exercise price (at the time of writing, the share price was just lower than the exercise price) and so it is touch and go whether many subscription shares will be exercised.

The company made this announcement: “On 2 December 2016, the Company undertook a bonus issue of one Subscription Share for every five Ordinary Shares held. The exercise price at which each Subscription Share may be converted to an Ordinary Share was set at 370.75 pence in year 1 (the published Net Asset Value of 366.88 pence plus a premium of 1%, rounded to the nearest quarter penny), 381.75 pence for year 2 (a premium of 4%, rounded to the nearest quarter penny) and 392.75 pence for year 3 (a premium of 7%, rounded to the nearest quarter penny) after which the exercise rights will expire.

Each Subscription Share confers the right, but not the obligation, to subscribe for one Ordinary Share, in the 25 Business Days preceding the last business day in November 2019.

The period to receive instructions will run from 5 November to 29 November 2019 for the third and final Annual Exercise Date, 29 November 2019. The Ordinary Shares arising on exercise will be allotted within ten Business Days of the Final Annual Exercise Date.

In the event that Subscription Shares remain unexercised following 29 November 2019, a Trustee will be appointed in accordance with the Prospectus published on 26 October 2016.

If the Trustee determines that there would be net proceeds (having taken account of the Exercise Price payable to the Company and all costs and expenses of exercise from the sale of Ordinary Shares arising on the exercise of the Subscription Rights), then the Trustee will exercise all such unexercised Subscription Rights. The Trustee will distribute the net proceeds of any such sale (after deduction of the costs and expenses) to holders of unexercised Subscription Rights by no later than 13 December 2019, save that, in accordance with the Articles of Association, aggregate entitlements per holder of less than GBP5.00 shall be retained for the benefit of the Company.”

Subscription shares – Geiger Counter and Golden Prospect

Both Geiger Counter and Golden Prospect subscription shares are well underwater for the exercise opportunity at end November.

GLI Finance

GLI Finance announced on 21 October that it would ask its zero dividend preference shareholders for an extension to the maturity date from 5 December 2019 to 5 December 2020. The final repayment amount would be adjusted to give ZDP holders an 8% return in their final year (up from 5.5%).

We reproduce the key part of the announcement here:

“The Company announced in its interim report for the period to 30 June 2019 that there will likely be a near term funding gap in relation to the 2019 Final Capital Entitlement due on 5 December 2019 as certain loans made by the Group are expected to be repaid later than their contractual maturity. As at the date of this announcement, the 2019 Final Capital Entitlement is approximately GBP16.8 million.

The Company has been focussed on the repayment of the ZDP Shares and the Group continues to sell down its on-balance sheet loan exposure and seeks to generate cash through business activities. The Group’s net assets at 30 June 2019 were GBP44.0 million and, excluding goodwill, were GBP21.1 million.

The Board must consider the interests of all Shareholders and does not believe that it is appropriate to liquidate a significant proportion of the Company’s assets in order to meet the 2019 Final Capital Entitlement. Accordingly, the Board expects that the Company will not have sufficient cash resources to pay the 2019 Final Capital Entitlement in full in a manner that would satisfy the solvency test set out under Guernsey company law.

Given the resultant liquidity mismatch of the Group’s loan book maturity profile and the 2019 Final Capital Entitlement due on 5 December 2019, the Board is proposing that the Group continues its process of selling down its loan exposure to raise cash, with the intention of using this cash (a) in the short term to effect a Tender Offer for ZDP Shares as described in further detail below, and (b) in the medium term to satisfy the Final Capital Entitlement of the ZDP Shares on an extended timeframe and to restart the Company’s ZDP Share buyback programme, and (c) generally, to fund and develop the Group’s business in the interests of Shareholders as a whole.

The Company has engaged with major holders of both ZDP Shares and Ordinary Shares, and consulted with its advisers, in considering alternative proposals to enable the Company to satisfy the Final Capital Entitlement in a manner that is most beneficial to the Company and its Shareholders as a whole. The Board has determined that the Proposals offer the most equitable and effective solution.

The Board therefore proposes that the life of the ZDP Shares be extended such that they carry the right to receive the 2020 Final Capital Entitlement of 141.152 pence per ZDP Share on 5 December 2020 (being the date falling 12 months after the current ZDP Share Maturity Date). This Final Capital Entitlement has been calculated to represent an increase in the return on the issue price of the ZDP Shares from 5.5 per cent. per annum to 8 per cent. per annum, with such increase being effective from 6 December 2019.

If Shareholders vote in favour of the Continuation and the Proposals are implemented, the Board intends to announce details of a Tender Offer for ZDP Shares in or around February 2020, to complete on or around 5 March 2020, being three months from the current Maturity Date of the ZDP Shares.

It is intended that the Tender Offer be made by the Company to all ZDP Shareholders for the purchase of ZDP Shares, on a pro rata basis amongst ZDP Shareholders, at a price per ZDP Share equal to the then accrued capital entitlement per ZDP Share calculated in accordance with the New Articles. The Board intends that the Tender Offer will be for between 25 per cent. and 50 per cent. of the ZDP Shares then in issue (excluding ZDP Shares held in treasury). The Board intends that the Tender Offer will include an option for ZDP Shareholders who so elect to receive GLI Bonds rather than cash in satisfaction of the relevant tender price.

The Continuation requires the approval of Ordinary Shareholders at a class meeting of Ordinary Shareholders, the approval of ZDP Shareholders at a class meeting of ZDP Shareholders, and the approval of Ordinary Shareholders and ZDP Shareholders at an extraordinary general meeting. The Circular is accompanied by forms of proxy for shareholders to vote at the relevant meeting(s).

In the event that Shareholders do not vote in favour of the Proposals at the Meetings, then the terms of the ZDP Shares will remain unchanged. Accordingly, the return on the issue price of the ZDP Shares would remain at 5.5 per cent. per annum and the Company would be required to pay the 2019 Final Capital Entitlement on 5 December 2019. As stated above, the Board expects that the Company will not have sufficient cash resources to pay the 2019 Final Capital Entitlement in full in a manner that would satisfy the solvency test set out under Guernsey company law. In the event that the Company is required to pay the 2019 Final Capital Entitlement and has insufficient cash resources to lawfully do so then, in accordance with the Existing Articles, the Company shall redeem such number of ZDP Shares (on a pro-rata basis amongst ZDP Shareholders) as it is lawfully able to redeem on 5 December 2019, and thereafter shall redeem further ZDP Shares in tranches (on a pro-rata basis amongst ZDP Shareholders) as and when it is lawfully able to do so. In such circumstances, the Board considers that there may be an adverse reaction amongst the Group’s loan funder network, which may disrupt the Company’s operations and prejudice the ability of the Group to effectively pursue its lending business. The Board considers that such a situation would pose a material risk to the financial and trading position of the Group.”

Result of meetings

“All resolutions proposed at the class meeting of Ordinary Shareholders, the class meeting of ZDP Shareholders and the extraordinary general meeting held earlier today were duly passed.

September 2019

GLI Finance has published its interim results for six months ended 30 Jun 2019 and they do not make good reading. The NAV has fallen again but more importantly for ZDP holders, there isn’t enough free cash to repay the zeros when they fall due. The statement says “The repayment of our ZDPs on 5 December 2019 remains at the forefront of our mind and we have made good progress acquiring those which have become available in the market over the last 12 months. We have spent GBP9.4m on buybacks up to the date of this report with a total of 7.9m ZDP shares now held by the Group. This has reduced the ZDP liability to GBP16.8m at the end of August 2019. Whilst we are focussed on selling down our on-balance sheet loan exposure and using cash assets, there will likely be a near term funding gap as loans take longer to repay. We have been exploring several options to fund this potential gap. This includes letting a portion of the ZDPs run past the scheduled repayment date and repaying the liability as liquidity becomes available to enable the Company lawfully to redeem the ZDPs, which although contemplated by the Company’s articles of incorporation and the ZDP prospectus, is not our preferred route. We have engaged with the major ZDP holders and are looking into the potential extension of the current ZDPs for a further year with a coupon of 7% or issuing further Bonds under the current Bond instrument.

Taking into account the varying possible outcomes of factors and assumptions listed above, these constitute a material uncertainty that may cast significant doubt over the Company’s and Group’s ability to continue as a going concern, such that it may be unable to release its assets and discharge its liabilities in the normal course of business. The Directors expect that if they are able to action the mitigations being considered above, the material uncertainties will be extinguished.”

The ZDPs that GLI Finance has bought back to date have been acquired at less than their NAV, enhancing GLI’s NAV. However, a significant proportion of the NAV relates to the goodwill attributed to the group’s investments in two Sancus companies (Jersey and Gibraltar – totalling £22.9m) and the rump of the fintech portfolio (£8.7m).

August 2019

RM Secured Direct Lending is exploring raising additional money by issuing more shares – this would increase the cover on the zero dividend preference shares – read more here.

JZ Capital is holding a tender offer for 5% of its shares, shrinking the asset cover for its zeros – read more here.

July 2019

On 20 June, RDL Realisation announced that “the company is pleased to note the announcement by ZDP Co that the resolutions proposed at the ZDP Class Meeting and the General Meeting of ZDP Co held earlier today were duly passed.” The effect is that the ZDPs have been redeemed early at 121.887 pence per ZDP Share and they have been removed from the splits sheet.

June 2019

RDL Realisation announced on 3 June a proposal to bring forward the winding up of its subsidiary, ZDP Co to 20 June 2019. ZDP Shareholders would receive a final capital entitlement ranging between 121.7652p and 121.8887p (increasing each day between 4 June 2019 and 19 June 2019), instead of 115.1433p which would have been the ZDP NAV on 20 June. The proposal needs approval by ZDP shareholders at a class meeting to be held on 20 June 2019. The company and ZDP Co have received undertakings to vote in favour of the resolutions to be proposed at the ZDP class meeting from holders of approximately 64.5 per cent. of the total number of ZDP shares in issue. The company does not propose to vote the 7,278,193 ZDP shares held by it (13.7% of the total number of ZDP Shares in issue).

RDL announced results on 18 June 2019. The NAV is 588p – our estimate used in the splits sheet was 590.1p.

April 2019

RDL Realisation published a statement on 26 April to the effect that a large shareholder has been approaching zero holders to find out what price they would be prepared to sell out at. “the company understands that the highest price that has been proposed by the relevant ordinary shareholders to the relevant holders of ZDP Shares is 120.75p per ZDP Share. The company also understands that, in response, some holders of ZDP Shares (although not a sufficient number to successfully implement a transaction) have indicated a willingness to agree at a price as low as 122p per ZDP Share (together with reimbursement of costs incurred by them). The company has also been informed that these discussions have included a proposal that a representative of a significant ordinary shareholder who has been involved in these discussions might request to be appointed to the board of the company to facilitate the implementation of any agreed outcome.”

March 2019

Raven Property’s remaining warrants expired during the month and have been delisted. We believe that most of the outstanding warrants were exercised in the weeks running up to the expiry.

January 2019

Ranger Direct Lending has announced a second special dividend of 145p per share – the ex dividend date is 3 January 2019 and the pay date 18 January. This will reduce the cover on its zero dividend preference shares.

Regional REIT has announced that its wholly owned subsidiary, Regional REIT ZDP plc, has paid c. £39.9m to the holders of the 6.5% Zero Dividend Preference shares for their final capital entitlement, which matured on 9 January 2019. Following this payment to the 6.5% Zero Dividend Preference shareholders, the company’s weighted average cost of borrowing, including hedging costs, has reduced to c.3.5% from c.3.8%. In addition, its unexpired average debt term has been extended to c. 7.1 years from c. 6.4 years.

December 2018

Ranger Direct Lending has offered holders of its ZDP shares 116p in cash per zero dividend preference share. The offer will be conditional on receiving acceptances of at least 61% (approximately 32m ZDP Shares). The 13.73% of ZDP shares already owned by the company are excluded from this calculation. If the deal goes through, the company plans to pay for the shares before 31 December 2018. [QD comment: 116p is well above the 112.1p value of the Ranger ZDPs at the end of November and would represent a transfer of value from the ords to the zeros of about £1.25m on the full 32m ZDPs or about 7.9p per share off the Ranger Direct Lending ordinary share NAV.]

The first tranches of the subscription shares issued by both Geiger Counter and Golden Prospect Precious Metals look to have expired worthless.

The second exercise of the Fidelity Asian subscription shares may see some sub shares exercised as these were in the money – we should get an announcement shortly.

November 2018

Ranger Direct Lending says that its ZDP committee has had initial discussions with the board of Ranger Direct Lending ZDP plc and received feedback from holders of the zero-dividend preference shares.

The ZDP committee remains of the view that:

• implementing a managed and orderly disposal of investments will maximise the value to be realised on the sale of the company’s assets and, at the same time, reduce the risk that the value of the assets will be impaired.
• the process will maximise the proceeds available to meet the company’s obligations to Ranger Direct Lending ZDP and the company’s shareholders.
• the steps being taken in the realisation of the investments would be permitted by the existing investment policy, so do not represent a change from the existing policy. However, the Board considered it appropriate to formally adopt an amended investment policy.

In order to take account of the views of the holders of ZDP shares, members of the ZDP committee have offered to meet with a group of holders of ZDP shares during the week commencing 19 November 2018 to discuss with them the appropriate framework for dealing with ZDP shares in the context of winding-down the investment portfolio.

(you can access earlier comments here)

Ranger Direct Lending has declared a special dividend of 85p per share (ex dividend 1 November and payable 8 November). This will reduce the cover on its zeros.

Fidelity Asian Values has issued a reminder to investors of its upcoming subscription share exercise opportunity (30/11). Its shares are trading at a small discount to the exercise price (following the steep falls in Asian markets), however.

Utilico Finance ZDP 2018 was due to mature on 31 October 2018. UIL already issued a new class of zeros in April 2018 due for repayment in 2026. On 22 October UIL announced that 20m 2024 UIL Finance zeros that it owned (effectively lending money to itself, as UIL Finance is a wholly owned subsidiary of UIL) had been cancelled. At the same time, 823,564 2018 UIL Finance zeros held by UIL were also cancelled. The UIL Finance ZDP 2018 matured on 31 October 2018 and so the balance of these shares has now expired and these zero holders have paid in full. As a result of these transactions, UIL and UIL Finance’s share capital comprises 89,493,389 ordinary shares, 39,000,000 2020 ZDP Shares, 50,000,000 2022 ZDP Shares, 30,000,000 2024 ZDP Shares and 25,000,000 2026 ZDP Shares.

October 2018

Ranger Direct Lending says that it anticipates being in a position to commence capital returns to holders of ordinary shares in the company in the coming months.  In addition, it has commenced discussions with holders of the zero dividend preference shares. The documents that established the ZDPs did not provide a mechanism specifically designed to implement a winding down of the company. At this stage, the company has indicated to holders of ZDP Shares a willingness to pay amounts of between 112.5p and 113.5p per ZDP Share. The dialogue with holders of ZDP Shares and any acquisitions of ZDP Shares by the company may or may not lead to an offer being made by the company to acquire all of the ZDP Shares. The company would expect to exercise the voting rights of any ZDP Shares acquired by it to vote against any Continuation Resolution (as defined in the Ranger ZDP Articles) if a vote on such a resolution is triggered. [QD comment: RDL subsequently announced that it had purchased 5,738,000 ZDP shares – 10.83% of those outstanding. It may go on to acquire more over the coming weeks and months.]

September 2018

The board of Ranger Direct Lending has formed a new sub committe, to be called the ZDP Committee, to analyse, consider and implement actions with respect to its subsidiary Ranger Direct Lending ZDP plc and their zero dividend preference shares. The ZDP Committee consists of Dominik Dolenec, Brett Miller and Gregory Share. For clarity, the ZPD Committee excludes any directors of Ranger ZDP which at the date of this meeting are Brendan Hawthorne and Jonathan Schneider. [QD comment: this looks like the first step in what might be the board exploring ways of redeeming the zeros early – as a way of expediting the wind up of the parent company.]

July 2018

There were no new issues or maturities in July but we have added RM Secured Lending’s zeros to our sheet – apologies these were issued back in April.

Chelverton Small Companies Dividend Trust became Chelverton UK Dividend Trust (ticker unchanged from SDV) on 14 June 2018.

Shareholders forced a change of Ranger Direct Lending’s board and the trust will now wind up

June 2018

There were no new issues or maturities in June.

NB Private Equity has successfully launched a £50m new issue of zeros due for redemption on 30 October 2024. The gross redemption yield of the 2024 ZDP Shares was determined by way of a book-build. Potential investors were asked to indicate the number of 2024 ZDP Shares they wish to acquire at different GRYs, ranging between 3.25 per cent. and 4.25 per cent. (in five increments of 0.25 per cent. each), or at the strike GRY. The GRY was set at 4.25%, the upper end of the scale. The new ZDPs have a final capital entitlement of 130.63p.

Raven Property Group (RAV) changed its name from Raven Russia (ticker RUS) on 4 June 2018.

May 2018

Chelverton Small Companies Dividend issued more of its 2025 ZDPs, taking the total in issue to 14.2m.

UIL issued a new tranche of zeros that will mature at the end of October 2026. The 25m zeros have an initial GRY of 5%, an issue price of 100p and a final entitlement on maturity of 151.5p.

April 2018

All warrants and subscription shares saw their values fall in March. However, the two largest fallers are Geiger Counter’s subscription shares and Raven Russia’s warrants (down 14.5% and 14.3% respectively). While the impact of US sanctions on Raven Russia is more obvious, Geiger Counter may also be a victim of US protectionism. Utility purchases of uranium have been limited this year,  following a petition by two US producers seeking protective support against subsidised uranium imports. This could impact US utilities ability to source material from Kazakhstan or Russia, with uranium equities being subdued as a result.

March 2018

Utilico Emerging Markets subscription shares have reached their final exercise date. On I March, Utilico Emerging Markets said that it has received applications from holders of subscription shares to exercise the rights attaching to their shares and to subscribe for 20,456,514 ordinary shares of 10 pence each in the capital of the company.

At 1 March, 8,408,951 subscription shares remain outstanding and have not had their rights exercised. In accordance with the terms and conditions on which the subscription shares were issued, the company has appointed a trustee over the outstanding subscription shares. Provided that, in the trustee’s opinion, the net proceeds of sale (after the deduction of all costs and expenses incurred) will exceed the costs of subscription, the trustee shall exercise all or a proportion of the subscription shares which have not been exercised and sell in the market the resulting ordinary shares for the benefit of the holders. All rights attaching to the subscription shares which are not exercised by the trustee by 14 March 2018 shall lapse on that date. A further announcement will be made in respect of the trustee’s decision in due course.

The bid for Taliesin Property has completed and the shares and zeros left AIM on 27 February.

JPMorgan Income & Capital announced that it received elections that equates to a rollover of in excess of £80m into the new investment trust, JPMorgan Multi-Asset Trust plc (“MATE”).

                                         Elections from                 Elections from     Elections from
Scheme Option         Ordinary Shareholders    ZDP Shareholders     Unitholders

New MATE Shares          31,421,094                    14,393,951                5,737,747

Cash Option                     23,649,526                    25,475,168               1,005,334

February 2018

Investors in JPMorgan Income & Capital have been offered the chance to rollover their investment into a new fund, JPMorgan Multi-Asset Trust. You can read more about the rollover offer here and we have also written a note that explains in detail how JPMorgan Multi-Asset Trust aims to achieve its 6% per annum with lower vitality than an equity portfolio objective.

January 2018

Taliesin Property is the subject of an agreed bid for the company. Upon the acquisition becoming effective, Taliesin is required to initiate a process of offering an early repurchase of the ZDP Shares which the holders of the ZDP Shares may either accept or reject. You can read more here.

Chelverton Small Companies Dividend is in the throes of issuing a new ZDP – to be traded as SDV 2025 ZDP – with a maturity date in 2025 and a 4% initial GRY. This was offered as a rollover for the zeros that mature on 8 January. Holders of 8,030,547 existing ZDP shares accepted the rollover offer resulting in 10,977,747 new ZDP shares being issued and a further 1,802,336 were placed. Trading in the new shares commenced on 8 January.

Artemis Alpha’s subscription shares came to the end of their life on 31 December 2017. The exercise price was 345p and the share price on the last trading day in December 300p and so it seems unlikely that any will be exercised. The subscription shares are suspended from trading pending an announcement.

Golden Prospect Precious Metals has announced a 1 for 2 bonus issue of subscription shares. These can be exercised on 30 November 2018, 2019 and 2020. The exercise price rises over time so that it will be 5% above the level of the NAV on the close of business on 20 December 2017 for the 2018 exercise, 10% above for the 2019 exercise and 20% above for the 2020 exercise. Shareholders approved the issue at a meeting to be held on 20 December.

December 2017

EJF Investments issued 15m zeros at £1 which started trading on 1 December. these had a GRY at launch of 5.75% and are repaid on 30 November 2022.

Geiger Counter has announced a 1 for 2 bonus issue of subscription shares to qualifying shareholders on the register on 13 December 2017. These can be exercised on 30 November 2018, 2019 and 2020. The exercise price rises over time so that it will be 5% above the level of the NAV on the close of business on 13 December 2017 for the 22018 exercise, 10% above for the 2019 exercise and 20% above for the 2020 exercise. Shareholders are being asked to approve the issue at a meeting to be held at noon on 13 December. Golden Prospect Precious Metals, a fund in the same stable as Geiger Counter, has followed suit with an issue of subscription shares on exactly the same terms.