Vpc Specialty Lending In... Share Discussion Threads

[cousinit] 23/4/2024 12:42

Looks like the facilities they offer to the merged business are open and can have new lending funded.

Given the nature of these, you'd expect VPC to be able to specify the credit quality and other metrics of the underlying borrowers (either as a minimum or in aggregate). It looks like there is an expectation of a long stop of 2028 which is likely predicated on a refinance. The facilities may become more expensive or restrictive as time elapses, incentivising an earlier refinance.

As Chucko says, VPC should know their stuff and the biggest risk (IMO) with these kind of facilities is for the sponsor to fail or go into run off, so support/forbearance now is probably better if it enables a credible business plan to be executed.

[chucko1] 23/4/2024 10:56

No, and neither do I. This is what they get paid for, and why we assume a certain degree of risk no matter how hard (intensity and duration) we stare at the problem.

[cc2014] 23/4/2024 10:38

Question is has it stabilised the investment or kicked the can down the road? Answer is I have no idea.

[chucko1] 23/4/2024 10:17

There are circumstances whereby raising external equity (as suggested in their Update) and increasing the seniority of their holdings to protect what clearly were two troubled exposures, makes sense. The maturity extension to 2028 is the only avenue to achieve this value injection, but depends upon a stabilisation of the underlying business(es).

Sometimes, conversely, increasing risk, but with the benefit of much shorter maturity is a preferred route. It all depends on the context, so one cannot really generalise.

[cc2014] 23/4/2024 10:09

As far as I can work out the Razor transaction results in them adding to their equity investment and pushing the repayment of the debt out 3 further years to 2028.

It's the opposite of what a fund should be doing in wind-down

[wilwak] 23/4/2024 09:57

True! 74p now! This is not reflecting well on VPC at all.

If I had funds in their other investments I’d be wondering how credible their accounting is.

They really need to deliver a good exit in VSL to maintain their credibility. Let’s hope they do.

[chucko1] 22/4/2024 23:27

NAV now lower by $15mn, of course. Just paid it out as cash, being 4.23p per share. So 78p is really 74p which costs 51p + risk.

[wilwak] 22/4/2024 23:24

51p is still a long way below 78p.

My thoughts are that if I can get 51p back ‘reasonably217; soon then there’s no point selling the shares. I’ll take a ride in the reminder.

Investment Trusts often have to value assets at very low valuations and even more so during a wind up process.

There could still be positive realisations ahead at above the 78p.

Selling is not an option for me and I have added some more based mainly on the fact that VPC are pretty well respected and also the fact that institutional shareholders pushed for this liquidation to obtain an exit at the then NAV which was far in excess of todays published NAV.

Sitting tight and hoping!

[panshanger1] 22/4/2024 20:01

The question remains is this worth a nibble at this price ?

[grahamg8] 22/4/2024 18:41

The latest fact sheet works hard at spinning the Perch/Razor combination. However click on the blue 'here' and a very different story emerges. The loss may still be unrealised but the market price of the deal says it is real, and seems unlikely to be recoverable.

[redhill9] 22/4/2024 18:40

Agree about the NAV being unreliable, that's what I meant about those particular assets perhaps now on a more realistic basis than before. This revaluation does appear to be specific to the circumstances of that merger but the concern is similar (or different)adjustments could apply across more of the portfolio as it continues to unwind.

I don't think we can tell whether that particular change of valuation basis means they were wrong before or are simply now being more conservatively valued. The answer may not become apparent until they are either sold or reach maturity (2028!).

The opacity of the NAV here seems to become more opaque each month rather than clearer.

[grahamg8] 22/4/2024 18:09

Well sort of, redhill. It doesn't get round the problem that other assets may also be on the books at too high a price. Which all boils down to the NAV being unreliable. I was hoping to make a decent profit here, now it looks more like break-even or even a loss, and probably a wait of several years to boot.

[redhill9] 22/4/2024 15:17

The February investment report shows that the NAV was retrospectively adjusted (into 2023)downwards by 4.43% in respect of the restructuring of two of VPC's holdings due to a different valuation basis required after the merger under IFRS regulations. This was offset by a current month positive release of 0.6%.

The (maybe) good news is these NAV adjustments are unrealised and reflect a change in valuation basis rather than losses on disposal, however the fact they needed to change the basis does perhaps suggest these assets are now on a more realistic NAV basis than previously?

[rogerrail] 22/4/2024 13:00

I guess the remaning NAV reduction of 2p is the dividend that was paid in March?

[dodger777] 22/4/2024 09:13

The wind up “is in the best interest of shareholders” they said 🙄

[solarno lopez] 22/4/2024 09:10

Thank you CC2014

[cc2014] 22/4/2024 08:49

#1741 because no-one trusts the NAV as demonstrated by today's RNS where 4.3% of the capital of the fund has disappeared. I say disappeared because we will have to wait for them to publish the monthly update sometime later in the day.

This is Feb's update as well, not March's.

One would perhaps think they have held the information back until the share redemption was over.

It's clear to me from the share price action someone knows well in advance where the NAV is going. Possibly if you have better access to information than me or more time and energy some of the information is in the public domain and it could be worked out.

Either way as far as I can tell 4.3% of the fund has just gone up in a puff of smoke and so one might be concerned there is more to come.

[solarno lopez] 22/4/2024 08:39

So we have a share price of 50p and a net asset value of 80p.

So why the differential?

[chucko1] 17/4/2024 18:08

Sometimes, these deeply discounted way out of favour Trusts pay a dividend (go ex-div) and the share price moves nothing like the div amount. A number of REITs do this on a regular basis, but frictional costs makes it tricky to take advantage of. Sometimes, it is a pure gift, however, and the effect can be magnified when the payment is large (as in this case with a payment of some 8% of the sp).

[metis20] 17/4/2024 18:01

Thanks for that chucko - makes sense. Good to know the share price will not be marked down at the start of trading on Friday! - at least not for any reason to do with the B shares issue.

[chucko1] 17/4/2024 17:50

No, 6.00pm is standard for a Record (time). It denotes the end of a trading day - the one being 1 trading day post ex-div. Or, in other words, 2 trading days (T+2) after the date on which you needed to own the stock.

Most commonly, if you own a stock on the Wed and it goes ex on the Thur, then you will get the div if you owned on the Wed, which would mean you are on the Record on the Fri at 6pm.

If you sold on the Thur, then you would get a low price as it had gone ex-div, but you would be entitled to the div to make up for this, as you would only NOT be on the Record at 6pm on the Mon following.

[metis20] 17/4/2024 17:41

chucko1 - its that 6:00pm timing that is also odd. If you are correct about the exdate being 24 hours before the Record Date then shares held up to 6:00 pm today should qualify for the B shares.

Is that 6:00pm timing usual for return of capital via the issuing of B shares?

[chucko1] 17/4/2024 17:40

Grahamg8, I get your 1.49p, but it is the other way around. The share price should have dropped by 4.25p (the capital return), but to keep a constant discount to NAV, the share price should actually only have dropped by (4.25p - 1.49p = 2.76p).

In any event, had it only dropped by 2.76p rather than the 1.8p that it did, you would then have made the 1.49p by earning the discount on the amount repaid (i.e. discounted assets turning into cash).

Well, we can talk about the maths all we like, but the fact remains that the MMs missed this completely. A previous comment that "metis20, not sure any of us are certain on that point" is in itself partly the reason why this situation has arisen!