Announcement of Dividend Canc

RNS Number : 2788G

T2 Income Fund Limited

21 October 2008

 



T2 Income Fund Limited

Announcement of Dividend Cancellation

The Directors of T2 Income Fund Limited (TIDM: T2I) today announced that the Company will not pay a dividend with respect to the third quarter of 2008. The Board made the decision in order to conserve the Company's cash position in view of the extremely severe dislocations across global credit markets which have accelerated over the past 30 days. The Company had previously declared an interim cash dividend for the period of 1.75p per share.

The Company, through its subsidiary T2 Income Fund CLO I Limited, has long-term notes outstanding in the amount of US $249.5 million, which bear interest at LIBOR plus 75bps. These notes contain a variety of covenants, compliance with which could be made more difficult or impossible should credit markets continue to deteriorate. Should certain covenants be violated, the Company's income from its ownership of the CLO's income notes would be diverted to the senior CLO noteholders. Although the Company thus far continues to receive the benefit of all residual income produced by the investments in the CLO and has not experienced any diversion of that income, in light of current conditions, the Board believes it prudent, and in the best interest of shareholders, to conserve the Company's cash by cancelling the dividend in respect of the third quarter. Such retained cash could, if necessary, serve to fund the Company's operations for some period of time. The Board, and the Investment Manager, will continue to monitor conditions in the credit markets and act prudently with regard to any future dividends. We note that if and when the Board determines that credit market conditions and other relevant factors warrant the resumption of dividend payments by the Company, such dividend payments may be funded with the retained cash attributable to the Company's income for the third quarter of 2008 as well as cash flow relating to income that may be derived by the Company in future periods.

Contact: 

Patrick Conroy

T2 Income Fund Limited

[phone]

Philip Secrett

Nominated Adviser

Grant Thornton UK LLP

[phone]

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