Vpc Specialty Lending In... Share Discussion Threads

[chucko1] 17/4/2024 16:11

@Specto, there are likely to be more ROCs in reasonably short order, now that the leverage is much smaller. Also likely to get 4-6p more dividends this year, although a part of that is likely to be taken from capital, so might as well just look at total return from here on in.

@Ctrader3, early days - and as the NAV shrinks, there may be significant opportunities to do well out of this if previous assumptions about asset quality hold good - i.e. that credit losses remain below 5% and most of the investment capital losses are taken. The problem is you are always having to rely open VSL reports and updates which tend to confuse in the first instance. The ROC RNS being a case in point as well as the December Portfolio Update.

[waterloo01] 17/4/2024 15:59

1st of many they have suggested, and as the most equitable way to do it for smaller holders.

[ctrader3] 17/4/2024 15:47

I added back the return of capital before the xp date, still early days here.

[chucko1] 17/4/2024 15:46

Note that the IB handling this is Jefferies - that well known and regarded Tier 1 Investment Bank.

The same IB where Mike Prew wrote that brilliantly incisive analysis on SUPR. Just saying.

[spectoacc] 17/4/2024 15:44

You were spot on @chucko1. Be interesting to see if the MMs get it wrong more than once.

[chucko1] 17/4/2024 15:37

So yes, 4.26 B shares per Ordinary share.

I think the reason for doing it this way is that because the amount returned is a fixed USD amount and the shares are GBP denominated, you have to wait util the FX is set to know what B share distribution you are going to get.

In the case of SLFR/X, it was a fixed 1p or 3p or whatever, so they could issue a new share on each occasion with that as the nominal value quite simply.

Of course, had VSL said that they would be returning 4pps in the first place, then none of this confusion would have arisen.

A sign of future chaos (to a degree), I sense. I think VSL are making this up as they go along.

[ctrader3] 17/4/2024 15:33

VPC Specialty Lending Investments PLC

Initial Return of Capital Exchange Ratio

On 9 April 2024, the Board of VPC Specialty Lending Investments plc (the "Company") announced an initial distribution to shareholders of $15 million, equivalent to approximately £11.9 million as at the date of release, through the issue and redemption of B Shares.

Pursuant to the authority received from shareholders at the General Meeting on 5 April 2024, B Shares of 1 penny each will be issued to all Shareholders on 19 April 2024 by way of a bonus issue at a ratio of 4.26159039 new B shares for each Ordinary Share held at the Record Date of 6:00 p.m. on 18 April 2024. The Redemption Date in respect of this initial return of capital is 25 April 2024. The B Shares will be redeemed at 1 penny per B Share. The Company will not allot any fractions of B Shares and entitlements will be rounded down to the nearest whole B Share. The proceeds from the redemption will be sent to uncertificated Shareholders through CREST or via cheque to certificated Shareholders on or around 10 May 2024.

[chucko1] 17/4/2024 08:18

Yes, you would likely end up with about 2p profit at current bid were you to try now. Given the variability in longer term outcome for VSL, only for traders at this stage!

[cousinit] 17/4/2024 08:08

Top work Chucko.

Whilst I'd done well on some of the SLFR/X ex dates, I also tried on CRS. Even though the div was nearly 10% of the share price, by the time I'd done the round trip I'd cleared maybe less than a quarter of it and it took best part of a week to trade back in...

I guess it depends on what %age the distribution is vs the share price. On SLFR they were often fairly chunky.

[chucko1] 17/4/2024 07:47

What I think the intention was that you get issued a bunch of B shares that you will never see, so you would not notice that you will be getting about 4.3 shares per ordinary share. Yes, an appallingly written RNS, and one might recall that they did this all in a hurry as they got approval for the B share scheme.

But this is so lax that one wonders what the heck else we will face as this all winds down. Like another NAV lurch? (in either direction). Note also that this month's NAV update is abnormally late.

@Specto, your point about 90p is a very good one as many holders will be in a similar position. So yes, 1p or 4.3p is little more than noise at this stage. But for those who bought in the 50s etc., a lot to chew over. And if you think you get back over 80p in total (close to NAV), then why sell now just to arb a couple of pence after bid/offer and SD?

[waterloo01] 17/4/2024 07:39

You might be right. Certainly unclear but 5% is more than 1p.

[spectoacc] 17/4/2024 07:38

"The B Shares will be issued on 19 April 2024 and redeemed at 1 penny per B Share."

"The capital to be returned represents approximately 5.12 per cent. of the Company's Net Asset Value as at 31 January 2024."


It certainly is confusing. I've no problem with them saying they're issuing the B's at nominal 1p, but why also say they'll redeem them at 1p? I think this is the most badly-worded one I've ever seen.

Unfortunately my average in someone else's a/c is 90p, so not sure a free 1p, 4.3p, or somewhere inbetween really cuts it! :)

[chucko1] 17/4/2024 07:34

But that is only a small part of the story. What about the amount that you will get paid per share currently held? Bloomberg and SharePro BOTH say that it is 1p. No - that is merely the nominal amount of the B share being issued. There is $15mn being distributed which amounts to circa 4.3pps of current holding. Again, this was a confusion in the original RNS. Ludicrous. The MMs have totally missed this, just as they did on the first ex-cap on SLFR/X. It is the fact that this has happened on a Wednesday that no one has really paid attention.

You will see the current Toal volume cited as 126k shares - it is much higher than that! (I know for a fact).

[cwa1] 17/4/2024 07:26

I'm with chucko1 on this one as the record date is clearly stated BUT it would be nice if they just plainly stated what the XCR date is just to avoid any confusion!

[chucko1] 17/4/2024 07:23

Indeed! The Notice put out by VSL was poorly constructed. Compare it with the ex-cap notices out out by SLFR/X - spot they difference. The point is that the Record dates is always one day after the ex-date. It has to be as UK stocks settle T+2.

[cwa1] 17/4/2024 07:22

FWIW, the LSE shows it as being XCR(Ex Capital Return), which SHOULD be correct

[waterloo01] 17/4/2024 07:15

Thought it was Ex tomorrow

Timetable

It is expected that the timetable will be as follows:

Record Date of initial return of capital

6 p.m. on 18 April 2024

Issue of Bonus shares

19 April 2024

Redemption Date of initial return of capital

25 April 2024

Payment date for CREST

10 May 2024

Dispatch of cheques in respect of certificated shareholders

10 May 2024

[chucko1] 17/4/2024 07:12

This has gone ex-cap this morning. Not that you would know it!

The Notice put out by VSL only specified the Record Date and the allocation date - it did not mention the ex date. Bloomberg does, and cites it as today, which is correct (to correspond with the Record Date).

SharePro, absurdly, has the correct Record Date, but has the ex date as tomorrow.

That said, Level 2 cites the share as now being XP. Wild! The bid is unchanged from yesterday, so yesterday's purchasers (and everyone else who is watching this) has a free piece of capital, were they to sell them today.

[ctrader3] 13/4/2024 10:20

KEY INFORMATION
ISIN GB00B16NNR78
TIDM TR27
Exchange LSE
Par Value £100
Maturity Date 7/12/2027
Coupons per year 2
Next coupon date 7/6/24
Coupon 4.25%
Income Yield 4.24%
Gross redemption yield 4.14%
Accrued interest 147.47p
Dirty Price £101.85


All u need to know, capital gains are tax free, so if held outside a tax wrapper.
Inside a tax wrapper u receive the yield tax free.
U can buy at AJ BELL for £5, u have to leave an order but are filled normally
straight away.
The dirty price is the price u have to pay as u have to pay the holder any accrued interest, if u want to lock in a higher yield if u think interest rates are going to fall an option. If u hold to maturity a guaranteed return, as u will be sent your
funds on the maturity date.

[ctrader3] 13/4/2024 10:14

KEY INFORMATION
ISIN GB00BL68HJ26
TIDM T26
Exchange LSE
Par Value £100
Maturity Date 30/1/2026
Coupons per year 2
Next coupon date 30/7/24 e
Coupon 0.125%
Income Yield 0.13%
Gross redemption yield 4.37%
Accrued interest 2.51p
Dirty Price £92.75

[spectoacc] 11/4/2024 05:53

Why tax at 33%? 40% on earned interest in the higher band.

But fair point - got my Gilts when they were c.5%, and highest I saw savings rates go to was 6%. So still a nobrainer (£5k vs 3.6k).

Also an argument for not wanting to be pushed into the 45% rate, now returns are higher. Only the Gilt interest will appear on tax return.

And arguably much better protection than the £85k's in banks, albeit the Gilts are held in HL.

[waterloo01] 10/4/2024 17:50

OT, apologies.

My maths might be off but the differential isn't as great as it seems. £100k into Gilts earning ave of 4% tax free per year, will pay out an ave of £4k per year (equivalent)

In an easy access account the same £100k earning 5% gives £5k minus tax at 33%, so £3,335k a year. £650 tax saving per £100k with the guilt, but to achieve that one loses the complete flexibility, as the value of Gilts do sometimes vary (ie go down, even if they will eventually reach par)