TIDMNBDD TIDMNBDX TIDMNBDG
RNS Number : 5678O
NB Distressed Debt Invest. Fd. Ltd
29 May 2015
NB Distressed Debt Investment Fund Limited
Portfolio Update - Extended Life Shares
NB Distressed Debt Investment Fund Limited ("NBDDIF") is a
Guernsey-incorporated closed-ended investment company that launched
in June 2010. NBDDIF's primary objective is to provide investors
with attractive risk-adjusted returns through long-biased,
opportunistic stressed, distressed and special situation
credit-related investments while seeking to limit downside
risk.
NBDDIF owns holdings diversified across distressed, stressed and
special situations investments, with a focus on senior debt backed
by hard assets. The portfolio is managed by the Distressed Debt
team at Neuberger Berman, which sits within what we believe is one
of the largest and most experienced non-investment grade credit
teams in the industry.
On 31 March 2015, the investment period of the Extended Life
Share Class ("NBDX") expired. The assets of NBDDIF attributable to
the Extended Shares were placed into run-off following the expiry
of the investment period. The net proceeds from the realization of
such assets will be distributed to Extended Life Shareholders at
such times and in such amounts as determined by the Board of
Directors of NBDDIF. The first such distribution is scheduled to be
made in the second quarter of 2015. Prior to the expiry of the
investment period distributions were made to reflect capital
profits arising from the exit of any assets attributable to
Extended Life Shares, with the first such distribution having been
made in the first quarter of 2014 and the second in the third
quarter of 2014.
The Extended Life Shares are one of three classes of shares in
NBDDIF. The other classes are the Ordinary Share Class and the New
Global Share Class. The Ordinary Share Class is subject to an
investment period which ended on 10 June 2013 and the Global Share
Class is subject to an investment period which will end on 31 March
2017. Separate factsheets are produced for those classes.
Summary
We remain satisfied with the portfolio's performance to date.
Given the volatility of the distressed debt markets in 2015 to
date, we were gratified to preserve our investors' capital whilst
at the same time deploying the portfolio in attractive debt backed
by hard assets. In the first quarter of 2015, we exited five
positions that contributed positively to NAV. We continue to see
significant upside potential in the existing portfolio, which we
expect to realise as we restructure and exit investments.
Portfolio
As at 31 March 2015, 99.9% of the NBDDIF Extended Life Share NAV
("NBDX's NAV") was invested in distressed assets. Cash available
for new investments and working capital ended the quarter at 0.1%
of the NBDX NAV. NBDX's NAV per share decreased 1.3% in the first
quarter of 2015, to $1.1757 per share from $1.1909 per share. The
primary drivers of NBDX's NAV decrease were secondary market price
declines of existing positions. We believe that performance
comparison versus other distressed debt managers is indicated by
the HFRI Distressed/Restructuring Index(1) which returned 0.8% in
the first quarter. During the quarter we saw our 28th, 29th, 30th,
31st and 32nd exits since inception, which are described in detail
below. We added incrementally to existing names in the power
generation, oil & gas, shipping and metals sectors, as well as
adding new names in the oil & gas and air transport
sectors.
Stock Repurchases
Pursuant to the NBDX discount management policy, NBDX made four
repurchases of shares for cancellation in the first quarter
totaling 542,000 shares. Subject to the NBDX discount management
policy, NBDX may make additional repurchases at the sole discretion
of the Board of Directors.
Capital Return
On 27 April 2015, the Board of the Company resolved to return
$4.0 million (equivalent to approximately $0.0123 per share) after
expenses to holders of NBDX shares by way of a compulsory partial
redemption of NBDX shares. The current return comprises all cash
available to NBDX, save for amounts deemed to be required for
existing positions and for working capital requirements. This
distribution is expected to be made in the second quarter of
2015.
Exits
In the Q4 we saw five exits, bringing the total to 32 exits
since inception. These exits generated approximately $6.0 million
of total return and gains for NBDX.
Investment 28: We purchased $19.4 million face value of a
defaulted loan at 32.2% of par, secured by an independent living
facility in the Midwest of the U.S. Our investment thesis was that
the underlying real estate was worth an amount significantly in
excess of price of the debt acquisition. Subsequent to our
purchase, we converted the loan into ownership of the property via
a deed-in-lieu of foreclosure and installed a new management team.
After enhancing operations and making incremental capital
improvements, we sold the property. Total return from this
investment was $3.4 million generating an IRR of 10%.
Investment 29: We purchased $11.7 million face value of a
defaulted loan at 59.12% of par, secured by a condominium
development located in the South of the U.S. Our investment thesis
was that the underlying real estate was worth an amount
significantly in excess of price of the debt acquisition.
Subsequent to our purchase, we converted the loan into ownership of
the property via foreclosure and commenced selling units.
Ultimately all units and the associated land were sold. Total
return from this investment was $1.8 million generating an IRR of
17%.
Investment 30: We purchased a GBP2.8 million portion of a first
lien debt facility at 87.75% of par, which was secured by the
operating assets of a British ferry company. We expected that the
company would either restructure its debt or would refinance its
existing debt structure. In the case of a debt restructuring and
conversion into post-reorganization securities, we believed that
our cost basis represented a significant valuation discount versus
comparable assets. Ultimately, the company was sold and our debt
paid off at par plus accrued interest. Total return from this
investment was GBP0.4 million generating an IRR of 24%(2) .
Investment 31: We purchased $2.6 million face value of senior
notes at 87.60% of par of a company with oil & gas assets. We
believed that the company would be able to refinance its capital
structure through a combination of asset sales and capital markets
activities. Subsequent to our purchase, the secondary price of the
senior notes increased significantly and we exited via the
secondary market. Total return from this investment was $0.3
million generating an IRR of 90%.
Investment 32: We purchased $1.6 million face value of senior
notes at 90.25% of par of a company with oil & gas assets. We
believed that the company would be able to refinance its capital
structure through a combination of asset sales and capital markets
activities. Subsequent to our purchase, the secondary price of the
senior notes increased significantly and we exited via the
secondary market. Total return from this investment was $0.2
million generating an IRR of 89%.
Data as at March 31, 2015. Past performance is not indicative of
future returns. All comments unless otherwise stated relate to
NBDX.
1. The HFRI Distressed/Restructuring Index reflects distressed
restructuring strategies which employ an investment process focused
on corporate fixed income instruments, primarily on corporate
credit instruments of companies trading at significant discounts to
their value at issuance or obliged (par value) at maturity as a
result of either formal bankruptcy proceeding or financial market
perception of near term proceedings (provided by Hedge Fund
Research, Inc.).
2. IRR in local investment currency.
-ENDS-
For further information please contact:
Neuberger Berman Europe Limited +44 (0)20 3214 9000
Damian Holland
Financial Dynamics +44 (0)20 7269 7297
Neil Doyle
Ed Berry
Laura Ewart
An accompanying factsheet on the information provided above can
be found on the Company's website www.nbddif.com. Neither the
contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other
website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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