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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Digital 9 Infrastructure Plc | DGI9 | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| -0.10 | -0.47% | 21.20 | 12:47:06 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 21.30 | 21.20 | 21.30 | 21.30 |
| Industry Sector |
|---|
| EQUITY INVESTMENT INSTRUMENTS |
| Announcement Date | Type | Currency | Dividend Amount | Ex Date | Record Date | Payment Date |
|---|---|---|---|---|---|---|
| 07/06/2023 | Interim | GBP | 0.015 | 15/06/2023 | 16/06/2023 | 30/06/2023 |
| 09/03/2023 | Interim | GBP | 0.015 | 16/03/2023 | 17/03/2023 | 31/03/2023 |
| 01/12/2022 | Interim | GBP | 0.015 | 08/12/2022 | 09/12/2022 | 23/12/2022 |
| 02/09/2022 | Interim | GBP | 0.015 | 15/09/2022 | 16/09/2022 | 30/09/2022 |
| 24/05/2022 | Interim | GBP | 0.015 | 01/06/2022 | 06/06/2022 | 30/06/2022 |
| 10/03/2022 | Interim | GBP | 0.015 | 17/03/2022 | 18/03/2022 | 31/03/2022 |
| 30/11/2021 | Interim | GBP | 0.015 | 09/12/2021 | 10/12/2021 | 23/12/2021 |
| 06/09/2021 | Interim | GBP | 0.015 | 16/09/2021 | 17/09/2021 | 30/09/2021 |
| Top Posts |
|---|
Posted at 23/3/2024 14:00 by keith95 "Nothing unclear, they are blocked by the terms of the VLN that they signed to fund the purchase"DGI9 were not "blocked" by virtue of the VLN - from the interim report: "Interest on the VLN is due annually in arrears on 30 June, and D9 has the choice either to settle each payment in cash or to accrue it. For the period ending 30 June 2023, the Company elected to accrue the interest, increasing the VLN’s outstanding balance from £163m to £170m. Accrued interest must be repaid in full before distributions can be made to the Group. After the fourth anniversary of the VLN, the Group can only receive distributions if the entirety of the VLN principal and any rolled up interest has been repaid in full. " Note the sentence: "D9 has the choice either to settle each payment in cash or to accrue it." DGI9 chose to not pay off the VLN interest but even if DGI9 had paid off the VLN interest, its unclear how it would distribute shareholder loans to DGI9 shareholders. Hence my comment: "I presume DGI9 thought a simple issue as a stakeholder but as it turned out they could not achieve for reasons that remain unclear outside of issuing shareholder loans being Arqiva's normal practice." That was clear, unlike the someone claiming clarity in their poor understanding of detail, and tres amuse. |
Posted at 22/3/2024 19:04 by keith95 "Well done the pension fund for stitching them up I say."I don't see any stitching up - Arqiva is an excellent asset. The problem is/was getting Arqiva annual revenues into DGI9 - that I presume DGI9 thought a simple issue as a stakeholder but as it turned out they could not achieve for reasons that remain unclear outside of issuing shareholder loans being Arqiva's normal practice. Arqiva squirrels them away in its subsiduaries - bear in mind the £2 bn Arqiva sale to Cellent paid off shareholder loans. I've e-mailed DGI9 to request clarity on the status of DGI9's current shareholder loans and what exactly the £163 Million of VLN bought when doing the Arquiva transaction - preferably to be stated in the special meeting on Monday. The issue with Arqiva itself lies with the future of broadcasting versus streaming. As it stands one argument for taking down broadcasting in the UK follows the reduction of broadcasting use in favour of streaming in the USA in preference for podcasts etc. Anyone who has switched on TV in the USA - with adverts before the movie, adverts after the credits, and every 5 minutes knows precisely why people moved from broadcasting in the USA .... it's a pain the rear ... ... the UK doesn't have the same problems. Broadcasting is cheaper, "green" compared with streaming and so more readily available. It would be a mistake in my view to kill it. |
Posted at 20/3/2024 21:58 by invisage Just read Oak Blokes piece on Arqiva to better understand what is going onhxxps://theoakbloke. Operating Profit is £238m (of which £114.3m accrues to DGI9). Obviously operating profit removes the concern that using EBITDA for an infrastructure player (where D or Depreciation is significant). In fact good news here. The fall in depreciation you see above, year on year is permanent - where in 2022 some one-off charges were made for legacy equipment being written off, via a Group IT transformation programme. £114m well affords a £20m dividend. It could afford a £50m dividend. (which was the cost of the previous dividend which would be a 20% yield at today’s prices). It could afford a 44% yield dividend theoretically. The magic trick is the bit I’ve highlighted. “Accrued interest on shareholder loan notes” refers to the fact that DGI9 and one other shareholder are accruing profits in Arqiva. So this is a form of shareholder funds (by another name). They also award themselves a 13-14% interest so that’s why this “interest̶ If you strip out that noise, the business owes £1,566.3m (inc. lease liabilities). Still a large amount. The repayment profile means some further refinancing is needed or paid down. So the fact dividends aren’t being paid to DGI9 is no bad thing. Debt costs 7.2% (£130.1m a year) so it’s worth doing. There are, too, hedges to complicate the world but we know from DGI9 the effect of these disappears in 4 years. Valuation The deep dive has confirmed a couple of things. Arqiva is as exciting a holding as I thought. In fact more so. Let’s consider the recent news about fellow smart meter provider Smart Meter Systems (SMS) being acquired. Let’s consider what that means for Arqiva. For a start Arqiva’s smart metering is almost double the size of SMS. (£110m vs £189m of ILARR - I’m being generous and including traditional meters in SMS’s £110m… Smart Meters are £70m actually). Arqiva have 25% market share of UK Smart Meters versus SMS who have 14%. SMS was bought at an EV / EBITDA multiple of 20.0x (calculated based on LTM Pre-exceptional EBITDA of £71 million as of June 2023). By comparison Arqiva has an EV/EBITDA of 11 (£3,714.2m/£337m) - again stripping out all the shareholder loan note stuff, so that implies that Arqiva could be worth £6.74bn (£337m x 20). If it were to occur, that would equate to a £1.45bn gain to DGI9….. or £1.68 per DGI9 share. (Note SMS have a EV car charger, a BESS and energy services business whereas Arqiva have a Media & Broadcasting business so you may disagree the same valuation methodology should apply…… in my opinion Arqiva’s other business is at least as valuable as asset as its Smart Meter business) The growth plans and the tailwinds it address along with the stability of utility like RPI linked income make this attractive indeed. You could buy the whole of DGI9 currently for £255m and own 48.02% of what looks to have £855m of net assets - so a near 50% discount to NAV. With a takeover potential which would take it to 90% discount to NAV…… And that’s ignoring all of DGI9’s other assets. On Arqiva alone, DGI9’s current share price makes no sense. The fact DGI9 has fallen in price maybe its people simply not understanding the assets and holdings. Or maybe the world have grown desensitised to “Discount to NAV” and assume such numbers are hocus pocus. Just snares to entrap the unwary. |
Posted at 20/3/2024 10:59 by keith95 The point is this ... Arqiva does not pay an annual cash dividend to owners ... so DGI9 not only used its RCF with interest payments to buy Arqiva, but was obliged to pay interest on the RCF with nothing coming back from Arqiva itself but a loan note - so where was DGI9 going to get the cash to pay off the RCF and DGI9 shareholder dividends?Stupid decision to buy Arqiva without raising the funds first ... that might have been the original plan .. but too late now. |
Posted at 20/3/2024 10:17 by keith95 I've now bought in on the drop this morning so happy to distribute the reason why I topped up this morning.Arqiva limited as opposed to Arqiva Global, books operating profits into reserves each year, as do all subsiduary companies, so according to the latest accounts, Arqiva Limited has some £3.18 billion recorded as reserves and tied to the Arqiva Limited equity. All in all, reserves tied to equity are closer £3.5 Billion across the group. These profits, having been stored, and then released to the owners as a shareholder loan note whose interest builds, but ensures that Arqiva Global itself doesn't register a profit on paper each year. The £2 bn sale to Cellnet of assets back in 2019 was indeed used to pay off shareholder and other bank loans. So in this respect, Old Bloke is spot on when he refers to assets of Arqiva being sizeable. What it means of course, is that DGI9 should never have bought Arqiva since shareholder loan notes are not much use to banks or DGI9 shareholders as dividends, but that's history now. The value, however, in Arqiva is huge - if it IPOs with £200 million of operating profit each year at 5% yield with dividend cover of 2 that makes it a £2 bn market cap ... so a generous return to DGI9 with a near 50% stake. DYOR |
Posted at 18/3/2024 14:29 by keith95 From Old Bloke:"But the problem is Arqiva can’t pay dividends to DGI until the £163m Vendor Loan Note (VLN) i.e. the principal is repaid plus any interest (£7m so far). So £170m must be found to unlock Arqiva earnings. Disposing of Verne is a step in the right direction." This is the headache and question, namely why DGI9 have not paid interest on the VLN given from the half year report: "Accrued interest must be repaid in full before distributions can be made to the Group. After the fourth anniversary of the VLN, the Group can only receive distributions if the entirety of the VLN principal and any rolled up interest has been repaid in full. The Company expects Arqiva’s future cashflows to cover D9’s VLN interest payments. The Investment Manager expects that the VLN will be refinanced prior to its fourth anniversary in October 2026, as was anticipated at acquisition" That would unlock Arqiva distributions and access to much needed cash? My own view, is that winding down will leave a relatively small amount of cash having paid off the RCF and VLN with other assets coupled with the Arqiva equity - but getting a valuation of the Arqiva equity seems to have a variance of £350 m from annual reports to £460 m - namely that paid for Arqiva by DGI9 ... can anyone clarify which is the appropriate number to use for Arqiva? It obviously makes a big difference to the underlying NAV of DGI9. |
Posted at 14/3/2024 15:24 by kamshafqat Thanks skinnypope - I agree on the Valuation Report as the next key event given Verne Sale & AGM realisation approval is very likely to go through IMO.I also have some positions in DGI9 in both the private Investment portfolios I manage and my shorter term Trading accounts. I am positive on the Digital Assets sector (and have invested in both CORD and DGI9 in the investment portfolios) over the MT/LT and think that the price action in DGI9 represents an interesting short-term realisation opportunity. I have seen some good posts on this IT over the last few weeks and wanted to add some comments and thoughts from my analysis: * I think the sell-off is/was very much overdone - I would not be surprised if this was in the 45-65p context based on the info available now * I think the case here is particularly interesting given the situation is far more due to poor management than any issue with underlying assets (as opposed say SLFR - formerly KKV and SQN even further back) * On a previous post - I couldn't find full details on the these but I note that the Manager fee is in the £4mm context, and they will have wages, etc in addition to I see they have a large number of holding companies, underlying companies / SPVs that will all have associated costs * I have run some analysis on the underlying portfolio (assuming the Verne Sale completes as expected Eo-Q1 and Realisation is approved at the AGM). To start, I have used the latest valuations from the last DGI9 report and info from the releases since then. This gives an estimated Post-Verne position as per below: Value Verne Sell Post-Verne PORTFOLIO £1,305 -£289 £992 Verne Global - Iceland £275 -£349 £107 Verne Global - Finland £136 Verne Global - London £69 Arqiva £508 £508 Aqua Comms £227 £227 EMIC-1 Elio Networks [Host] £58 £58 SeaEdge UK-1 £18 £18 Giggle Fibre £0 £0 Cash £14 £60.0 £74 DEBT -£544 £289 -£255 RCF -£373.8 £289 -£84.8 VLN -£169.8 £0 -£169.8 TOTAL £761.2 £0.0 £737.2 *I have then assumed that is takes 2Y to realise the all sales in the portfolio and assumed associated RCF Interest Costs, VLN Interest Costs, D9 Ops costs and Advisory costs (I assume they are keeping GS as advisors to sell). => This takes off another £85mm or so from the NAV * I have then backed out the assumed discount to the underlying Portfolio values to calibrate to the current Market Price: Market PX Calib HV*(1+X%) -48.18% PORTFOLIO £550 DEBT -£255 TOTAL £295 EXIT COSTS -£84 NAV £210.7 MARKET PX 24.36 => This implies that the market assumed discount to latest valuations is c. 50% - which seems very steep given there is no reported information on drastic underlying company performance. *Assuming some other ranges of realisation discount adjustments gives the below: Bull Base Bear Stress HV+X% HV+X% HV+X% HV+X% -10.00% -20.00% -30.00% -45.00% PORTFOLIO £900 £808 £716 £579 DEBT -£255 -£255 -£255 -£255 TOTAL £645 £554 £462 £324 EXIT COSTS -£84 -£84 -£84 -£84 REALISATION VALUE £561.2 £469.4 £377.6 £239.9 PX 64.87 54.26 43.65 27.73 Good luck all... |
Posted at 07/3/2024 14:14 by alan pt also note that most of the loans will be non-recourse, so they can't force the trust into administration, only individual entitiesArqiva is responsible for the accretion payments, not DGI9. Arqiva entered into the collar agreement, not DGI9. DGI9 could just walk away if Arqiva went into administration RCF is DGI9, but even with a likely haircut to NAV it's still significantly less than the value of assets. This is why a rights issue (although wildly unpopular) would be a more likely scenario than administration. Some REITs have done this in the past when in serious trouble |
Posted at 06/12/2023 10:11 by loglorry1 From Peel Hunt (or PH)Sum-of-the-parts points to upside potential • Following last week’s announcement regarding the sale of Verne Global and the initiation of a strategic review, DGI9 shares fell sharply. • Given the uncertainty surrounding the earn-out component of the Verne Global transaction, and the future trajectory of Arqiva and AquaComms/EMIC-1, we see a wide spread of possible NAV outcomes. DGI9 shares are trading around 31p, which is in line with our worst-case scenario eNAV. If we refer to our base-case scenario NAV of 86p and apply a 40% discount, we see material upside from here, and we maintain our Outperform recommendation. Portfolio. The recently announced sale of Verne Global is structured such that £107m of the £456m is in the form of a potential earn-out, payable subject to Verne Global achieving run-rate EBITDA targets for FY26 – in three out of the four scenarios we have assumed no earn-out. The initial proceeds are expected to allow DGI9 to pay down c.£300m of the RCF, and the focus then shifts to the remaining assets in the portfolio (primarily Arqiva and AquaComms & EMIC-1), hence we flex the valuation/growth assumptions for these remaining investments across the different scenarios. For the worst- and bear-case scenarios, we apply a 20% haircut to carrying values; the worst-case scenario also writes Arqiva down to zero, which we feel is particularly cautious, given the potential for a softening inflation backdrop and the fact that Arqiva’s bonds are trading at c.95p in the pound. Peak pessimism. DGI9’s share price is trading in line with the worst-case scenario – no earn-out, no Arqiva, and a significant haircut to carrying values (eNAV 31p); our bear case assumes no earn-out and a reduction in carrying values (eNAV 59p); the base case assumes no earn-out but no haircut (eNAV 86p); and in our bull case we add the Verne Global earn-out back into the equation (eNAV 93p). Put another way, the current DGI9 share price reflects zero earn-out and implies a c.50% discount to the carrying values of the remaining portfolio – too pessimistic in our view. This is reminiscent of the peak pessimism towards listed private equity that we saw in October 2022 and March 2023. If we stick to the base-case scenario (without the earn-out), DGI9 is currently trading on c.64% discount to the 86p eNAV. If we assume DGI9 is capable of mean-reverting to a discount of c.40% (still wide by core-plus infrastructure standards), this would represent c.70% upside potential. We maintain our Outperform recommendation. |
Posted at 30/10/2023 07:19 by ghhghh Fun and games begin:Aqua Ventures Limited Aqua Ventures Limited seeks strategic review of Digital 9 Infrastructure Aqua Ventures Limited announces it has written to the chairman of Digital 9 Infrastructure, in which Aqua Ventures Limited holds a 3.47 per cent shareholding, seeking an immediate independent strategic review of the business. Aqua Ventures Limitedclosely engaged, and discussed the letter,withsharehold Ends Phil Jordan, Chair Digital 9 Infrastructure plc Dear Phil, Aqua Ventures Limited is a shareholder of Digital 9 Infrastructure plc ("DGI9" or the "Company") with an interest of 3.47% of the outstanding shares in DGI9. We write to you, in your capacity as Chair of the Company's board of directors (the "Board"), to express our dissatisfaction about the way the Company has been managed and governed. Over the past several days we have closely engaged, and discussed this letter, with shareholders representing in excess of 20% of the ordinary shares, in addition to ourselves, who have expressed their support for us making the recommendations outlined in this letter. Notwithstanding the announcements released on 17 and 27 October 2023, we are not convinced that the Board is taking seriously the feedback given by shareholders during the recent consultation process, in the light of its fiduciary and other duties. In particular, it is concerning to us that the Board appears to have decided, notwithstanding this feedback, that it is in shareholders' best interests to progress the sale of a majority or co-controlling interest in Verne Global in circumstances where that sale, if completed, would be likely to foreclose a sale of DGI9 and risk value destruction by stranding the Company's other assets. At the date of this letter, the share price has declined 53% year-to-date and is overall down 60% since the IPO on 31 March 2021. This is a dismal performance both in absolute and relative terms: the Company's closest direct peer, Cordiant Digital Infrastructure, has declined 26% (38% since 31 March 2021) whilst the FTSE 250 index has declined 12% (22% since 31 March 2021). Indeed, the market reaction suggests investors have not accepted the 27 October announcement as value accretive. Despite the 10% increase during the day amidst low liquidity, it still ended with no gains for the week. Shareholders have yet to see a commensurate response or any resolute actions being taken in response to their feedback in order to mitigate ongoing value destruction. We understand following our discussions with other shareholders that many have already insisted on a strategic review. Instead, we observe that the Board's actions have only exacerbated the situation: · 13 June 2023: the Board announced a new management team, concluding its prolonged search - the share price was down 18% one month later. · 19 July 2023: the Board released a company update reaffirming its position on recent recruitment, capital, and dividend cover - the share price was down 9% down one month later. · 28 September 2023: the Board released H1 results and cancelled the Q2 dividend, directly contradicting the dividend target it reaffirmed only two months prior - this had a devastating effect on the share price, which closed 40% down on the day. The repeated failure of the Board to take actions to remediate issues in a timely and transparent manner is of serious concern. Contradictory statements and a lack of communication with investors amidst, and indeed further contributing to, an ongoing destruction of value, raise serious questions as to the competence of the Board. We question whether the course of action pursued by the Board to date is in our best interests as shareholders, or whether the Board is allowing itself to be led into strategic mistakes by advice and information provided by Triple Point, which is self-evidently in a conflicted position with respect to these critical decisions. We also question the Board's judgement in engaging Goldman Sachs as adviser to the Board in circumstances where that firm has, to date, been advising Triple Point, which would seem to breach the fundamental principle that the Board must be able to act independently of its investment manager. The strategic decisions, and non-decisions, taken recently appear to demonstrate the Board's failures: 1)Retaining Triple Point as the investment manager for DGI9 portfolio has been detrimental to shareholder value. · Each of the public funds managed by Triple Point has been trading at a significant discount to NAV, raising serious concerns about the investment manager's track record. This is the case not only at DGI9, which trades 64% below NAV, but also at the other public funds managed by Triple Point, with Social Housing REIT (SOHO) and Energy Transition plc (TENT) trading 59% and 43% below NAV, respectively. · The fee structure in place with Triple Point for the DGI9 portfolio does not align the shareholder and investment manager's interests. Triple Point's management fees are based on DGI9's NAV, which means that the Company must continue to pay fees to the manager notwithstanding the value destruction and sustained share price underperformance we have witnessed over the past year. This position is no longer acceptable to us, especially as DGI9's close peer Cordiant's fee structure is based on market value and share price performance, which in our view is a better way to align shareholder and investment manager interests and reward the investment manager for delivering value growth. 2) The management of the Company's investment in Verne Global raises serious concerns about the Company's growth prospects and could result in a significant destruction of value. · In March-April 2023 the Board reported "significant progress" on a minority stake syndication with terms "expected to be announced in August 2023", which was revealed to be for Verne Global on 5 June 2023, with proceeds to be used to "partly pay down the RCF at the Company level and fund growth capex in Investee Companies". · No update on the syndication was provided by the Board in August 2023, contrary to previous communication. Instead, on 28 September 2023, the Board communicated that the syndication is now for a co-controlling or majority stake, again, contrary to prior communication. The Verne Global growth capex pipeline increased from £493m to £610m during this period - reflecting the considerable growth opportunities Verne Global is able to capture. At a time when a supportive investor should be investing to help the business grow, the Board continue to pursue solutions detrimental to shareholders. · It is a widely held view that Verne Global is a "crown jewel" of the DGI9 portfolio, operating in the fast-growing data centre segment with sustained and accelerated customer demand. The Board has failed to realise the inherent value of Verne Global and has not accurately evaluated the prospects of the syndication and growth capex requirements. This has not only starved Verne Global of capital, but has also put DGI9 as a whole in a disadvantageous position of having to consider a forced co-control or majority sale. In our view this course of action risks destroying the value that would otherwise could be realised for DGI9 shareholders from continuing to own Verne Global. 3) The repeated failures of the Board and Investment Manager to change course and communicate effectively with investors during this period of underperformance call into question whether the Board is acting in the best interests of shareholders. · Delayed permanent management replacement in critical period. After the departure of the previous management team, the Board announced on 1 December 2022 that it had commenced a search for a permanent replacement. However, it ultimately took the Board over 6 months to announce the replacement and a further c. 3 months for the new head of digital infrastructure to assume their role. The Board's failure to act with appropriate urgency, while fees continued to be paid to an interim manager for c. 9 months, suggests that the Board had not grasped the urgency of the situation. · Acquiring Arqiva was mishandled. It was publicly stated that the acquisition was intended to "support the Company's total return and yield target". In practice, the acquisition has become a drag on Company cash flows due to accretion payments, resulting in the Company's inability to cover the whole dividend for Q2. · Unsustainability of the dividend policy. The uncovered dividend and capital expenditure requirements of the portfolio were arithmetically implausible and in our view demonstrate that the Board has failed to effectively monitor and manage the performance of the investment manager. The fact that the Board re-affirmed the dividend in, only to cut it less than 3 months later, suggests that the Board did not have a clear grasp of the risks of continuing with an unsustainable dividend until it was too late. We are obliged to now re-insist that the Board announces the initiation of a proper strategic review of the Company that includes a review of the ongoing Verne process and is supported by a financial adviser independent of Triple Point. A failure to evaluate options for the Company could result in a serious breach of fiduciary duty that will cause irreparable harm to the Company and its shareholders. In such circumstances there will inevitably be cause to investigate. As you will be aware, a group of shareholders representing an aggregate interest of greater than 10% in DGI 9 has the ability to requisition an extraordinary general meeting. With the support of shareholders with whom we have discussed this letter, we intend to initiate the actions to exercise this right for the purpose of removing and replacing directors unless, before 3 November 2023, we receive the Board's written assurance that the Company will: (a) Initiate a proper strategic review supported by an independent financial adviser acceptable to us, and a stock exchange announcement is made to this effect; (b) Elect a new independent board member with M&A experience to oversee the execution of the strategic review. We look forward to your formal response. Yours faithfully, on behalf of Aqua Ventures Limited |
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