Sqn Asset Finance Income Share Discussion Threads

[rogerrail] 01/5/2020 09:31

IMO they should be transferring assets including liquidated cash to the C fund in exchange for shares.

[spectoacc] 01/5/2020 06:49

@gopher - because they'll point out the length of time to realise value from the loans, the loss of value if they attempted to dump them, and that they're technically winding down as it is.

[makinbuks] 30/4/2020 10:44

Same team but different leader. This is effectively Dawn Kendall taking control. Positive in my view.

[spectoacc] 30/4/2020 09:37

@rausage - the Ords and Cs are in effect different companies, with generally differing holdings (eg no AD in the C's, & shorter loan duration).

Agree re extra year - if only because trying to wind down either portfolio in this market would be horrendous.

Is possible the June vote will go against them but even if it does, would be no swift return of capital. Main thing is, they recognise (how can they not!) that things have to change.

[scburbs] 30/4/2020 09:30

Looks like the discussions with shareholders has potentially bought them another year to show they can turn this around, but not permit them to reinvest any capital receipts which will be used for share buy backs or capital returns until 2021 vote. Seems sensible in the circumstances.

"If the 2020 Continuation Vote passes for any Share Class, the Board intends to propose a further continuation vote during 2021 for that Share Class ("2021 Continuation Vote ") with any excess cash flow from the amortisation, repayment or realisation of assets prior to the 2021 Continuation Vote being returned to shareholders of that Share Class either through the repurchase of Shares or, if the quantum is material, via a return of capital"

[rausage] 30/4/2020 09:29

Hey all. First post on here. Hope all are well!
Where's the change in ticker discussed? Missed that.
I've gone back through the various docs etc to try to break down what happens in the event of a wind down of ord/Cs with regards to return of capital. Am I right in thinking that (assuming both cont. votes fail) C share portfolio get wound down & redistributed to C-share holders, and then everything left goes to ordinary? Admittedly it was a few weeks ago when I read, but I remember thinking that C shares were similar to senior debt and would basically be payed off at full, current NAV before ord were paid out at whatever was left. Could anyone with a better understanding than myself elaborate? TIA.
On a separate note - surely it's in most shareholder's interest to continue (even the ords), a wind down firesale in a troubled economy seems like a tough way to achieve anything close to fair value. Obviously lots of issues (esp w ords) to cause people to have 'given up hope' though. Just interested in thoughts. I'll be voting to cont. anyway...

[richyggg] 30/4/2020 09:28

Should there be a vote for wind down , would the share price be expected to approach the NAV , which is potentially under-estimated ?

[chucko1] 30/4/2020 07:56

Changing ticker, though!

Underwhelming.

[spectoacc] 30/4/2020 07:49

Brilliant - "We're changing manager, to a new manager which is the same people as the old manager".

Glad to see separate continuation votes at end-June for the Ords and C's tho. IMO the ords need to go, the C's to continue.

[chucko1] 29/4/2020 20:49

I think this Trust is worse than poorly rated - detested might be nearer the mark. Therein lies the value although it make a long time to ooze out.

[gopher] 29/4/2020 20:23

An income Trust without income is always going to be poorly rated. I agree with comments but would like to see some positive write ups by those with a better inside track

[chucko1] 24/4/2020 21:14

Funny that, did the same today. They are cheap vs. the Cs in all likelihood. The write down of the AD should explain no more than 7p of the price differential.

So I sold a bunch of Cs and bought twice the amount of ords. If they restart dividends, I get twice as much. If they both rise by 20p to 43p and 66p respectively (keeping the 23p differential), I make twice the gain. The fixed 23p differential as of late is mad. Only if you have specific knowledge of the underperformance of loans in the ords vs. the loans in the Cs is such an analysis invalid. Given the virus, everything is random and so I will let blind statistics guide me rather than stale knowledge (if it ever existed).

[2wild] 24/4/2020 16:43

At 31 March 2020, the unaudited estimated NAV was 69.82p and 97p on the Cs.

PPicked up a few at 21.92p. Assuming 50% fall in NAV ¹should give a profit of 50% over next few years.
.

[a0002577] 02/4/2020 17:05

interestingly JLEN have just purchased (part of) another AD plant. This is their announcement which puts a value on a working plant.

"JLEN, the listed environmental infrastructure fund, is pleased to announce an investment in the Peacehill Farm anaerobic digestion (AD) plant for an aggregate amount of c.GBP11m. The investment consists of the provision of a debt facility and subscription for a minority equity stake in JLEAG AD Limited, which holds, through its wholly owned subsidiary Peacehill Gas Limited, the rights and operational assets at the Peacehill Farm AD plant.

The Peacehill Farm AD plant, located in Wormit, Fife, Scotland, was commissioned in December 2015 . The plant has a thermal capacity of c.5MW(th) and predominantly produces biomethane exported to the national gas grid. In addition, the plant also has a 0.25MW(e) CHP engine on site. The Peacehill Farm AD plant is accredited under the Renewable Heat Incentive (RHI) and Feed-in-Tariff (FiT) schemes."

[spectoacc] 01/4/2020 07:08

@steve36 - yes it could.

@A00002577 - they released the next two months of NAVs later in the day, same sort of figures.

Again, my big concern - all of this is pre bloody Covid-19. What on earth is a NAV that accounts for possible non-payment of other loans?

If they could remove the divi (for the C's too) on 19th March, do they really not have anything more to say by 31st March?

[steve36] 31/3/2020 18:46

Thanks Specto, that makes sense although the announcement could have been clearer

[a0002577] 31/3/2020 16:59

How right you are SpecToAcc - and the valuation was 3 months ago. Wonder what remedial work has been done in the time since the problem was announced.

Also wonder why the price has gone up so sharply in the past few days.

JLEN might snap these up - they seem to know what they are doing with AD. If they don't then you will know there is a serious and insoluble/intractable problem.

WE had one of these near us and eventually the whole thing was demolished!

I don't think anyone has posted this

"As a result, the unaudited, estimated NAV per Ordinary Share as at 31(st) December 2019 was 72.57p, representing a decrease of 21.11p per Ordinary Share or 22.53% from 30(th) November 2019."

[spectoacc] 31/3/2020 15:56

I took it to mean that SQN only own a % of the AD plants, ie security isn't over 100%. KPMG's valuation (pre-Covid!) is of the whole.

[steve36] 31/3/2020 15:51

Could anyone with a better grasp of maths/economics than me explain how the midpoint of the FV range is lower then the low end of the FV Range?

The Board has now received the KPMG report. KPMG provided a range of valuations of the AD Plants prepared on a Fair Value basis of between GBP64.76m and GBP73.26m ("the FV Range") as at 31(st) December 2019. This range is derived from a discounted cash flow model using expert input as well as observed market transactions. The valuations are reflective of the operational capability and contractual positions of the AD Plants as at 31(st) December 2019, taking account of prudent estimates of cash flow upside where KPMG believe that a willing investor would likely attribute value as part of a competitive acquisition process. A detailed paper and va(D) luation model has been provided to the Company for each AD Plant.

KPMG has further stated that should a point value be required, as it is for the calculation of the NAV and for the production of the Company's Interim Financial Statements to 31(st) December 2019, the mid-point of the FV Range could be considered appropriate ("the FV Mid-Point"). The Board has determined to use the FV Mid-Point and, accordingly, the Fair Value of the Company's investment in AD Plants is GBP55.33m, resulting in additional expected credit losses on the related credit investments of GBP73.71m, equivalent to 20.71p per Ordinary Share or 22.20% of the Ordinary Share NAV. This has been calculated taking into account other lenders on three of the AD Plants, the outstanding debt held in the Company's books and the Company's existing IFRS9 Expected Credit Losses.

[chucko1] 31/3/2020 13:49

And a larger hit than was suggested by the original range given. That is not good.

[spectoacc] 31/3/2020 13:23

I was only in C's, but wouldn't have sold them down there.

KPMG think the AD still has value, but another thumping hit to NAV. Disappointing lack of Covid commentary - are the AD's operational or have the workers gone home?

[chucko1] 31/3/2020 12:39

It wasn’t easy. I had already sold from normals to Cs in part, but if you were only in Cs, it was a gift from above. This happens often in market blowups. This is why I value cash as earning 6% per annum - provides the liquidity to do things at times like this that those without cash cannot risk doing (or do not have the stomach, which is quite understandable).

[spectoacc] 31/3/2020 12:27

Was there a market in the C's? I've frequently been unable to sell anything in size.