Jz Capital Partners Share Discussion Threads

[topvest] 19/10/2020 19:08

Not much confidence here of getting much more than a nominal sum back. Why is it that they are unable to complete any transaction without a related party complication?

edit....I think we all know the answer to that question!!

[spectoacc] 19/10/2020 11:11

Indeed:

"..The sale of its Greenpoint property located in Brooklyn, New York.
The Company received approximately US$13.6 million all in cash for its interest
in the site which corresponds to a write down to the Company's net asset value
of approximately US$20 million. The approximate write down has already been
included in the updated valuations applied to the Company's real estate
investments as earlier announced in September and October 2020."


And if it had been written down again in a matter of weeks, it wouldn't have looked too good. But it wasn't, so I'm taking that as a positive :)

[pldazzle] 19/10/2020 08:07

Specto - Re the property sale, the RNS makes it clear that the consideration reflects the further write-downs (totalling $110m I think, but of course that is across-the-board and not just this property) that were announced in September and earlier this month. So a loss of $20m compared with the Feb 2020 accounts figure.

[spectoacc] 19/10/2020 06:50

I'll attempt to read it again later, but I read it more bullishly.

Selling some of the microcaps, for cash, but keeping some carry with it - it's not $90m and nowt. A much-needed $90m up front.

The property sale looks a plus to me - the write-down happened previously, so effectively sold at current value in accounts.

[grahamg8] 19/10/2020 06:47

Fire sale makes grim reading. Six companies sold for $90m when the February valuation was $159.1m + write down of $20m confirmed for sale of Greenpoint property.

The September NAV of 350-400pps shown to be be unbelievable versus a share price then of 90pps. But still a possible return for the very brave. True NAV likely to be much nearer 50% which would still I think leave us with an exit around 200pps.

The only bright note is that this announcement represents around 40% of assets disposed of. Remaining 60% derisked, but of course the rump may have little or no value at all. DYOR

[davebowler] 17/9/2020 09:24

Liberum;
Real estate writedowns will result in covenant breach

Mkt Cap £69m | Prem/(disc) -76.3% | Div yield n/a

Event

JZ Capital Partners expects to write down the value of its real estate assets by $80m-$100m at the August 2020 interim report. This follows the receipt of updated appraisals for the impact of Covid-19. The company has not yet received appraisals on all of the real estate assets.

As a result, JZCP will require a waiver under its senior facility with Guggenheim Partners as it will be in breach of its minimum asset coverage ratio. The board expects to receive a waiver from Guggenheim. The company will not be able to make the interest payment due on the CULS at the end of September without this waiver. The company is in discussions to amend the current loan arrangements and expects to pay down a substantial portion of the senior debt facility through a secondary sale of US micro-cap assets in the near term.

Liberum view

The writedown will reduce NAV by a further 17-21%. The loss on the real estate portfolio over the last 18 months is staggering. The assets mainly comprise development projects in Brooklyn and Miami. Further heavy losses are inevitable given the leverage within the structures. The portfolio was valued at $443m at 29 February 2019. The company invested a further $43.6m in the assets and the overall value is now estimated to be $59m-$79m (84% to 88% decline based on the range provided today).

The timeframe for a return of capital for shareholders is likely to be fraught with difficulty. Debt needs to be repaid first and JZCP has c.$264m of debt outstanding including loans, convertible bonds and zero dividend preference shares. The company's debt matures between 2021 and 2022. The Guggenheim debt has a minimum collateral value covenant of 4x. We estimate the ratio will be 3.8x following the writedown. The company's leverage ratio continues to rise and debt to equity ratio is c.70%. The company also does not control many of the investments and is reliant on the cooperation of partners to achieve realisations.

[spectoacc] 04/7/2020 09:34

MoneyWeek done a write-up, makes fairly grim reading - "There's an investment trust even worse than Woodford" etc (hi, Johnwig). 747th out of 747, went outside their skillset etc.

[spectoacc] 19/6/2020 06:05

Lol they can say that again.

Now - are the loans recourse? Because "..Stub.." is soon going to be "..heavily negative.." IMO. Last valuations pre-Covid.

[rambutan2] 18/6/2020 21:04

Only a stub of equity left across the prop port:

"High loan-to-value ratios at the property level have also exacerbated the effect of falling appraisals on the Company’s equity value. Nonetheless, it would seem that many of the Company’s real estate investments have not been the advantageous purchases they were considered to be, in terms of either price or timing."

[robizm] 18/6/2020 07:10

Not even a price drop until you try and sell some.

[robizm] 18/6/2020 06:55

Run for the hills and don’t look back.

[spectoacc] 18/6/2020 06:06

This will surprise....absolutely no one:

"However, the Board and Investment Adviser believe the effects of the
Covid-19 crisis on the values of the real estate investments are expected to be
significant and adverse, although their quantum cannot yet be estimated.
Further appraisals will be commissioned to establish the value of the real
estate portfolio as at 31 August 2020."


Tho this is a bit much:

"JZ Capital Partners Limited ("JZCP" or the "Company"), the London listed fund
that invests in US and European micro-cap companies and US real estate, today
announces that, in the light of the uncertainties about the valuation that
results from Covid-19, the Company is suspending its monthly NAV announcements
until circumstances allow the Company to make informed judgements as to value.
In addition, for the same reason, further informed commentary about the results
for the year ended 29th February 2020 would be impossible. Therefore the usual
call between the Company and analysts and investors will not be held on this
occasion."

[stemis] 14/6/2020 12:41

How easy are JZCP's asset going to be to sell to be able to distribute to shareholders? Aren't pretty much all their microcaps unlisted and valued on a pretty subjective basis? Indeed aren't they all held indirectly through various funds?

[spectoacc] 04/6/2020 14:19

Thanks @SteMiS. Zeros first in the queue tho - wonder how large the shortfall would/could be.

[stemis] 04/6/2020 13:33

I guess its worry about

"Should there be a shortfall on 5 December 2020 for the repayment of the ZDPs in full, the Directors' intention is either to obtain a commercial loan at a similar rate or, subject to Shareholder consultation may seek approval to extend the ZDPs on similar terms or may offer a swap into GLI Bonds. Taking into account the various possible outcomes and assumptions as part of the Going Concern model, these constitute a material uncertainty that may cast significant doubt over the Company's and Group's ability to continue as a Going Concern, such that it may be unable to realise its assets and discharge its liabilities in the normal course of business."

[spectoacc] 04/6/2020 12:18

What a great page, never seen that before - thanks @Rob. What am I missing on GLIZ? Not long to wait?

[rob the slob] 04/6/2020 11:38

Me neither. JZCZ GRY Sitting at over 30% p.a. Small illiquid trade volumes or manipulation IMHO. Not really bothered. Happy to sit on assets till oct 2022 and hope for anywhere near the full final repayment or agree to take pro rata payment at marginally above par if they try and wind up before then. See https://quoteddata.com/wp-content/uploads/2020/06/June-Zeros-warrants-and-subscription-shares.pdf for GRY and cover calculations. I keep adding at around GBP 2.52

[fuzzyneil] 02/6/2020 16:56

Thanks. Normally there is provision for zeros to be paid out early according to a sliding scale, increasing daily up to the final redemption date, (in this case 2022. I don't really understand why the zeros are currently being so discounted by the market.

[spectoacc] 01/6/2020 08:03

Hopefully it's not JZC's properties getting burnt in the riots.

[fuzzyneil] 01/6/2020 06:44

Hi - Are you sighted on when the Company might announce its detailed proposals for winding up?

[hindsight] 27/4/2020 10:52

When they were in a similar boat in 2008 they did a heavily discounted rights issue

[spectoacc] 27/4/2020 10:16

Fair to say the CULS won't be converting to equity :)

Again, that Secondary Sale failure is potentially a problem, as is the much-diminished property, now also Covid-19'd.

On the plus side, they seem to recognise winding up the only option.

[rob the slob] 27/4/2020 10:11

I think CULS is paid semiannually and went xd in march but dont quote me on that. Regards debt, there is a good summary of the position on p31http://www.jzcp.com/media/108074/JZCP-Annual-Report-2019.pdf(i) Financing ObligationsThe Company has obligations to repay loan debt in June 2021, the balance outstanding to Guggenheim Partners at 28 February 2019 was $149.2 million(28 February 2018: $150.1 million). It is expectedthe debt facility will be repaid in full or part from the proceeds of realisations and refinancing of investments. It is anticipated the Company will repay a significant proportion of the loan over the next three years.The Company will potentially redeem CULS in July 2021 amounting to £38.9 million, assuming holdersof CULS do not convert their holdings to equity.JZCP is due to redeem £57.6 million of ZDP shareson 1 October 2022, again it is expected the redemption of both CULS and ZDPs will be met from the proceeds of realisations and refinancing of investments.At 28 February 2019, the Company had outstanding investment commitments of $43.6 million(28 February 2018: $73.7 million). The Board will continue to consider the Company's position in meeting debt obligations and commitments falling outside the three year review and will continueto consider appropriate gearing levels to enable the financing of debt and ongoing investment/ operating activities.