HWSI Realisation Fund Ltd Net Asset Value(s) (8033L)
May 04 2020 - 4:24AM
UK Regulatory
TIDMHWSL TIDMHWSC
RNS Number : 8033L
HWSI Realisation Fund Ltd
04 May 2020
HWSI Realisation Fund Limited
(the "Company")
Net Asset Value and Investment Update
NAV
The Company announces that the unaudited cum-income net asset
value per Ordinary Share as at 31 March 2020 was 61.20 pence, after
deducting the 19 pence per share capital distribution by way of B
share issue and redemption that was announced on 31 March. The
Ordinary Shares went ex the entitlement on 6 April. Prior to
deducting the capital distribution the net asset value per Ordinary
Share cum income would have been 80.20 pence.
Investment Update
Shareholders will recall that in the Company's announcement
dated 27 March 2020, the Board, the Investment Manager and
Hadrian's Wall Capital (the "Investment Adviser") acknowledged that
Covid-19 was likely to have a detrimental effect on portfolio
investments. The spread of Covid-19 and the associated impact on
economic activity has led to significant volatility in both the
equity and debt capital markets, as well as to other market
indicators such as interest rates and forecast inflation. Whilst
the net asset value as at 29 February 2020 was published at a much
earlier stage of the pandemic, the situation remains fluid and it
is the Investment Adviser's and the Board's view that it is not
possible to estimate with any certainty the impact of Covid-19 on
the portfolio at this time. Nevertheless, there have been a number
of specific developments in the portfolio and a number of requests
for forbearance have been received from the Company's
borrowers.
Forbearance requests are being dealt with on a case-by-case
basis. In each case the Investment Adviser is working closely with
borrowers to:
1. Help them survive this pandemic and continue to be economically viable; and
2. Ensure that any forbearance tries to protect the full
economic interest of the Company (both interest and capital
protection)
At the date of this announcement, 10 Loans (representing a
cumulative total of GBP71.1m of principal outstanding loan
balances) have requested forbearance of some kind. The request for
forbearance arrangements include, but not limited to:
-- three months' deferred interest and capital payments,
-- a proportional payment of interest due based on their actual
collections as a percentage of expected collections,
-- full interest on the deployed capital and a reduced rate of
interest to be charged on the variable cash at bank in the borrower
SPV.
All forbearance requests and agreements are being reviewed on a
monthly basis or as extraordinary circumstances arise.
As a prudent measure, with very few exceptions, loans in the
portfolio have had an increase in expected losses arising from a
movement in the relevant risk category solely by virtue of the fact
that Covid-19 will have to a greater or lesser extent, an impact on
the Company's Loans and this has to be recognised. Eight borrowers
have had their risk ratings downgraded or their Expected Loss
adjusted to the full level of the Risk Category. In total the
Expected Credit Loss provision has increased by GBP2.7m (equivalent
to 1.9p per share) during the month bringing the aggregate Expected
Loss provisions to GBP28.4m.
As new facts and information come to light as to the impact of
Covid-19 on the Loans, the Board will review the need for any
additional provisioning and will keep shareholders updated on
material developments.
The Board, after due consideration and following recommendations
from the Investment Adviser, has determined that the above changes
to the IFRS9 provisions to reflect the developments in the
portfolio, caused by the uncertainties associated with the COVID-19
pandemic, are prudent.
Other portfolio developments
The Company announced on 27 June 2019 that one of the Company's
borrowers was in the process of undertaking an equity raise or
company sale. Whilst this process has been progressing, it was
originally hoped that it would conclude in the first quarter of
2020 so as to ensure full repayment of the loan at its face value
of GBP13 million, plus accrued interest. Whilst the Investment
Adviser still believes it more likely than not that the equity
raise or company sale will conclude, the timeframe for conclusion
has become more uncertain owing in part to Covid19. The IFRS 9
general loss reserve has not been adjusted on this loan, including
as a result of any Covid-19 impact (it being currently GBP2 million
plus accrued interest). Whilst the indicated valuations of the
portfolio company support a full recovery, the borrower has limited
liquidity and consequently a further delay could expose the Company
to the risk of material loss. In the circumstances, it is possible
that the borrower might request the Company to provide additional
capital for working capital purposes. The Board continues to
monitor this situation closely given the significance of this loan
in the overall position of the Company's loan portfolio.
Contact Details:
Hadrian's Wall Capital (Investment Adviser)
Ron Miao / Mike Schozer
Telephone 020 3026 8620
International Fund Management (Investment Manager)
Chris Hickling
Telephone: 01481 737600
Praxis Fund Services Limited (Administrator)
Ben Le Prevost
Telephone: 01481 755524
Winterflood Investment Trusts (Corporate Broker)
Neil Morgan
Telephone: 020 3100 0000
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END
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