Cash Exit Facility Offer

RNS Number : 0564P

NB Global Monthly Income Fund Ltd

16 June 2022

 

16 June 2022

NB Global Monthly Income Fund Limited

(the "Company")

Cash Exit Facility Offer 2022

The Company announced on 1 June 2022 that the Board intended to exercise its discretion to implement the first tender offer under the Cash Exit Facility described in the shareholder circular published by the Company on 17 August 2020 and approved by Shareholders at the EGM of the Company held on 8 September 2020.

The Board is pleased to announce that is has today published a Circular to Shareholders containing details of the first such tender offer under the Cash Exit Facility (the "Circular"). Terms used and not defined in this announcement shall have the meanings given to them in the Circular published by the Company on 16 June 2022. Copies of the Circular will shortly be available on the Company's website.

1.  INTRODUCTION AND BACKGROUND

Cash Exit Facility Offer

In accordance with the discretionary regular cash exit facility that was introduced at the extraordinary general meeting of the Company held on 8 September 2020 (the "Cash Exit Facility"), the Board wishes to inform you that it is exercising its discretion to offer eligible Shareholders a partial cash exit opportunity by way of a redemption offer (the "Cash Exit Facility Offer"). As per the terms of the Cash Exit Facility, the next such potential exercise of the Board's discretion to offer Shareholders a partial cash exit opportunity by way a redemption offer would be expected to close in December 2022 and subsequent Cash Exit Facility Offers every six months thereafter. 

Pursuant to the Cash Exit Facility Offer, Shareholders will be entitled to elect to have up to 25 per cent. of their Shares held at the Record Date redeemed.

The redemption price per Share redeemed pursuant to the Cash Exit Facility Offer will be equal to the Company's published Net Asset Value per Share on 5 July 2022 (the "NAV Determination Date"), less 2 per cent.

Following the completion of the Cash Exit Facility Offer, should the NAV of the Company fall beneath £150 million, the Board reiterates that its intention would be to propose a wind-up of the Company.

Timings

The Board shall be entitled to defer any effective date specified in the Circular and the implementation of the Cash Exit Facility Offer in its absolute discretion to accommodate any legal, regulatory, operational or other requirements that are not resolved prior to or on the relevant effective date.

Cancellation

If, at any time between the Record Date and the Cash Exit Redemption Date, there is a material adverse change in market conditions such that the Company's ability to realise assets for the purposes of meeting redemption requests, in a manner which is fair as between the redeeming Shareholders and the remaining Shareholders (to the extent that those remaining Shareholders have not participated in the Cash Exit Facility Offer), is in the opinion of the Board, acting reasonably and in good faith, materially impaired or likely to be materially impaired, the Directors may in their absolute discretion cancel the Cash Exit Facility Offer. In the event of any such cancellation as described in this paragraph, no Shares will be redeemed under the Cash Exit Facility Offer.

2.  VIEW FROM THE BOARD

Whilst it is a matter for individual Shareholders to determine whether to tender Shares for redemption pursuant to the Cash Exit Facility Offer, the Board believes that the Company's Shares continue to be an attractive investment, including for the following reasons:

· Performance - As of 30 April 2022, the Company has outperformed the 50%/50% S&P Loans/ICE BofA High Yield Index by +152, +242 and +275 basis points (gross of fees), respectively, over the year-to-date period, 1-year period and since inception of the revised investment strategy in September 2020. Given the recent macro volatility due to higher inflation, central bank rate hike expectations and the conflict in eastern Europe, the Company's investment results, both absolute and relative, have demonstrated resilience.  Since inception of the revised investment strategy, total annualised returns of 6.68% (gross of fees) and 5.46% (net of fees) have provided attractive risk-adjusted total returns and durable income generation. 

http://www.rns-pdf.londonstockexchange.com/rns/0564P_1-2022-6-15.pdf

· Consistent dividends - The Company's objective to generate durable and predictable monthly income for investors through a stable dividend paid monthly has been achieved and the Company expects to continue to deliver on this objective. On 28 April 2022, it was announced that the target distribution for the remainder of 2022 would increase to a rate of 5.8% of Net Asset Value per annum (as of 22 April 2022) net of fees and expenses.

· Benefits of best opportunities mandate - Neuberger Berman, the Company's investment manager, employs a "best ideas" approach driven by deep, fundamental credit research that allows focus on issuers that can navigate the more challenging operating environment of higher inflation and slowing real growth. Furthermore, Neuberger Berman's ability to rotate the portfolio based on relative value by issuer, rating, region and sector as well as the flexibility to allocate across the capital structure are particularly beneficial features in the current macroeconomic environment. That said, this has also proven to be the case across a full market cycle with attractive total returns since inception.

· Outlook for portfolio - Neuberger Berman believes that non-investment grade credit yields are compensating investors for the relatively benign default outlook, will continue to provide durable income and are attractive compared to other fixed income alternatives. Real global GDP growth is estimated to be around trend for 2022 and input costs for many issuers are being passed on to end markets and consumers. However, as real growth slows back towards trend, this will help to alleviate some of the inflationary pressures. Neuberger Berman continues to be focused on the outlook for issuer margins given rising input costs. Mitigating this, however, are strong consumer and business balance sheets and positive GDP growth. Neuberger Berman's global research team continues to monitor the investment thesis for each issuer in the Company's portfolio.  Even with the heightened uncertainty, which is resulting in short-term volatility, Neuberger Berman believes that its bottom-up, fundamental credit research focused on security selection while seeking to avoid credit deterioration and putting only its "best ideas" into portfolios, positions the Company well to take advantage of the increased volatility.

The Directors do not intend to participate in the Cash Exit Facility Offer in respect of those Shares held by them. Any funds managed by Neuberger Berman which are Shareholders also do not intend to participate in the Cash Exit Facility Offer.

3.  CASH EXIT FACILITY OFFER

The Board is providing Shareholders (other than Shareholders in certain jurisdictions as described in paragraph 2 in Part II of the Circular) with the opportunity to realise by way of redemption up to 25 per cent. of their Shares through participation in the Cash Exit Facility Offer. Further details of how the Cash Exit Facility Offer will operate are set out below.

All Shares that are redeemed will be cancelled with effect from the Cash Exit Redemption Date. Accordingly, once redeemed, Shares will be incapable of transfer and no dividend will be paid in respect of those Shares.

Shareholders should note that the issued share capital of the Company will be reduced as a result of the Cash Exit Facility Offer to the extent that Shares are redeemed. Consequently, the fixed costs of the Company will be spread over fewer Shares.

Mechanics of the Cash Exit Facility Offer

Pursuant to the Cash Exit Facility Offer, Shareholders will be entitled to elect to have up to 25 per cent. of the Shares held by them as at the Record Date (being 30 June 2022) redeemed.

A Shareholder who requests the redemption of Shares pursuant to the Cash Exit Facility Offer will need to submit a Redemption Notice for Shares held in certificated form or TTE Instruction(s) for Shares held in uncertificated form for the number of Shares that they wish to offer for redemption by 1.00 p.m. on 30 June 2022. 

Details on submitting Redemption Notices and TTE Instruction(s) are set out in paragraph 1 in Part II of the Circular.

Proceeds of the Cash Exit Facility Offer

Following the receipt of the Redemption Notices and/or TTE Instruction(s) from Shareholders, the Shares to be redeemed pursuant to the Cash Exit Facility Offer will be redeemed on the Cash Exit Redemption Date. The redemption proceeds per share that a redeeming Shareholder will receive pursuant to the Cash Exit Facility Offer will be equal to the Company's published Net Asset Value per Share as at the NAV Determination Date, less 2 per cent. (the "Redemption Proceeds").

Absent any unforeseen circumstances and subject to general market conditions, the Company expects to realise assets for the purposes of meeting redemption requests under the Cash Exit Facility Offer and to be in receipt of the proceeds of such realisations within 30 to 90 Business Days after the Cash Exit Redemption Date. Although the Company's portfolio contains assets with high trading liquidity (which subject to unforeseen circumstances and general market conditions, the Company estimates will be disposed of in the market within 2 to 3 Business Days of the Cash Exit Redemption Date), the settlement liquidity of the Company's assets varies. The Company estimates that it will receive payment for those assets with higher settlement liquidity, such as bonds and collateralised loan obligations ("CLOs"), within 30 Business Days of the Cash Exit Redemption Date. The Company estimates that it will receive payment for those assets with lower settlement liquidity, such as loans and private credit, within 90 Business Days of the Cash Exit Redemption Date. The Company estimates that as at the date of the Circular, 40 per cent. of the assets to be realised in connection with the Cash Exit Facility Offer have higher settlement liquidity, with the remaining 60 per cent. having lower settlement liquidity. Payment of the Redemption Proceeds to each Shareholder redeeming Shares will be made within 10 Business Days of the Registrar receiving such realisation proceeds from the Company.

The total Redemption Proceeds due to each redeeming Shareholder will therefore be paid in two instalments, the first being paid on or around 1 September 2022, and the second instalment being paid on or around 24 November 2022. The Redemption Proceeds are to be paid in two instalments in order to expedite payment to redeeming Shareholders (to the extent possible). However, Shareholders are nonetheless advised that it may be up to 100 Business Days or more after the Cash Exit Redemption Date before redeeming Shareholders receive full payment pursuant to the Cash Exit Facility Offer.

The redemption of the Shares pursuant to the Cash Exit Facility Offer will constitute a distribution for the purposes of the Companies Law. Accordingly, the Board will follow the procedure for making a distribution set out at section 303 of the Companies Law and will consider the statutory solvency test set out therein. The redemption of the Shares pursuant to the Cash Exit Facility Offer is therefore subject to the Directors being satisfied that the provisions of section 303 of the Companies Law are satisfied at the relevant time.

Details regarding the tax consequences of the Cash Exit Facility are set out in paragraph 4 in Part II of the Circular.

4.  RISK FACTORS RELATING TO THE CASH EXIT FACILITY OFFER

Shareholders should, when considering participating in the Cash Exit Facility Offer, have regard to the following risk factors.

· Once a Redemption Notice has been served on the Company or a TTE Instruction(s) has been submitted, the relevant Shareholder will be unable to access or otherwise deal in those Shares pending completion (or cancellation) of the Cash Exit Facility Offer. Shares will be held in escrow subject to the completion (or cancellation) of the Cash Exit Facility Offer. In the case of Shareholders who hold their Shares in certificated form (that is, not in CREST), the restriction on dealing shall also apply in respect of all Shares to which any surrendered share certificates relate. A Redemption Notice or TTE Instruction(s), once submitted, may only be withdrawn with the consent of the Company.

· Securities laws in certain jurisdictions may prevent certain Shareholders from participating in the Cash Exit Facility Offer. For more information, please refer to paragraph 2 in Part II of the Circular.

5.  ACTION TO BE TAKEN BY SHAREHOLDERS IN CONNECTION WITH THE CASH EXIT FACILITY OFFER

Shareholders should note that, if they wish to participate in the Cash Exit Facility Offer, action is required to be taken by them. Information on such action to be taken by Shareholders seeking to participate in the Cash Exit Facility Offer is set out in Part II of the Circular.

6.  DOCUMENTS AVAILABLE FOR INSPECTION 

The Circular will be dispatched today to all eligible shareholders. A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism . This Circular will also be available on the Company's website: https://www.nbgmif.com/ . 

Expected Timetable

CASH EXIT FACILITY OFFER
Circular sent to Shareholders	16 June 2022
Record Date	30 June 2022
Latest time and date for receipt of Redemption Notices and TTE Instructions for the Cash Exit Facility Offer	1.00 p.m. on 30 June 2022
NAV Determination Date	5 July 2022
Announcement of results of the Cash Exit Facility Offer	6 July 2022
Cash Exit Redemption Date	6 July 2022
Estimated asset realisation period for assets with higher settlement liquidity*	7 July - 17 August 2022
Estimated asset realisation period for assets with lower settlement liquidity*	7 July - 9 November 2022
Estimated date of payment of the first instalment of the Redemption Proceeds**	1 September 2022
Estimated date of payment of the second instalment of the Redemption Proceeds**	23 November 2022
*Absent any unforeseen circumstances and subject to general market conditions, it is currently estimated that the Registrar will be in receipt of the proceeds for the first instalment of the Redemption Proceeds within 30 Business Days of the Cash Exit Redemption Date and will be in receipt of the proceeds for the second instalment of the Redemption Proceeds within 90 Business Days of the Cash Exit Redemption Date. **Certificated Shareholders will be paid by cheque despatched at the latest known address as indicated on the Shareholders' register. Uncertificated Shareholders will be paid via CREST. Payments will be made w ithin 10 Business Days of the Registrar receiving the proceeds of the Company's assets realised pursuant to the Cash Exit Facility Offer.

Enquiries:

Neuberger Berman Europe Limited (Manager) Elizabeth Papadopoulos	[phone]
Numis Securities Limited (Broker) Hugh Jonathan Matt Goss	[phone]
KL Communications (PR) Charles Gorman	[phone]
Sanne Fund Services (Guernsey) Limited (Company Secretary) Matt Falla/Gemma Woods	[phone]

LEI: 549300P4FSBHZFALLG04  

 

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