NB DISTRESSED DEBT INVESTMENT FUND LIMITED RED ...

NB Distressed Debt Investment Fund Limited

Portfolio Update - Global 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.

The New Global Share Class ("NBDG") was created in March 2014 and aims to capture the growing opportunity in distressed debt globally. NBDG is subject to an investment period ending on 31 March 2017, following which the assets will be placed into run-off.

The New Global Shares are one of three classes of shares in NBDDIF. The other classes are the Ordinary Share Class and the Extended Life Share Class. The Ordinary Share Class is subject to an investment period which ended on 10 June 2013 and the Extended Life Share Class is subject to an investment period which will end on 31 March 2015. Separate factsheets are produced for those classes.

Summary

The fourth quarter proved challenging from a mark-to-market perspective.  However, we remain optimistic about the long-term return potential of the distressed market. In the fourth quarter of 2014 we exited two positions which contributed positively to NAV.  We see significant upside potential in the existing portfolio, which we expect to realise as we restructure and exit investments. We also believe the pipeline of distressed debt opportunities remains compelling in our sectors and geographies of interest.

Portfolio

As at 31 December 2014, we had deployed approximately 70.5% of NBDG's capital. NBDG had investments in 27 names across 11 industries. The largest sector concentrations were in lodging & casinos, power generation, surface transportation and shipping.  Our level of deployment did not materially increase during the quarter, as we were selective in making new investments in a dislocated market.  However, we did add new positions in the shipping and oil & gas sectors.  We also added incremental exposure to existing names in the real estate, power generation and industrial sectors.

NBDG's NAV per share decreased 4.5% in the fourth quarter of 2014, to GBP 89.95 from GBP 94.18 per share. The primary drivers of NBDG's NAV decrease were secondary market price declines of acquired assets. The market environment for distressed debt was challenging in the fourth quarter, as indicated by the HFRI Distressed/Restructuring Index¹ which declined 3.6% in the quarter. During the fourth quarter of 2014 we saw the first two exits of NBDG, which both added positively to NAV and are described in detail below. We are working towards key restructuring milestones on our existing investments, which we anticipate can ultimately result in profitable exits.

Market Update²

We continue to believe the pipeline of distressed debt opportunities in real estate, transportation and energy debt is compelling. EU banks in particular increased their disposal of European and U.S. loans and assets to €64 billion in 2013, versus €46 billion in 2012, €36 billion in 2011 and €11 billion in 2010. €67 billion of debt sales have occurred in the first nine months of 2014, on a run-rate to exceed €89 billion for the full year. However, over €1 trillion of non-performing loans remain on EU banks' balance sheets. We believe that the European regulatory environment may continue to facilitate further recognition and disposal of distressed loans.  Additionally, the recent volatility in energy markets has presented new opportunities in the U.S.

Exits

In the fourth quarter we saw two exits in NBDG.  These exits generated approximately £0.6 million of total income and gains for NBDG.

Investment 1: We purchased $3.0 million face value of trade claims at 37% of par of a shipping company which had entered insolvency proceedings.  Pursuant to a plan of restructuring, the trade claims were expected to be exchanged for new debt and post-reorganization equity.  At the time of purchase, we believed that the trade claim purchase price represented a discount relative to the expected value of post-reorganization securities.  Subsequent to the restructuring, we sold the post-reorganization equity and debt in the secondary market.  Total income from this investment was £0.2 million.

Investment 2: We purchased $6.4 million face value of term loans at 83% of par, secured by petroleum tanker ships.  At the time of our purchase, we believed that our purchase price represented a significant discount relative to the value of the collateral.  Subsequent to our purchase, the equity sponsor agreed to purchase our debt at a premium to our cost basis.  Total income from this investment was £0.4 million.

Data as at December 31, 2014 unless otherwise noted. Past performance is not indicative of future returns. All comments unless otherwise stated relate to NBDG.
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.  Source:  Data from PWC dated July 2014 and December 2014.
-ENDS-

For further information please contact:

Neuberger Berman Europe Limited                              [phone]
Damian Holland

Financial Dynamics                                                           [phone]
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 announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: NB DISTRESSED DEBT INVESTMENT FUND LIMITED RED ORD NPV via Globenewswire

HUG#1892618