Interim Management Statement

RNS Number : 9390E

NB Distressed Debt Invest. Fd. Ltd

17 May 2013

 



NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

17 May 2013

NB DISTRESSED DEBT INVESTMENT FUND LIMITED

INTERIM MANAGEMENT STATEMENT

NB Distressed Debt Investment Fund Limited (the "Company"), is publishing this Interim Management Statement in accordance with DTR 4.3 of the FSA Handbook.

This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the FSA's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purpose.

This interim management statement contains information that covers the period between 1 January 2013 and the date of publication of this interim management statement, unless otherwise specified.

Investment Manager's Review

Summary

We were gratified to generate positive NAV momentum in the first quarter and to see continuing growth in the second quarter to-date. In April, 99.8% of voting ordinary shareholders approved the creation of an extended life share class and 72% of ordinary shareholders elected to convert to extended life shares.  We were pleased with our investors' continued support for the Company and our investment strategy.

Portfolio

As at 31 March 2013, over 93% of the Company's NAV was invested in distressed assets, with investments in 50 companies diversified across 17 industries. The Company's NAV increased 5.0% in the first quarter, to $1.1308 from $1.0766 per share, and we believe that our performance year-to-date compares favourably with other distressed debt managers, as indicated by the HFRI Distressed/Restructuring Index which returned 4.6% in 1Q13 and Bloomberg's BAIF-Distressed Securities benchmark which returned 3.2% over the same period. Subsequent to the first quarter NAV has continued to grow to a level of $1.1788 as of May 14^th.

The first quarter NAV increase was primarily due to mark-to-market gains of positions which reached key restructuring milestones or made progress post-reorganisation. Included in this group of positive contributors were several positions we had initiated or added exposure to in the second half of 2012.  We believe the performance of recent purchases reflects an improving environment for acquiring distressed assets from banks' balance sheets, as does our asset accumulation experience in the second quarter to-date.  We continue to actively bid on additional distressed loans, although we are more constrained by cash levels than earlier in the life of the fund.

Market Environment

The distressed debt market is providing a longer-term opportunity than we originally expected.  Over $1.9 trillion of nonperforming loans remain on banks' balance sheets and banks have announced over $2.0 trillion of asset reduction targets.  Non-performing loan portfolios are expensive from a capital perspective, and with the introduction of Basel III, the minimum capital standards are going to increase in the future.  Whilst country-by-country factors relating to their speed of disposal may vary, problem assets still need to come off bank balance sheets, leading us to opportunities that are of interest in the medium-term. Consequently, we expect year-end selling pressure from banks' balance sheets over the next few years, should result in continued compelling investment opportunities.  We continue to be confident about the current and future environment for distressed debt investing.

Investment Exits

In the first quarter there were no exits.  However, we anticipate additional exits in 2013 as we harvest existing positions.

Material Events and Transactions

Earlier this year, the Board of the Company, after consultation with the Investment Manager, concluded that opportunities in the distressed market remain compelling and that an extension to the investment period would enable the Company to access attractive investment opportunities after the current investment period expires on 10 June 2013. To that end, on 6 March 2013 the Company published a prospectus in connection with the proposed creation of an extended life share class which is subject to a new investment period ending 31 March 2015.The extended life share class is also subject to a new capital return policy, new discount policy and increased preferred return.  In order to implement these proposals, it was necessary to obtain approval of ordinary shareholders by a resolution passed at a general meeting.

On 8 April 2013 the resolution proposed at the Class Meeting was approved by ordinary shareholders by a majority of 284,746,804 shares (99.8%) to 553,308 (0.2%).  In addition, the Company received a total of 320,109,841 conversion elections from ordinary shareholders to convert to extended life shares, representing 72.1% of issued share capital.  Following Admission the Company has 124,160,471 ordinary shares and 320,109,841 extended life shares in issue.  The extended life shares trade under the code "NBDX" and the ordinary shares continue to trade under the code "NBDD".

Report and Accounts

On 22 April 2013, the Company announced its annual results for the period ended 31 December 2012. On 22 April 2013, the Company posted its Annual Report and Financial Statements for the period ended 31 December 2012 to shareholders.

Financial Highlights

	14         May 2013	31 December 2012	31 October 2012	29 June 2012	30 March 2012
NAV per Ordinary Share
- US Dollars ($)	1.1788	107.65	105.41	101.53	99.44
NAV per Extended
- US Dollars ($)	1.1783	n/a	n/a	n/a	n/a

Investment Policy & Objective

The Company is a closed-ended investment company limited by shares registered and incorporated in Guernsey under the Companies Laws on 20 April 2010, with registration number 51774. The Company'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 by, amongst other things, focusing on senior and senior secured debt with both collateral and structural protection.

The financial information covered herein for the period between 1 January 2013 and the date of publication of this interim management statement has not been audited.

By order of the Board

BNP Paribas Fund Services (Guernsey) Limited, for and on behalf of

NB Distressed Debt Investment Fund Limited

as Company Secretary

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN.

This document and the information contained herein is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia or Japan or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia or Japan. No recipient may distribute, or make available, this document (directly or indirectly) to any other person. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law. Accordingly, recipients represent that they are able to receive this document without contravention of any applicable legal or regulatory restrictions in the jurisdiction in which they reside or conduct business.

This document has been prepared by NB Distressed Debt Investment Fund Limited ("NBDDIF") and is the sole responsibility of NBDDIF. No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by NBDDIF or NBEL or Neuberger Berman Fixed Income LLC ("NBFI") or Oriel Securities Limited ("Oriel Securities") or Jefferies Hoare Govett ("Jefferies") or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of Neuberger Berman LLC, NBEL, NBFI, NBDDIF, Oriel Securities, Jefferies  nor any of their respective Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to NBDDIF or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future.

NBDDIF will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and investors will not be entitled to the benefits of that Act. The securities described in this document have not been and will not be registered under the Securities Act, or the laws of any state of the United States. Consequently, such securities may not be offered, sold or otherwise transferred within the United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, applicable state laws and under circumstances which will not require NBDDIF to register under the Investment Company Act. No public offering of the securities is being made in the United States.

Neuberger Berman Europe Limited is authorised and regulated by the United Kingdom Financial Services Authority and whose registered address is at Lansdowne House, 57 Berkeley Square, London, W1J 6ER. Neuberger Berman LLC is a registered Investment Adviser and Broker Dealer and member of the New York Stock Exchange, the Financial Industry Regulation Authority and the Securities Investor Protection Corporation. Neuberger Berman Fixed Income LLC is a US registered Investment Adviser. Neuberger Berman is a registered trademark. All rights reserved. © 2012 Neuberger Berman.

 

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