UK Mortgages Ltd Tender Offer

 
TIDMUKML 
 
THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, 
RELEASE OR DISTRIBUTION (IN WHOLE OR IN PART) DIRECTLY OR INDIRECTLY IN OR INTO 
OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE 
RELEVANT LAWS OF THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A 
TAKEOVER OFFER OR AN OFFER OF SECURITIES. 
 
Capitalised terms used in this Announcement, unless otherwise defined, have the 
same meanings as set out in the Circular. 
 
28 May 2021 
 
                             UK MORTGAGES LIMITED 
 
 (a closed-ended investment company incorporated in Guernsey with registration 
                    number 60440) LEI 549300388LT7VTHCIT59 
 
          Company Update, Sale of Malt Hill No.2 and May Tender Offer 
 
Company Update and Sale of Malt Hill No.2 
 
The Board of UK Mortgages Limited ("UKML", the "Company") and TwentyFour Asset 
Management LLP ("TwentyFour") are pleased to announce that the Company has 
completed the sale of the second portfolio of loans originated by the Coventry 
Building Society that had been securitised in the Malt Hill No.2 transaction. 
 
 
When the sale of the two Coventry portfolios was first proposed to shareholders 
in late 2020, it was highlighted that an early realisation may result in a 
negative impact to the NAV, albeit this short term impact would be expected to 
be more than offset over the medium term by the combined benefits of divesting 
from a portfolio of lower yielding assets whilst buying back shares to reduce 
the Company's dividend requirement and at the same time investing in higher 
yielding assets to further boost income. 
 
As previously communicated, the improved execution that was actually achieved 
reduces that impact, but doesn't eradicate it. In accordance with the Company's 
accounting policy, the impact is reflected in a number of stages as the various 
components of the transactions are recognised. Several of those components have 
already been manifested in previous NAV releases and the remainder will flow 
through in the next two NAV announcements. 
 
These are expected to total approximately 0.25 pence per share of asset 
mark-to-market cost in the April NAV - the next to be released - which will 
also reflect the Q1 2021 dividend payment of 1.125 pence per share. This will 
be followed by approximately 2.86 pence per share in the May NAV to reflect the 
cost of the swap unwind. These will both be partially offset by the net running 
income from the Company's other investments of approximately 0.37 pence per 
share in each month and growing. Furthermore, the subsequent June NAV will also 
benefit from the likely positive impact of the ensuing share tender. 
 
Looking to the future, with the ramp-up of the second Keystone warehouse now 
running more than two months ahead of schedule and approaching target leverage, 
the growth in that portfolio will become increasingly accretive to net monthly 
income with no other exceptional outgoings expected for the rest of the year. 
Thus, once the effects of the Coventry portfolio sales are fully absorbed from 
the July NAV onwards, by which time we expect monthly income of approximately 
0.43 pence per share, dividend cover is expected to increase over the remainder 
of this year and further into 2022, with the second Keystone portfolio likely 
to be ready to securitise in Q2 at the current growth rate. This would 
represent a growth in the level of dividend cover from approximately 1x 
currently to 1.15x in July and approaching 1.5x by the end of the year; leading 
to steadily increasing NAV growth. 
 
It is also intended that once any account balancing from the Malt Hill No.2 
sale is concluded, further income may also be derived by investing committed 
capital that will not be required to be utilised until the Keystone warehouse 
grows further, into AAA rated RMBS notes in the near term, as per the Company's 
investment guidelines. 
 
The currently modelled dividend cover progression can be seen in a chart 
published on the UKML website, www.ukmortgageslimited.com. 
 
Meanwhile the rest of the portfolio continues to perform well, as detailed in 
the most recent factsheet published last week. 
 
May Tender Offer 
 
The Board previously announced in the shareholder Circular published 26 
February 2021, that they would distribute the proceeds (net of expenses and 
future commitments) of the sale of Malt Hill No. 2 through a tender offer (to 
be implemented by Numis, acting as principal) and the subsequent repurchase of 
Ordinary Shares from Numis by the Company. 
 
Having carried out a full review of the Company's liquid resources, future cash 
requirements, commitments and costs, the Board has concluded that the May 
Tender Offer will comprise a capital return of £20,000,000. 
 
Tender Price 
 
The May Tender Offer will take place by way of a tender offer and associated 
repurchase of up to 13.0 per cent. of the Ordinary Shares at a price of 75p per 
Ordinary Shares, which represents a 7.0 per cent. discount to the net asset 
value per Ordinary Share of the Company as at the Latest Practicable Date. 
 
The number of Ordinary Shares to which the Tender Offers will apply 
 
The number of Ordinary Shares subject to the May Tender Offer (and the 
associated Repurchase) is 26,666,666 which is calculated by dividing £ 
20,000,000 by the Tender Offer Price and rounding down to the nearest whole 
number. This is 13.0 per cent. of all Ordinary Shares in issue as at the Latest 
Practicable Date, which represents the "Basic Entitlement" under the Tender 
Offer and each Qualifying Shareholder is entitled to tender a percentage of 
their holding equal to (or less than, if they so choose) the Basic Entitlement. 
By way of example, the Basic Entitlement of a Qualifying Shareholder with 100 
Ordinary Shares would be 12 Ordinary Shares. Qualifying Shareholders will also 
be entitled to apply to tender Ordinary Shares above their Basic Entitlement, 
which, may be satisfied on a pro rata basis to the extent that other Qualifying 
Shareholders do not tender up to their respective Basic Entitlements. 
 
Expected Timetable 
 
Announcement of May Tender                                              28 May 2021 
Offer 
 
May Tender Offer                                                        28 May 2021 
opens 
 
Latest time and date for receipt of Tender Forms and    1.00 p.m. on 21st June 2021 
TTE Instructions in CREST from Shareholders in 
relation to the May Tender Offer 
 
May Tender Offer Record Date                            6.00 p.m. on 21st June 2021 
 
Announcement of the results of the May Tender Offer                  22nd June 2021 
 
Cheques despatched and payments through CREST made                   29th June 2021 
and CREST accounts settled 
 
Balancing share certificates despatched               week beginning 29th June 2021 
 
 
Notes: 
 
1. References to times above and in the Circular generally are to London time 
unless otherwise specified. 
 
2. All times and dates in the expected timetable and in the Circular may be 
adjusted by the Company. Any changes to the timetable will be notified via an 
RIS. 
 
Enquiries: 
 
UK Mortgages Limited 
Christopher Waldron (Chairman)               020 7260 1000 
 
Numis Securities Limited, Financial Adviser and Corporate Broker 
Hugh Jonathan                                           020 7260 1000 
Nathan Brown 
 
Important notice 
 
This announcement is not intended to and does not constitute an offer to buy or 
the solicitation of an offer to subscribe for or sell or an invitation to 
purchase or subscribe for any securities or the solicitation of any vote in any 
jurisdiction. The release, publication or distribution of this announcement in 
whole or in part, directly or indirectly, in, into or from certain 
jurisdictions may be restricted by law and therefore persons in such 
jurisdictions should inform themselves about and observe such restrictions. 
 
Numis Securities Limited ("Numis"), which is authorised and regulated in the 
United Kingdom by the Financial Conduct Authority, is acting exclusively for UK 
Mortgages Limited and no one else in connection with the matters set out in 
this announcement and will not regard any other person as its client in 
relation to the matters in this announcement and will not be responsible to 
anyone other than UK Mortgages Limited for providing the protections afforded 
to clients of Numis, nor for providing advice in relation to any matter 
referred to herein. 
 
Forward looking statements 
 
This announcement, oral statements made regarding the Proposal, and other 
information published by the Company may contain statements which are, or may 
be deemed to be, "forward-looking statements". Forward-looking statements are 
prospective in nature and are not based on historical facts, but rather on 
current expectations and projections of the management of The Company about 
future events, and are therefore subject to risks and uncertainties which could 
cause actual results to differ materially from the future results expressed or 
implied by the forward-looking statements. Often, but not always, 
forwardlooking statements can be identified by the use of forward-looking words 
such as "plans", "expects" or "does not expect", "is expected", "is subject 
to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" 
or "does not anticipate", or "believes", or variations of such words and 
phrases or statements that certain actions, events or results "may", "could", 
"should", "would", "might" or "will" be taken, occur or be achieved. Although 
The Company believe that the expectations reflected in such forward-looking 
statements are reasonable, The Company can give no assurance that such 
expectations will prove to be correct. By their nature, forward-looking 
statements involve risk and uncertainty because they relate to events and 
depend on circumstances that will occur in the future. There are a number of 
factors that could cause actual results and developments to differ materially

from those expressed or implied by such forwardlooking statements. Such 
forward-looking statements should therefore be construed in the light of such 
factors. Neither The Company, nor any of its associates or directors, officers 
or advisers, provides any representation, assurance or guarantee that the 
occurrence of the events expressed or implied in any forward-looking statements 
in this announcement will actually occur. You are cautioned not to place undue 
reliance on these forward-looking statements. Other than in accordance with its 
legal or regulatory obligations (including under the Disclosure Guidance and 
Transparency Rules of the FCA), the Company is under no obligation, and 
expressly disclaims any intention or obligation, to update or revise any 
forward-looking statements, whether as a result of new information, future 
events or otherwise. 
 
Publication on website and availability of hard copies 
 
Copies can be downloaded from the Company's website: 
 
https://twentyfouram.com/en/funds/uk-mortgages-fund/ 
 
 
 
END

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