Blackstone Loan Financing Limited Results of Shareholder Consultation (2976T)
17 Mars 2023 - 8:00AM
UK Regulatory
TIDMBGLF
RNS Number : 2976T
Blackstone Loan Financing Limited
17 March 2023
17 March 2023
Blackstone Loan Financing Limited
(the "Company")
Results of Shareholder Consultation
On 26 January 2023, the Company announced it would undertake a
shareholder consultation on potential policy amendments in light of
the prevailing and persistent discount to net asset value ("NAV")
at which the Company's shares trade and with a view to broadening
investor interest in the Company's shares and maximising
shareholder total return. Since that announcement the Board, the
Investment Adviser and/or the Company's joint financial advisers
and brokers have consulted with shareholders and incorporated the
view of Blackstone, which together represent 78% of the share
capital of the Company.
The shareholder consultation set out to cover the following
topics: reinvestment/distribution of excess net income including
expanding the Company's remit to enable direct primary market
investment and a potential exit opportunity. During the
consultations the topic of the Company's NAV valuation methodology
was also discussed. This announcement covers the results of the
shareholder consultation and a summary of proposals.
Reinvestment/Distribution of Excess Net Income
In general, the shareholders consulted were comfortable with the
current approach taken to the allocation of excess net income
between reinvestment, dividend distribution and share buybacks. It
was however recognised that there are times when reinvestment by
the Company into BCF may be unattractive but direct investment in
primary market CLOs managed and controlled by the Investment
Adviser may still be attractive. At present the Company is unable
to make such direct investments. The Board believes such
flexibility to be in the interests of shareholders and will propose
a change to the Company's investment policy to allow such
investment to be put forward at the time of the Company's Annual
General Meeting ("AGM") expected to be held in July. Further
details will be set out in the Notice of AGM.
Potential Exit Opportunity
The shareholder consultation discussed various potential exit
opportunities. There was variation in feedback with no consensus
whether such an exit opportunity should be offered. In general,
there was no consensus for the creation of a run-off share class to
sit alongside a continuing share class given the potential reduced
liquidity of both such share classes. There was some appetite, but
not consensus, for the entire fund being placed into run off.
As at 31 January 2023, 67% of the Company's assets were in CLO
securities which must be held to maturity under EU retention
regulations. Any run-off of the Company, in whole or part, would
therefore take place over a number of years as the portfolio
matures. There was concern from a number of shareholders that the
slow decline of the Company's asset base over such an extended
timeframe may reduce shareholder liquidity.
The Board and its advisers have evaluated shareholder feedback,
considered these issues at length and sought to balance various
views whilst cognisant of the evergreen nature of the Company. In
summary, the Board does not currently believe that an immediate
exit opportunity would be in the best interests of the Company and
shareholders as a whole. The Board will continue to monitor the
situation and consult with shareholders, and if there is no
significant improvement in the discount the Board will consider
putting forward a continuation vote alongside the AGM in 2024. In
the period between now and the 2024 AGM, the Board will continue to
use all tools at its disposal, principally its buyback policy, in
an effort to mitigate the discount while taking into account the
market environment for CLOs.
Valuation Methodology
At the Initial Public Offering of the Company in July 2014 the
Company adopted a mark to market valuation methodology for all its
assets. In the March 2016 Placing Programme prospectus the
valuation methodology for CLO equity tranches was amended to that
of mark to model. During the shareholder consultation a number of
shareholders expressed concern that the mark to model approach,
whilst reflective of the hold to maturity nature of retention
assets, was not a good benchmark for assessing current market risk
and therefore whether the Company's shares are trading at discount
or premium to the risk of the underlying assets. The Board is
considering these points and believes there is merit in adopting a
mark to market valuation methodology at a time when the NAV derived
from both methodologies are broadly aligned. The Company will make
a further announcement at the time of any change in valuation
approach.
The Board thanks all those shareholders it was able to consult
with for their time.
The information contained within this announcement constitutes
inside information.
The person responsible for arranging for the release of this
announcement on behalf of the Company is Priya Mooroogen of BNP
Paribas S.A., Jersey Branch, Company Secretary.
Enquiries:
Blackstone Loan Financing Limited via BNP Paribas
Charlotte Valeur, Chair
BNP Paribas 01534 709189 / 813967
Singer Capital Markets
James Maxwell / Alaina Wong (Corporate
Finance)
Alan Geeves / Sam Greatrex (Sales) 020 7496 3000
Winterflood Investment Trusts
Neil Langford (Corporate Finance)
Darren Willis (Sales) 020 3100 0000
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END
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