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Alcentra EurFltRt Fd (AEFS)

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Thursday 11 July, 2019

Alcentra EurFltRt Fd

Introduction of quarterly redemption mechanism

RNS Number : 2577F
Alcentra European Fltng Rate Inc Fd
11 July 2019

11 July 2019

Alcentra European Floating Rate Income Fund Limited

Introduction of quarterly redemption mechanism

The Board of Directors of Alcentra European Floating Rate Income Fund Limited (the "Company") announces that it has conducted a comprehensive review of the outlook for the Company, in tandem with extensive shareholder consultation. A key theme from these discussions has been that shareholders are supportive of the Company and the Investment Manager and wish to continue to be invested in the asset class.

While the Board does not wish to change the Company's investment approach, it is aware that a number of investors wish the Board to take steps to try to ensure that the discount at which the Company's shares trade to their net asset value is narrowed.

Therefore following the review outlined above, the Board has concluded that it would best serve shareholders by strengthening the Company's approach to discount control through introducing a quarterly redemption mechanism.

Quarterly redemption mechanism

The Board is proposing to introduce a quarterly redemption mechanism as follows:

·      On a quarterly basis, ordinary shareholders will have the option to redeem up to 20 per cent. of their holding of ordinary shares (the "Basic Entitlement") as at the relevant record date (a "Quarterly Redemption")

·      The Company will calculate its net asset value on the final business day in each quarter (or such other date as the Board of Directors in its absolute discretion may determine, the "Calculation Date"). Quarterly Redemptions will be made at a 1.5 per cent. discount to net asset value such that ongoing shareholders are not disadvantaged by shareholders electing to redeem

·      Shareholders may request to redeem shares in excess of their Basic Entitlement and such requests will be satisfied on a pro rata basis to the extent that other shareholders do not request to redeem any of all of their Basic Entitlement

·      In each year, no more than 50 per cent. of the ordinary shares in issue (excluding ordinary shares held in treasury) may be redeemed

·      Ordinary shares purchased under this mechanism will be held by the Company in treasury and will be available for reissue

The Board believes the change to the Company's discount control policy will broaden the appeal of the Company in the market, as the active reduction of discount risk will provide materially improved liquidity for both buyers and sellers of the Company's shares. It is hoped that the Company's share price rating will improve such that it is able to issue shares at a premium to net asset value.

Subject to shareholder approval, the Company will implement the first Quarterly Redemption from the quarter ending 31 December 2019. In the intervening period from today until the quarterly redemption mechanism is approved by shareholders at the general meeting described later, the Company will continue its active approach to share repurchases.

Quarters will be deemed to end on the last day of March, June, September, and December each year and the Calculation Date will be the last business day of each relevant quarter. No later than 30 business days prior to each quarter end, shareholders will be able to submit their redemption requests. The Company's net asset value and therefore the Quarterly Redemption price (the "Redemption Price") will be struck on the last business day of each quarter. The Company will aim to settle each quarterly redemption 30 business days following a quarter end, however this may be delayed due to any abnormal market conditions arising at the relevant time impacting the underlying portfolio.

Further, the Company notes that its Articles of Association currently provide that if, as at 31 March, 30 June, 30 September or 31 December in any calendar year, the Ordinary Shares of any class in issue have, on average over the last twelve calendar months preceding such date traded at an average discount in excess of 5 per cent. of the net asset value per share of that class, the Company will implement a redemption offer. In conjunction with the introduction of the quarterly redemption mechanism, the Company is proposing removing this requirement from its constitution.

General meeting

The Company will convene a General Meeting to set forth a resolution to approve the amendments to the Company's Articles of Association that are required to implement the quarterly redemption mechanism and remove the redemption offer requirement referred to above.

A circular detailing further details of these amendments and terms and conditions of the quarterly redemption mechanism will be published in due course. The terms and conditions applicable to each quarterly redemption in the future will be contained in a circular to be distributed to shareholders in advance of each annual general meeting.

For clarity, the Board emphasises that there is no proposed change in the Company's investment policy, nor the Investment Manager's approach to investment.

This announcement is released by Alcentra European Floating Rate Income Fund Limited and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.


BNP Paribas Securities Services S.C.A., Guernsey Branch

Jasper Cross                +44 (0)1481 750 850


J.P. Morgan Cazenove

William Simmonds         +44 (0)20 7742 4000


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