Fair Oaks Income Limited Company Update (9558H)

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RNS Number : 9558H

Fair Oaks Income Limited

30 March 2020

30 March 2020

Fair Oaks Income Limited ("the Company")

Company Update

In light of the ongoing uncertainty in economies and markets caused by the COVID-19 pandemic, the Board has resolved to suspend the declaration of dividend payments.

The Board and the Investment Adviser recognise the importance of dividends for Shareholders but believe that suspension is the appropriate reaction to the unprecedented circumstances. In the near term the uncertainty will lead to rebased market assumptions as to credit performance, which is expected to materially constrain the Company's income calculated using the effective interest rate methodology and therefore would mean that any dividends declared would have to be substantially funded from the Company's capital.

It is premature to seek to quantify the fundamental impact of the pandemic, which will depend on an array of factors including the effectiveness of recently announced government intervention, but over time there is risk of underlying CLO managers being required to divert cash flows from CLO subordinated notes to purchase additional loan collateral in response to increased credit downgrades and defaults. At the portfolio level the Investment Adviser has also taken steps to minimise mark-to-market risk, retaining a prudent reserve of cash to cover any fx hedge and warehouse financing needs.

The dislocation in the credit markets will create investment opportunities, which is expected to be a factor in the allocation of future cash flows as the Company continues to seek to maximise shareholders' total return over the long term.

The Board will keep developments under close review and make further announcements as appropriate.

Enquiries:

Praxis Fund Services Limited

Ben Le Prevost

DDI: [phone]

Email: [e-mail]

Fair Oaks Capital Limited

Investor Relations

DDI: [phone]

Email: [e-mail]

Numis Securities Limited

Nathan Brown, Investment Banking

DDI: [phone]

Email: [e-mail]

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March 30, 2020 02:00 ET (06:00 GMT)