Rdl Realisation Share Discussion Threads

[spectoacc] 30/4/2018 07:24

A little movement on Princeton being spun positively.

[riskvsreward] 28/4/2018 09:25

The issues are: Yield is paid largely out of capital so each time a div.is paid, the NAV is reduced and then how reliable the NAV is (it has a large reduction a mont or so back from over 11 pounds to about 9.5 pounds).

All considered at this price there are better values around.

[scburbs] 27/4/2018 09:43

An odd calculation which doesn’t look very independent!

Full payout of ZDP liability, management fee termination cost and wind up costs but no income during 18 months wind down!

Credibility issue?

[davebowler] 27/4/2018 09:37

Liberum;
Ranger Direct Lending (Mkt Cap £130m)

Oaktree urges the Board to put future management arrangements to a vote

Event

Following the publication of its initial letter on Wednesday, Oaktree has written to the Board again requesting that they put any future management arrangements to a full shareholder vote. Oaktree states that it would raise governance questions if a new long-term management arrangement was agreed without allowing all shareholders a vote.

Oaktree is Ranger's second largest shareholder (18.6% stake) and called for a wind-down of the fund earlier this week as it could not see "a viable path forward" that it or any other investment manager could propose for the vehicle. The Board responded by stating the issues raised by Oaktree are being dealt with as part of the strategic review process. The review has considered a full or partial winding down of the company's activities and returning cash to shareholders. The Board does not believe Oaktree's approach will achieve the best capital value for the assets.

The Board is engaged in discussions with shareholders and is expected to publish the findings of the review process shortly.

Liberum view

The discount has narrowed to -14.6% since the publication of Oaktree's original letter. The prospect of a potential wind-down usually leads to an improved share rating but we believe this may be over-reaction given the ongoing uncertainty with the remaining value in Princeton. Assuming the full writedown of the remaining Princeton investment, the implied discount to NAV is -1.0%.

The main complicating factor for a wind-down proposal is the ZDP shares. The final redemption value of the ZDP shares is £67.6m ($94.6m based on current FX rates) and the final maturity date is July 2021. The ZDP holders could demand the final redemption value if the company was winding-down. We estimate the additional liability would be c.$16m over and above what has been accrued to date. In the table below, we have estimated what the potential remaining proceeds could be under a wind-down scenario, assuming payment of the ZDP final redemption value is required.

Estimated remaining proceeds under wind-down scenario



Incl. Princeton

Excl. Princeton



$m

$m

February 2018 cum-income NAV

217.4

188.0







Adjustments





Accrual for income for March & April

1.7

1.7

Q4 dividend (ex-date 8 March)

-5.4

-5.4

Additional ZDP accrual (assuming final redemption value)

-16.3

-16.3

Manager termination (assume 1% of GAV)

-3.0

-3.0

Additional wind-down costs (assume 1% of NAV)

-2.2

-2.2







Net remaining proceeds ($m)

192.3

162.9

FX Rate

1.40

1.40

Net remaining proceeds (£m)

137.5

116.5







Shares (m)

16.1

16.1







Net remaining proceeds per share (p)

852.7p

722.3p



Source: Liberum estimates

[spectoacc] 26/4/2018 08:37

I struggle to sell on that dividend - will wait to see how it plays out, & pocket the yield in the meantime.

On a straightforward "18 months to wind up and 12% discount" I'd otherwise agree. Plenty of variables & an interesting battle about to play out.

[riskvsreward] 25/4/2018 17:33

Out of this now. On just about 12% discount to NAV it is not attractive enough even if the winding up would go ahead.

[scburbs] 24/4/2018 19:03

True, let’s see what Invesco (seller) and LIM (activist investor) make of it. If the two of them join Oaktree then it must be game over. Difficult to see either of them backing the board.

[spectoacc] 24/4/2018 17:12

Agreed, but can Oaktree push it with "only" 18%? And now a bad relationship with the board.

[scburbs] 24/4/2018 16:39

Difficult to see how they are going to make the case for not winding this up. Performance has been awful. They would need a plan to get this to trade at close to NAV and actually produce decent returns.

Just because they have some ZDPs is not going to save them! Given the wind up will take a couple of years the ZDP drag is probably less than 20p per share if they have to pay them out in full a year early.

[spectoacc] 24/4/2018 14:59

Response out - sounds like war. Good point about the ZDP's too, was going to ask what would happen to them.

[spectoacc] 24/4/2018 14:34

THey've done their homework. Not sure how I feel about winding it up though - they say it's easy, but earlier say (rightly) that there's no sign of any resolution in sight for Princeton. Also quite enjoy the divi.

Will have to see how it plays out but should be a nice earner either way, barring more skeletons.

[scburbs] 24/4/2018 14:19

Oaktree tanks parked on lawn and first warning shots fired.

If Invesco and LIM join then capitulation should be inevitable.

[bench2] 19/4/2018 16:11

We are still being paid 24p a quarter which equates to an annual yield of circa 13% . Do we still expect this to continue ?

[atholl91] 15/4/2018 18:33

Oaktree headed by Howard Marks rated one of the best Distressed Debt investors around has taken a stake is a good sign.

[spectoacc] 04/4/2018 15:59

Thanks - apologies, was too lazy to check! So Invesco may well still be sellers out there.

[rambutan2] 04/4/2018 14:15

Looks like they took Aviva's 5.8% in mid feb, and end march took BMO's 6.2%. BMO also lost another 5% in dec, so they prob picked that up as well. Out of those the only big trade on lse i can see is 1m at 730p on 28 march.

LIM last reported upping stake at start of aug, when hit 9.2%.

Invesco reported dropping to 27.9% a few days before that.

Otherwise no reported shifting in stakes.

[spectoacc] 04/4/2018 06:56

Very interesting @rambutan2 - is this Invesco's stock they're taking? Have Oaktree taken over from Lim as the buyer of last resort?

Haven't seen the trades go through, though probably not LSE-reported.

[rambutan2] 03/4/2018 18:49

Also, only a month to go until current management contract up:

Ranger is an externally managed investment company. On IPO a management contract with Ranger Alternative Management II, LP (the "Manager") was put in place with an initial term to 1 May 2018 and with a rolling one year notice period thereafter. On 1 November 2017 the Board of the Company announced that it, in conjunction with the Manager, was in discussions with potential co-managers who could assist in and strengthen aspects of the Manager's current role and responsibilities. In furtherance of such process and given the need to resolve the management arrangements of the Company going forward, the Board, following discussion with shareholders and with the Manager, has initiated the formal process to determine the management arrangements for the Company beyond May 2018. The Board has appointed Kinmont to provide independent advice on this process.

A further announcement will be made in respect of this process in due course and parties interested in a future investment mandate in respect of the Company's external management arrangements are invited to contact Kinmont to register their interest.

[rambutan2] 03/4/2018 18:45

Have just noticed this rather intriguing new shareholder. I don't remember seeing them buy into a LSE listed closed end fund before.

2nd feb appears with 5.27%:


21st feb now at 12.14%:


28th march now at 18.56%:

[spectoacc] 12/3/2018 09:41

Strewth! What a bunch of b*stards. Arbitration delayed & delayed, costs coming out of our returns, and now at the last minute (when clearly they're about to lose the arbitration), they declare bankruptcy.

Well, my investment in RDL was always based on a nil recovery at Princeton - if they get c.$30m I'll be delighted, but when? Not next week, next month, how about next year? All the while incurring costs.

[davebowler] 12/3/2018 09:33

Liberum;
Princeton files for bankruptcy

Event

Princeton Alternative Income Fund and its general partner filed for bankruptcy on 9 March. The fillings occurred shortly before the arbitration panel was due to rule for an order requiring Princeton to hold and segregate all revenues generated by its investment activities.

The first phase of the arbitration, focusing on Ranger's demand for a redemption of its capital in Princeton, was expected to complete the testimony phase on the day of the filing. The bankruptcy filings stopped the ruling on the segregation order and have also stalled the first phase of the arbitration.

The activities of Princeton will be monitored by a bankruptcy court now that a bankruptcy petition has been made. Princeton estimated that the aggregate value of its assets was between $50m-$100m and the estimated liabilities were $1m-$10m within its petition. The current value of Ranger's exposure to Princeton is $29.3m and the manager believes its investment represents 75-85% of the total investment in Princeton.

Ranger intends to proceed with the second phase of claims against various individuals and entities who are alleged to have controlled the Princeton funds.

Liberum view

Based on the asset and liability ranges in the filing, Princeton's net asset value remaining at the low end would be $40m. Princeton's Chapter 11 bankruptcy filing is incomplete as it does not contain any financial information. This is due to filed by 23 March.

On a headline level, assuming Ranger represents 80% of the fund, its share would be $32m which would be sufficient to cover the latest value of $29.3m. However, there would be little confidence in the quality of Princeton's valuation policy and there clearly is potential for further writedowns from within the Princeton portfolio. It was previously indicated $8m of Ranger's remaining exposure related to a platform that had filed for Chapter 11 bankruptcy and two small credit lines ($2.1m total exposure) are in workout as they are not in full compliance with facility agreements.

Princeton's bankruptcy will inevitably lead to the likelihood of legal costs remaining high as Ranger seeks to recover its investment.

The Ranger shares currently trade on a 22.7% discount to NAV (10.5% discount assuming full writedown of Princeton position).

[spectoacc] 29/1/2018 08:17

The sort of update they should have put out months ago. At least there's a date (another one!). How much is this costing in legals?

"Princeton Arbitration Update
On 26 June 2017, the Company announced that itself and the Manager had initiated arbitration proceedings (the "Proceedings") with JAMS (a dispute resolution provider) against the Princeton Master Fund ("Princeton") and its general partner Princeton Alternative Funding, LLC (the "General Partner"). The purpose of the Proceedings was to seek to enforce Ranger's and the Manager's rights (including, inter alia, rights concerning redemption and the provision of financial information) against the Princeton Master Fund and the General Partner.
The Company also announced via its monthly updates that the arbitration proceedings initially took place over 20 November 2017 to 30 November 2017 but were continued to a four-day period from 18 January 2018 in order to accommodate proposed testimony. The testimony is now substantially complete and the remaining witness testimony is estimated by the Company to require an additional two day hearing period. These additional days have been scheduled and are expected to conclude by 9 March 2018. Following conclusion of the testimony, the parties will submit post hearing briefings and then the arbitration panel will have up to 30 days to make a determination in respect of its ruling.
As previously described in the October 2017 NAV newsletter, the Company also sued MicroBilt and related parties in the Delaware Court of Chancery. The Princeton parties moved to force the Company to pursue the claims against MicroBilt and its related parties within the existing arbitration; and that motion was granted by the arbitration panel. As a result, the Company dismissed its claims in Delaware without prejudice and without waiving its rights to later seek review of the arbitration panel's decision compelling arbitration. The Company intends to refile its claims in arbitration. The Company does not expect that the filing of such claims in arbitration will impede or delay the arbitration panel's decision with respect to the claims currently being pursued against Princeton or its General Partner. The MicroBilt proceedings continue to be conducted by the Company's attorneys on a contingency basis as previously announced."

[spectoacc] 12/1/2018 14:50

SQN I could imagine rising on that (it hasn't, much). But RDL?