Hadrian's Wall Secured Invs.Ltd Portfolio Update (8986K)
19 December 2018 - 6:01PM
UK Regulatory
TIDMHWSL TIDMHWSC
RNS Number : 8986K
Hadrian's Wall Secured Invs.Ltd
19 December 2018
19 December 2018
Hadrian's Wall Secured Investments Limited
Portfolio Update
Further to the note in the annual report and accounts for
Hadrian's Wall Secured Investments Limited (the "Company") for the
year ended 30 June 2018, the board of the Company (the "Board")
notes that Arensis Energy Ltd, Entrade Energy Ltd and Arensis
Energy One Ltd (each a "Borrower" and together the "Group"), with
the knowledge of the Company's investment adviser, Hadrian's Wall
Capital Limited (the "Investment Adviser"), entered administration
proceedings on 15 October 2018. At such time, it was not
anticipated that the administration proceedings would have a
negative impact on the valuation of the Company's investment in the
Group, nor on the Company's ability to meet the dividend target on
the Ordinary Shares, and this continues to be the case.
The Company (through its subsidiaries) has a loan and hire
purchase arrangement in place with the Group, which is attributable
to the portfolio of the Company's ordinary shares (the "Ordinary
Shares") and, as at 13 December 2018, represented a principal
amount of GBP13.0m.
The Group is a leading wood pellet manufacturing business,
representing approximately 30% of UK production, and benefitting
from long-standing customer arrangements. The Company is the first
ranking secured creditor to the Group, with security over all of
the assets of the Group including, without limitation, the Group's
manufacturing facilities and equipment, and owns the equipment
hired to the Group under the hire purchase arrangement.
The Group experienced a working capital shortfall and did not
have sufficient funds to complete certain capital improvement
projects, which are expected to generate significant long-term
inflation-linked income streams, such that it was necessary for the
Group to enter administration. Administration has provided a more
stable and orderly framework within which to hold discussions
between the key stakeholders to seek to resolve the Group's
critical working capital issues, which the Investment Adviser
believes should result in the Company ultimately realising the full
amount of its investment.
The assets of the Group are expected to be acquired out of
administration by two new companies, one acquiring the English
plant and associated operations and one acquiring the Scottish
plant and associated operations, with the acquisitions financed by
the Company. The Company has committed to provide additional
funding not expected to exceed GBP3 million to the English business
and GBP1 million to the Scottish business, for working capital and
capex purposes.
As noted in the Company's annual report and accounts for the
year ended 30 June 2018, based on advice received from the
Investment Adviser, the Board did not consider that an individual
loan loss reserve was required in respect of the Company's
investment in the Group. The Company does, however, establish
general loss reserves pursuant to IFRS9, as distinct from case loss
reserves, as part of its continuing monitoring of its loan
portfolio. On advice from the Investment Adviser, the Board
continues to believe that an individual loss reserve is not
required for this investment, however, the general IFRS9 loss
reserves remain in place and has been reflected in the Ordinary
Share NAV since 31 October.
Although the administrations of the Borrowers and corresponding
restructuring process has caused the revenue received from the
Company's portfolio of investments to be lower than expected in the
short term, the Investment Adviser does not anticipate any impact
on the Company's ability to continue to meet the dividend target on
the Ordinary Shares.
Contact Details
Hadrian's Wall Capital Limited (Investment Adviser)
Ron Miao / Mike Schozer
Telephone 020 3026 8620
Winterflood Investment Trusts (Corporate Broker)
Joe Winkley / Neil Morgan
Telephone 020 3100 0000
Forward-looking statements
This press release may contain forward-looking statements with
respect to the Company's future (financial) performance and
position. Such statements are based on current expectations,
estimates and projections of the Company and information currently
available to the Company. The Company cautions readers that such
statements involve certain risks and uncertainties that are
difficult to predict and therefore it should be understood that
many factors can cause actual performance and position to differ
materially from these statements. The Company has no obligation to
update the statements contained in this press release, unless
required by law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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