Distribution Policy

RNS Number : 9226Z

Fair Oaks Income Limited

20 September 2022

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which forms part of domestic law in the United Kingdom pursuant to The European Union (Withdrawal) Act 2018, as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019

20 September 2022

FAIR OAKS INCOME LIMITED
(the "Company")

(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)

Distribution Policy

The Board announces that it has resolved to enhance the Company's aggregate distributions to holders of the 2021 Shares, with the objective of being meaningfully accretive to 2021 Shareholders and positively influencing the discount to NAV and trading liquidity of the 2021 Shares.

The Board has authorised:

· Share buyback programme. The Board has resolved to commence buybacks of 2021 Shares in the secondary market, initially for aggregate consideration of up to $20 million (equivalent to c.47 million shares at current mid-market price) funded from the Company's current material cash balance. It is also intended that buybacks will be used by the Company on an ongoing basis, subject to the level of the prevailing price relative to NAV.

· Dividend guidance and additional resource for buyback programme. The Board considers that, in addition to deploying current cash to the buyback programme, it will be accretive to 2021 Shareholder value, for as long as the discount to NAV remains wide, to direct a portion of net income into funding share buybacks rather than fully distributing as dividend. The Board therefore guides that it intends to declare future quarterly dividends on the 2021 Shares at a consistent rate of 2 US cents, equivalent to an annual dividend yield of 17% on the current price, with any excess net income available to fund share buybacks. Establishing a consistent level of dividend provides greater certainty about future income for existing and prospective shareholders; based on the last quarter's portfolio cashflows the 2 US cents quarterly dividend would have been healthily covered.

The Board and Investment Adviser believe that recent movements in the market price of the 2021 Shares are not being driven by fundamentals and intend through these measures to demonstrate the Company's capital discipline and confidence in the Company's cashflows and NAV. The effectiveness of the Company's evolved distribution policy will be closely monitored and the Company will update shareholders in due course.

Enquiries:

Fair Oaks Income Limited

Email: [e-mail]

Web: www.fairoaksincome.com

Fair Oaks Capital Limited

Investor Relations

DDI: [phone]

Email: [e-mail]

Sanne Fund Services (Guernsey) Limited

Ben Le Prevost

DDI: [phone]

Email:  [e-mail]

Numis Securities Limited

Nathan Brown / Matt Goss, Investment Banking

DDI: [phone]/1642

Email: [e-mail] / [e-mail]

Liberum Capital Limited

Chris Clarke, Investment Banking

DDI: [phone]

Email: [e-mail]

LEI: 2138008KETEC1WM5YP90

Notes

As at 31 August 2022, the cash held in respect of the 2021 Shares was c.$27.1 million. This cash balance is pro-forma for the dividend announced in August 2022 and excludes proportional ownership of cash at the underlying Master Funds.

The Board retains absolute discretion as to the execution, pricing and timing of any share buybacks, subject to the conditions set out in the authority to execute share buybacks granted approved at the Company's 2022 annual general meeting. In accordance with that authority the maximum price paid in respect of any share buyback will be 105% of the average middle-market price for the five business days immediately before the purchase. Any shares purchased by the Company will be held in treasury.

Shareholders should be aware that a repurchase of shares on any trading day may represent a significant proportion of the daily trading volume in the shares and could exceed 25 per cent of the average daily trading volume of the preceding 20 business days.

The dividend guidance contained within this announcement represents guidance only and not a profit forecast. This guidance should not be taken as an indication of the Company's expected or actual current or future results and there can be no assurance that the level of dividend indicated will be paid.

Fair Oaks Income Limited

Fair Oaks Income Limited is a registered closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange (now the Specialist Fund Segment of the Main Market of the London Stock Exchange) on 12 June 2014.

The investment policy of the Company is to invest (either directly and/or indirectly through FOIF II LP and FOMC III LP) in US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing.

 

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