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CQS Rig Finance Fund Ltd (RIG)

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Tuesday 23 August, 2011

CQS Rig Finance Fund Ltd

Interim Management Statement

                          CQS RIG FINANCE FUND LIMITED
                         Monthly Shareholder Fact Sheet

CQS Rig Finance Fund Limited (the "Company"), a closed-ended investment company
incorporated in Guernsey, is pleased to announce that its Monthly Fact Sheet for
July 2011 is now available on the Company's website ( and
includes further information on the top ten investments and outstanding

In July, the mood in risky asset classes was dominated by the debate around the
US debt ceiling and the risk of a potential downgrade from the AAA status.
Equities weakened into the close of the month due to the deepening political
impasse in the US. The S&P 500 Index fell 2% in US dollar terms. The price of
Brent Crude remained unaffected by the move in equities rising 4% to close at
$116.74 per barrel. The Company's final NAV per share ended the month 1.2%
higher during the month to 28.56 pence.

There were two large movements in the portfolio. Losses were realised on the
sale of the Petromena 10.85% bonds. These bonds have been in liquidation
proceedings since December 2009 and recovery estimations have been reduced by
market participants due to the deterioration in value of the underlying
collateral over this time period. The final value and timing of recovery remains
uncertain and subsequently, the decision was made to exit half of the position
as part of the ongoing effort to move the portfolio into income-generating
assets. Losses were more than offset by an increase in the perceived recovery
value of another one of the Company's legacy positions, as well as small profits
across a number of other strategies. Downward moves in the Remedial Cayman and
Rubicon Offshore bond prices were offset by cash receipts.

There were three pieces of good news during the month.

Firstly, at the second attempt, TrollDrilling & Services Ltd closed an equity
and bond issue during the month. Troll is issuing $60m of first lien five-year
bonds paying a 13.75% coupon and the Company subscribed for a small amount of
the bond issue. The proceeds will be used primarily to purchase an offshore
service vessel built by Remedial Cayman and sold to Spring Capital earlier in
the year. The deal is due to settle in late August 2011 and the Company's
position in the Remedial bonds is due to be cashed out soon thereafter.

Secondly, credit positive news was seen on Polarcus as the company announced
the signing of a term sheet for a $410m bank facility. With the new facility,
the company will take advantage of the $260m proposals from Eksportfinans for
the long-term financing of the new build program for Polarcus Amani and Polarcis
Adira. This will, subject to closing, allow Polarcus to refinance certain
existing debt obligations. The Company holds the 1st and 2nd lien bonds.

Thirdly, Rubicon Offshore confirmed that the vessel Maverick has been sold for
$35.5m and 100% of the sale proceeds were used to repay the senior callable bond
at par as per the terms of the Mandatory Redemption clause in the loan
agreement. The cash was received into the Company on 17 July.

For further information, please contact:

Tom Daish
Corporate Secretariat
Kleinwort Benson (Channel Islands) Fund Services Limited
01481 727111

Hugh Field
Director, Corporate Finance
Arbuthnot Securities
020 7012 2000

All market data sourced from Bloomberg

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(i) the releases contained herein are protected by copyright and 
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(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE