Portfolio Update

RNS Number : 1720E

NB Distressed Debt Invest. Fd. Ltd

08 May 2013

 

NB Distressed Debt Investment Fund Limited

Portfolio Update

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 credit teams in the industry.

We were gratified to generate positive NAV momentum in the first quarter and to see continuing growth in the second quarter to-date.  In the first quarter we continued to add to our portfolio and at the end of April approximately 97% of NAV is deployed in distressed assets.  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 NBDDIF's NAV was invested in distressed assets, with investments in 50 companies diversified across 17 industries, which represented a peak level of deployment in the life of the fund at that time. NBDDIF'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 Index¹ which returned 4.6% in 1Q13 and Bloomberg's BAIF-Distressed Securities² benchmark which returned 3.2% over the same period.

The first quarter NAV increase was primarily generated by mark-to-market gains on positions which reached key restructuring milestones or made progress post-reorganization (there were no new exits in the quarter). 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.  April was a particularly busy month for us as we reached a level of approximately 97% of NAV deployed in distressed assets. 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.

Investment Period Extension

Earlier this year, the Board of NBDDIF concluded that opportunities in the distressed market remain compelling and that an extension to the investment period would enable NBDDIF to access attractive investment opportunities after the current investment period expires on 10 June 2013. To that end, on 6 March 2013 NBDDIF 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 553,508 (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.  NBDDIF currently 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".

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.         The BAIF-Distressed Securities Hedge Funds Domiciled Globally Index is one of Bloomberg's Active Indices for Funds (BAIF) used to measure a fund's performance against its peers.  This index represents distressed securities hedge funds, domiciled globally.

-ENDS-

For further information please contact:

Neuberger Berman Europe Limited                               [phone]

Damian Holland

Anji Stewart

Financial Dynamics                                                          [phone]

Neil Doyle            

Ed Berry

Laura Pope

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.

 

END

 

 

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