TIDMBGLF
RNS Number : 5814N
Blackstone Loan Financing Limited
26 September 2023
26 SEPTEMBER 2023
FOR IMMEDIATE RELEASE
RELEASED BY BNP PARIBAS S.A., JERSEY BRANCH INTERIM RESULTS
ANNOUNCEMENT
THE BOARD OF DIRECTORS OF BLACKSTONE LOAN FINANCING LIMITED
ANNOUNCE INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
Blackstone Loan Financing Limited
(the "Company" or "BGLF")
Half Yearly Financial Report for the six months ended 30 June
2023
Refer to the glossary below for the definitions of all the
terms, jargon, abbreviations and acronyms used throughout this
half-yearly financial report.
STRATEGIC REPORT
ABOUT THE COMPANY
The Company was incorporated on 30 April 2014 as a closed-ended
investment company limited by shares under the laws of Jersey and
is authorised as a listed fund under the Collective Investment
Funds (Jersey) Law 1988. The Company continues to be registered and
domiciled in Jersey. The Company's ordinary shares are quoted on
the Premium Segment of the Main Market of the LSE.
The Company has a wholly-owned Luxembourg subsidiary, Blackstone
/ GSO Loan Financing (Luxembourg) S.à r.l. which currently has an
issued share capital of 2,000,000 Class A shares and 1 Class B
share. As at 30 June 2023, 100% of the Class A and Class B shares
were held by the Company together with 224,651,555 Class B CSWs
issued by the Lux Subsidiary. The Lux Subsidiary invests in PPNs
issued by BCF, which in turn invests in CLOs and loans.
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company with cash returned to the
Shareholders in a timely and efficient manner. The Board also
published a circular to the Shareholders to convene an EGM on 15
September 2023 seeking approval from the Shareholders for a managed
wind-down of the Company and associated amendments to the Company's
investment objective and policy and to its share capital.
On 15 September 2023, the Shareholders approved the resolution
at the EGM. Refer to the Chair's Statement below and Strategic
Overview below for further details.
Investment objective
Further to the resolution that was passed by the Shareholders on
15 September 2023, the new investment objective of the Company is
to realise all existing assets in the Company's portfolio in an
orderly manner.
Refer to below for details on the Company's new investment
policy.
RECONCILIATION OF IFRS NAV TO PUBLISHED NAV
At 30 June 2023, there was a difference between the NAV per
ordinary share as disclosed in the Condensed Statement of Financial
Position, EUR0.6761 per ordinary share ("IFRS NAV") and the
published NAV, EUR0.8808 per ordinary share, which was released to
the LSE on 21 July 2023 ("Published NAV"). The reconciliation is
provided below and in Note 13 in the 'notes to the condensed
interim financial statements'. The difference between the two
valuations is entirely due to the different valuation bases used,
as explained in detail below.
Valuation policy for the Published NAV
The Company publishes a NAV per ordinary share on a monthly
basis in accordance with its Prospectus. The valuation process in
respect of the Published NAV incorporates the valuation of the
Company's CSWs and underlying PPNs (held by the Lux Subsidiary).
These valuations are, in turn, based on the valuation of the BCF
portfolio using a CLO intrinsic calculation methodology per the
Company's Prospectus, which we refer to as a "mark to model"
approach. As documented in the Prospectus, certain "Market Colour"
(market clearing levels, market fundamentals, BWIC, broker quotes
or other indications) is not incorporated into this methodology.
This valuation policy is deemed to be an appropriate way of valuing
the Company's holdings and of tracking the long-term performance of
the Company as the underlying portfolio of CLOs held by BCF are
comparable to held to maturity instruments and the Company expects
to receive the benefit of the underlying cash flows over the CLOs'
entire life cycles.
Valuation policy for the IFRS NAV
For financial reporting purposes on an annual and semi-annual
basis, to comply with IFRS as adopted by the EU, the valuation of
BCF's portfolio is at fair value using models that incorporate
Market Colour at the period end date, which we refer to as a "mark
to market" approach. The Company also assesses and publishes the
mark to market IFRS NAV on a quarterly basis. IFRS fair value is
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants as at the measurement date and is an "exit price" e.g.
the price to sell an asset. An exit price embodies expectations
about the future cash inflows and cash outflows associated with an
asset or liability from the perspective of a market participant.
IFRS fair value is a market-based measurement, rather than an
entity-specific measurement and so incorporates general assumptions
that market participants are applying in pricing the asset or
liability, including assumptions about risk.
Both the mark to model Published NAV and mark to market IFRS NAV
valuation bases use modelling techniques and input from third-party
valuation specialists.
KEY PERFORMANCE INDICATORS
IFRS NAV Published NAV
NAV [1] EUR0.6761 EUR0.8808
(31 Dec 2022: EUR0.6784) (31 Dec 2022: EUR0.9081)
-------------------------- --------------------------
NAV total return1 5.01% 2.20%
(31 Dec 2022: (19.19)%) (31 Dec 2022: 5.22%)
-------------------------- --------------------------
Premium/(discount)1 0.58% (22.80)%
(31 Dec 2022: (1.98)%) (31 Dec 2022: (26.77)%)
-------------------------- --------------------------
Dividend- EUR0.0475 EUR0.0475
(30 Jun 2022: EUR0.0450) (30 Jun 2022: EUR0.0450)
-------------------------- --------------------------
Further information on the reconciliation between the IFRS NAV
and the Published NAV can be found below and in Note 13 in the
'notes to the condensed interim financial statements'. Refer to
'Discount Management' in the Chair's Statement below for the latest
share price discount to the Published NAV.
Performance
Published
IFRS NAV NAV per Premium/ Discount
per ordinary ordinary Share price (discount) Published Dividend
Ticker share share [2] IFRS NAV NAV yield [3]
BGLF
------------- ---------- ----------- ----------- ---------- ----------
30 Jun
2023 EUR0.6761 EUR0.8808 EUR0.6800 0.58% (22.80)% 12.50% 3
------------- ---------- ----------- ----------- ---------- ----------
31 Dec
2022 EUR0. 6784 EUR0. 9081 EUR0. 6650 (1.98)% (26.77)% 12.03 % 3
------------- ---------- ----------- ----------- ---------- ----------
BGLP [4]
------------- ---------- ----------- ----------- ---------- ----------
30 Jun
2023 GBP0.5810 GBP0.7569 GBP0.5850 0.69% (22.71)% 12.47% 3
------------- ---------- ----------- ----------- ---------- ----------
31 Dec
2022 GBP0. 6006 GBP0. 8040 GBP0. 5888 (1.96)% (26.77)% 12.03 % 3
------------- ---------- ----------- ----------- ---------- ----------
LTM 1 3-Year Annualised Cumulative
return annualised since inception since inception
BGLF IFRS NAV (0.82)% 6.92% 4.73% 51.17%
------- ----------- ---------------- ----------------
BGLF Published NAV 5.68% 11.91% 7.86% 96.78%
------- ----------- ---------------- ----------------
BGLF ordinary share
price (2.98)% 10.79% 5.44% 60.63%
------- ----------- ---------------- ----------------
The Company is not managed in reference to a benchmark, however
commentary to market indices and market performance is detailed in
the Portfolio Adviser's report below.
DIVIDS AND OTHER KEY DATA
Dividends
On 23 January 2023, the Board announced that the Company will be
targeting a total 2023 annual dividend of between EUR0.08 and
EUR0.09 per ordinary share, which will consist of quarterly
payments of EUR0.02 per ordinary share for the first three quarters
and a final quarter payment of a variable amount to be determined
at that time.
Ordinary share dividends for the period ended 30 June 2023
Period in respect of Date declared Ex-dividend date Payment date Amount per ordinary share
EUR
-------------- ----------------- ------------- -------------------------
1 Jan 2023 to 31 Mar 2023 25 Apr 2023 4 May 2023 2 June 2023 0.0200
-------------- ----------------- ------------- -------------------------
1 Apr 2023 to 30 Jun 2023 21 Jul 2023 3 Aug 2023 1 Sep 2023 0.0200
-------------- ----------------- ------------- -------------------------
Ordinary share dividends for the year ended 31 December 2022
Period in respect of Date declared Ex-dividend date Payment date Amount per ordinary share
EUR
---------------- ------------------- --------------- -------------------------
1 Jan 2022 to 31 Mar 2022 25 Apr 2022 5 May 2022 9 Jun 2022 0.0175
---------------- ------------------- --------------- -------------------------
1 Apr 2022 to 30 Jun 2022 21 Jul 2022 28 Jul 2022 26 Aug 2022 0.0175
---------------- ------------------- --------------- -------------------------
1 Jul 2022 to 30 Sept 2022 21 Oct 2022 3 Nov 2022 2 Dec 2022 0.0175
---------------- ------------------- --------------- -------------------------
1 Oct 2022 to 31 Dec 2022 23 Jan 2023 2 Feb 2023 3 Mar 2023 0.0275
---------------- ------------------- --------------- -------------------------
Period highs and lows
Period ended 30 June 2023 and 30 June 2022
2023 2023 2022 2022
High Low High Low
Published NAV per ordinary share EUR0.9220 EUR0.8808 EUR0.9657 EUR0.9127
--------- --------- --------- ---------
BGLF share price (last price) EUR0.7700 EUR0.6650 EUR0.8000 EUR0.7450
--------- --------- --------- ---------
BGLP share price (last price) GBP0.6650 GBP0.5750 GBP0.6695 GBP0.6302
--------- --------- --------- ---------
Schedule of investments
As at 30 June 2023
Nominal Market Percentage of
holdings value NAV
EUR %
----------- ----------- -------------
Investment held in the Lux Subsidiary:
----------- ----------- -------------
CSWs 224,651,555 285,901,763 95.51
----------- ----------- -------------
Shares (2,000,000 Class A and 1 Class B) 2,000,001 7,623,498 2.55
----------- ----------- -------------
Other net assets n/a 5,797,186 1.94
----------- ----------- -------------
Net assets attributable to Shareholders 299,322,447 100.00
----------- ----------- -------------
As at 31 December 2022
Nominal Market Percentage of
holdings value NAV
EUR %
----------- ----------- -------------
Investment held in the Lux Subsidiary:
----------- ----------- -------------
CSWs 239,550,782 290,426,295 96.29
----------- ----------- -------------
Shares (2,000,000 Class A and 1 Class B) 2,000,001 7,294,874 2.42
----------- ----------- -------------
Other net assets 3,893,808 1.29
----------- ----------- -------------
Net assets attributable to Shareholders 301,614,977 100.00
----------- ----------- -------------
Schedule of significant transactions
Date of transaction Transaction type Quantity Amount
EUR
----------------- ----------- ------------
CSWs held by the Company - ordinary share class
----------------- ----------- ------------
3 February 2023 Redemption (8,180,401) (13,605,180)
----------------- ----------- ------------
5 May 2023 Redemption (6,718,826) (11,442,059)
----------------- ----------- ------------
The proceeds of the redemptions were used to fund dividends and
share buy backs and to cover other administrative costs. The
Company made no subscriptions during the period ended 30 June
2023.
CHAIR'S STATEMENT
Dear Shareholders,
Company returns and NAV[5]
The Company delivered an IFRS NAV total return per ordinary
share of 5.01% over the first six months of 2023, ending the period
with a NAV of EUR0.6761 per ordinary share. The return was composed
of 5.23% dividend income and (0.22)% net portfolio movement.
On a Published NAV basis, the Company delivered a total return
per ordinary share of 2.20% over the first six months of 2023,
ending the period with a NAV of EUR0.8808 per ordinary share. The
return was composed of 5.23% dividend income and (3.03)% net
portfolio movement. Refer to below for the calculation of the IFRS
and Published NAV total return.
As highlighted above, the Company uses different valuation
policies to determine Published and IFRS NAV. As at 30 June 2023,
the variance between Published and IFRS NAV was EUR0.2047 per
ordinary share. This is primarily associated with the discount
rates used under the two policies. The table below further explains
the rationale regarding the differences in the assumptions that
have contributed to the variance as at 30 June 2023.
During the first half of 2023, the Company's performance on a
Published NAV and IFRS NAV basis was supported, through its
investment in BCF, by uninterrupted distributions from the
underlying CLO and loan portfolio. CLO distributions have continued
to benefit from refinancing and reset activity during 2021 and
early 2022.
The Company has declared two dividends to ordinary Shareholders
in respect of the six-month period ended 30 June 2023, totalling
EUR0.04 per share. As a reminder, the 2023 BGLF dividend policy is
composed of three flat payments before a final variable payment to
be determined in the fourth quarter of 2023. The BGLF 2023 dividend
policy targets a total annual dividend of EUR0.08 - EUR0.09 [6] .
Details of all dividend payments can be found within the 'Dividends
and Other Key Data' section at the front of this Half Yearly
Financial Report.
To remind investors, the Company's dividends are funded from the
cash flows generated by the Company's underlying CLO portfolio.
During the period, the Board considered three strategic priorities
when allocating these cash flows:
-- Paying a sustainable dividend sufficiently covered by cash
generated, that does not erode the capital of the Company over
time;
-- Providing funds to implement the Board's share buyback policy; and
-- Reinvesting surplus cash proceeds in order to grow the Company's NAV over time.
The Board's framework considered both realised and
forward-looking expectations of underlying cash flows to derive a
target range for the dividend for the coming year, then considered
the level of the Company's share price and calculations of the NAV
per share in order to allocate a budget for share buybacks and
re-investment.
Historical BGLF NAV and share price
The graph below shows cumulative Published NAV and ordinary
share price total returns and cumulative returns on European and US
loans [7] .
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited//
]
Historical BCF default loss rate
The graph below shows the default loss rate, which incorporates
asset recovery, within the BCF portfolio and the default loss rate
of European and US loans [8] .
[Graphs and charts are included in the published Half Yearly
Financial Report which is available on the Company's website at
https://www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited//
]
Market conditions
Rate volatility returned at the start of 2023 to spark a crisis
of confidence in the banking sector in March, culminating in the
collapse of Silicon Valley Bank and UBS's takeover of Credit
Suisse. Shortly after the turmoil in the banking sector subsided,
the prospect of a US sovereign debt default spooked markets in May,
before rebounding in June as risk appetite returned once an
agreement was reached. At the same time, central banks around the
world pressed on with further rate hikes, led by the Fed's ten
straight rate hikes in 15 months which left the policy rate at
5-5.25%. Markets have largely accepted the prospect of rates being
higher-for-longer and with it, hopes for a near term Fed pivot have
diminished.
Amidst this context, the loan market exhibited a strong start to
the year, surpassing high yield and investment grade markets,
despite challenges from retail outflows and limited CLO
creation.
Credit metrics indicated that despite an uptick in defaults, the
majority of below investment grade companies maintained robust
fundamentals during the initial half of 2023. Moving forward, we
anticipate floating rate credit, including leveraged loans and
CLOs, to serve as a natural interest rate and inflation hedge and
remain a promising asset class for investors in the current
environment.
Discount management
The share price discount to Published NAV decreased from 26.77%
on 31 December 2022 to 22.80% on 30 June 2023. The share price
discount to IFRS NAV transitioned from a discount of 1.98% on 31
December 2022 to a premium of 0.58% on 30 June 2023. During the
first half of 2023, the Company repurchased 1,839,619 shares for
EUR 1,228,191 at an average discount of 24.20% using available cash
with the goal of reducing the volatility and quantum of discount.
As of 31 August 2023, the share price discount to Published NAV was
35.06%. As a Board, we regularly weigh the balance between
maintaining liquidity of the shares, the stability and quantum of
any discount and the desire of Shareholders to see the ordinary
shares trade as closely as possible to their intrinsic value [9]
.
Summary of results of the EGM
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company with cash returned to the
Shareholders in a timely and efficient manner. The Board also
published a circular to the Shareholders to convene an EGM on 15
September 2023 seeking approval from the Shareholders for a managed
wind-down of the Company and associated amendments to the Company's
investment objective and policy and to its share capital.
In formulating the Managed Wind-Down proposal, the Board took
into account a number of factors, including the prevailing discount
to the Published NAV at which the shares have been trading, the
market capitalisation of the Company, the liquidity of the shares,
the Company's structure and the fact that re-investment into the
BCF portfolio at NAV is not accretive to Shareholders. The Board
therefore believed that an orderly return of the net proceeds of
the realisation of the Company's investments will be in the best
interest of its Shareholders as a whole.
On 15 September 2023, the Shareholders approved all of the
following by way of an ordinary resolution:
-- the adoption a new investment objective and policy to
facilitate the Managed Wind-Down. The new investment objective of
the Company is now to realise all existing assets in the Company's
portfolio in an orderly manner. Refer to below for details on the
Company's new investment policy.
-- the conversion of the shares of the Company into redeemable
shares to allow for the proceeds of realising assets in accordance
with the Managed Wind-Down to be returned to Shareholders by way of
pro-rata compulsory redemptions of the redeemable shares. Refer to
below for more details on the mechanics to return cash to
Shareholders.
-- the issuance of a share in a new non-redeemable share class
in the Company with appropriately deferred rights (the "Deferred
Share") to ensure compliance with the mandatory requirement of the
Companies (Jersey) Law 1991 which dictates that a Jersey company
shall not issue redeemable shares at a time when there are no
issued shares of the Company that are not redeemable. The Deferred
Share will carry certain rights as detailed in section 3.5 of the
Circular.
The Board intends to continue to pay dividends to Shareholders
in respect of the financial year ending 31 December 2023, in
accordance with its dividend policy set out above. Refer to section
3.4 of the Circular for further details.
Transition away from LIBOR
The transition away from LIBOR to SOFR primarily impacts BCF's
US CLO portfolio, which accounts for 41.37% of BCF's NAV as of 30
June 2023. A portion of BCF's US CLO equity holdings include
language that will likely trigger a LIBOR to SOFR liability switch
sometime later in 2023. Under normal market conditions, the
Portfolio Adviser expects the impact to BCF's US CLO equity
positions to be relatively muted due to the ability to refinance
and the expectation of converging forward rates.
Recent market events
Local, regional, or global events such as bank failures (e.g.
Silicon Valley Bank), conflicts (e.g. Russia/Ukraine), acts of
terrorism, public health issues like pandemics or epidemics (e.g.
COVID-19), recessions, or other economic, political and global
macro factors and events could lead to a substantial economic
downturn or recession in the US and global economies and have a
significant impact on the Company and its investments. The recovery
from such downturns is uncertain and may last for an extended
period of time or result in significant volatility and many of the
risks discussed herein associated with an investment in the Company
may be increased. The Board continues to monitor noteworthy market
events and developments on a continuous basis.
ESG
The practice of responsible investing remains a key focus for
investors and for Blackstone. The Board regularly engages with the
Company's Portfolio Adviser regarding their ESG policy. Blackstone
has committed to being a responsible investor for over 35 years and
is a signatory to the PRI. This commitment is affirmed across the
organisation and guides its approach to investing.
Whilst the Company is currently exempt from the requirement to
report against the TCFD recommendations, the Board continues to
actively discuss ESG matters with BX Credit with a view to
obtaining meaningful information for Shareholders. The Board fully
acknowledges the importance of the TCFD recommendations and expects
the companies to which BCF provides finance to be compliant in
their reporting against TCFD recommendations, as may be required by
applicable law or regulation. We continue to liaise with BCF on
progress in this area.
Further information regarding the Company's approach towards
TCFD-aligned disclosures will be detailed in the Company's 2023
Annual Report and Audited Financial Statements [10] . Refer to the
Portfolio Adviser's Review below for further details on the
Portfolio Adviser's ESG policy.
The Board
Good governance remains at the heart of our work as a Board and
is taken very seriously. The Board believes that the Company
maintains high standards of corporate governance. The Board was
very active during the period, convening a total of 11 Board
meetings and 13 Committee meetings (including 6 NAV Review
Committee meetings).
During the period, the Board and its advisers have met
frequently, with the Company's advisers providing general updates
as well as recommendations on pertinent matters such as the
Company's share repurchase programme. The Board deems the careful
consideration of such matters to be critical to ensuring the
optimum returns of the Company, particularly in light of the
challenges and uncertainty faced since the start of 2022.
The work of the Board is also assisted by the Audit Committee,
NAV Review Committee, Management Engagement Committee, the
Remuneration and Nomination Committee, the Risk Committee and the
Inside Information Committee.
The Company is a member of AIC and adheres to the AIC Code which
is endorsed by the FRC and meets the Company's obligations in
relation to the UK Code.
Shareholder communications
During the first half of 2023, using our Portfolio Adviser and
Brokers, we continued our programme of engagement with current and
prospective Shareholders. The Board sincerely hopes that you found
the shareholder consultation, monthly factsheets, quarterly
letters, quarterly update webcasts and market commentary valuable.
The Board is always pleased to have contact with Shareholders and
welcomes any opportunity to meet with you and obtain your
feedback.
Outlook
With the Managed Wind-Down approved by Shareholders, as noted
above, the Board's focus is on working, together with the Portfolio
Adviser, on an orderly wind down of the portfolio and return of
cash to the Shareholders of the Company, on a timely basis, as
described in the Circular dated 25 August 2023.
The Board wishes to express its thanks for the support of the
Company's Shareholders.
Steven Wilderspin
Chair
25 September 2023
PORTFOLIO ADVISER'S REVIEW
Bank loan market overview
Over the first half of the year, leveraged loans demonstrated
remarkable resilience, surpassing other credit markets amidst
market volatility. This outperformance was driven by investors'
pursuit of floating-rate assets as a safeguard against increasing
interest rates, with the Fed and ECB latest hikes taking rates to
their highest levels in more than 22 years. Despite these
headwinds, loan prices recovered from the year-end dip and remained
relatively stable in the EUR/$93-95 [11] range.
Corporate balance sheets remained broadly robust in the first
half of 2023, with leverage at decade lows and interest coverage,
while weakening, remaining close to a four-year high [12] .
Inflation has proven stickier on the cost side than on the revenue
side for the majority of issuers, leading to a slightly weaker
outlook. One positive offset to the slowing growth and higher rate
backdrop is that companies have responded conservatively by not
adding to their debt burden (which remained flat year on year) and
reducing capital expenditure, down 7.9% in the first quarter of
2023. There has been an ongoing bifurcation between the credit
health of issuers and while the majority of corporates remain
fundamentally sound, a handful of outliers have struggled and
defaulted. The last twelve-month par weighted default rates
increased to 2.2% for both European and US loans, by 30 June 2023.
Although these are a lagging indicator, both are still well below
historic averages of 3.5% in Europe and 3.1% in the US11.
Loan issuance further slowed in the first half of 2023, driven
by lower volumes of buyout and acquisition activity, with volumes
only reaching EUR20.2 billion and $145.6 billion in Europe and the
US, down 35% and 51% from the same period last year, respectively
[13] . To put the shortage of loan issuance in perspective, year to
date volumes are 76% lower in Europe and 66% lower in the US, when
comparing against the first six months of 2022. Investors also
withdrew capital from loan funds amid generally declining secondary
market valuations. In May, assets under management for US loan
funds dipped below $100 billion for the first time since March 2021
[14] . While a strong secondary rally lifted this back above the
watermark figure in June, year to date losses in asset values still
exceed $14 billion.
Overall, European and US leveraged loans performed strongly,
returning 6.68% and 6.33% by 30 June 2023, respectively. The
average price for European and US leveraged loans grew to EUR94.71
and $93.55 from EUR91.56 and $91.89 at the end of 2022 and
similarly, European and US loan spreads (represented by 3-year
discount margin) contracted by 104 bp and 71 bp over the same
period to 557 bp and 581 bp, respectively.
Following 30 June 2023, the market continued to firm. A rally
across risk assets has pushed loan prices higher, contributing to
an improvement in sentiment which may be a catalyst for more
balanced loan markets. We expect market technicals to be supportive
barring an unexpected macro or geopolitical shock. On the whole,
the loan markets appear more sanguine compared to this time last
year, boosted by prospects of a soft landing, visibility towards
peak rates and resilient credit fundamentals.
CLO market overview
Compared to the historically wide levels seen at the end of last
year, AAA liability spreads have compressed. European CLO new issue
spreads on AAA-rated tranches tightened by 33 bp (to 187 bp),
whilst the overall weighted cost of capital contracted by 25 bp (to
299 bp). For US CLOs, AAA spreads and the weighted average cost of
capital decreased by 83 bp (to 181 bp) and by 99 bp (to 251 bp),
respectively. However, the CLO new issuance arbitrage remained
challenged due to the offsetting pressure resulting from the
combined effect of a lack of new issue loan supply and resulting
rally in loan prices. In Europe, new issuance volume in the first
half of the year trailed the same period in 2022 by 16% at EUR11.7
billion [15] .
In the US, a relatively active first quarter of 2023 gave way to
a slower pace in the second quarter, finishing at $55.6 billion
YTD; down 24% from the first half of last year [16] . Absent of any
material catalyst for CLO new issuance in the second half of 2023,
including an increase in loan new issue, we expect this muted
volume to continue. Opportunities to engage in reset and
refinancing activity have been broadly limited year to date due to
unattractive economics, especially since many managers took
advantage of the constructive market in 2021 and early 2022 to lock
in a lower cost of debt.
Since 30 June 2023, CLO activity has maintained pace in the US
and accelerated in Europe, in tandem with the recent improvement in
overall market sentiment. CLO new issue spreads have remained at
relatively tight levels, with further improvement expected globally
[17] . Looking forward, reset transactions are expected to make a
comeback in the US, with a handful of managers already resetting
CLOs that were originally issued during the second half of 2022,
when liability spreads were at their widest. Resetting allows
managers to reduce the costs at which they borrow CLO debt, while
also extending the maturity of the deal, potentially translating
greater residual cashflows for holders of the equity tranche. In
Europe, resets are expected to transpire later as deals issued in
2022 had longer periods until which the debt can be called.
Portfolio update - BCF
BCF's CLOs have remained resilient to disruptions caused by
increasing inflation and interest rates. At Blackstone, we
anticipated the potential impact of inflation in 2021 by closely
monitoring labour and input costs in our portfolio companies. Our
belief that inflation would have a more lasting effect than
expected influenced our trading strategies within the portfolios
over the past year. We harnessed our extensive network of portfolio
company CFOs to gain valuable insights into corporate fundamentals
and expectations. Simultaneously, we conducted stress tests on the
issuers in our portfolios, considering higher forward-looking base
rates and sticky inflation. Each quarter, our credit research team
diligently re-evaluate each loan and offer guidance on the timing
and likelihood of defaults or downgrades on a loan-by-loan basis.
While our perspective on the credit environment has become more
cautious and we have raised our expectations for downgrades and
defaults over the past year, these increases have been moderate and
well within CLO limits. So far, these higher assumptions would not
have resulted in disrupted cashflows for any of BCF's CLOs and our
analysis indicates that even in stressed scenarios, cashflows will
likely remain stable.
The management of BCF's loan portfolio for the first half of the
year was centred on divesting from riskier assets due to the
increasing market volatility. This was achieved by moving up in
credit quality to safeguard against potential rating risk, credit
risk and price fluctuations. Often this means focusing on issuers
from defensive sectors that belong to what we refer to as 'good
neighbourhoods', characterised by a demonstrable ability to
generate cash through the cycle.
During the first six months of 2023, BCF invested in the equity
of two new issue European CLOs, Bushy Park CLO and Glenbrook Park
CLO, where debt was once again placed at very competitive levels
versus peers in both transactions. BCF's portfolio now consists of
51 CLOs [18] spanning 10 vintage years, re-emphasising the
diversified and wholesale exposure that investors receive through
this vehicle. To date, BCF has invested in a total of 60 CLOs since
its inception.
Given the ongoing base rate movement throughout the year so far,
the expected return from spread arbitrage (the net interest from
each CLO's collateral portfolio less its financing costs) were
temporarily squeezed due to a timing mismatch between the base
rates used for assets and liabilities and we expect this to
normalise over time as interest rates stabilise. Despite this, CLO
distributions remained robust and have maintained uninterrupted
cash flows from each CLO since inception. As of 30 June 2023, the
average annualised cash on cash distribution rate for BCF's CLOs
was 15.6% in Europe and 16.8% in the US [19] . Moreover, BCF's
weighted average remaining reinvestment period was 1.6 years at 30
June 2023, which has generally been maintained since the start of
the year, providing ample runway to actively reinvest in loans.
At 30 June 2023, BCF remains a defensively positioned portfolio
of over 650 loan issuers diversified across 29 sectors and 27
countries. The portfolio remained concentrated around B2 rated
issuers and holds 4.7% Caa-rated assets (at the facility level),
which is broadly flat from the start of the year. In line with the
market, the portfolio's average loan price increased to around
EUR/$95 and 100 from EUR/$90 and 95 at the end of last year. Assets
priced below EUR/$80 decreased by 1.0% over the six months to 5.4%
at 30 June 2023. We see minimum refinancing risk in the portfolio
as loan maturities are generally wrapped around 2028.
Looking forward, BCF will continue to lever Blackstone's vast
research platform with the aim of avoiding credit deterioration,
whilst rotating the portfolio to prioritise capital preservation.
As new opportunities arise from market volatility and price
dislocations, we will look to capitalise by purchasing discounted
assets that offer attractive relative value, supporting returns to
equity investors through principal appreciation on the underlying
assets.
On 15 September 2023, the Shareholders approved the resolution
to facilitate the Managed Wind-Down of the Company. Refer to the
Circular for further details on the expected management of the BCF
portfolio.
Past performance does not predict future returns and there can
be no assurance that BCF will continue to achieve comparable
results or implement its investment strategy or achieve its
investment objectives or avoid substantial losses.
CLO portfolio positions
Current Closing Deal Position % of Reinvest. Current Current Current NIM % of
Portfolio / Size Owned BCF Period Asset Liability Net 3M Distributions Tranche
[Expected (M) (M) NAV Left Coupon Cost Interest Prior Through
Close] (Yrs) [20] Margin Last Payment
Date Date[21]
Ann. Cum.
------ -------
EUR CLO Income Note Investments
EUR EUR
Phoenix Park Jul-14 417 22.2 1.0% 0.0 6.65% 4.93% 1.72% 1.81% 13.4% 117.7% 51.4%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Dartry Park Mar-15 424 25.4 1.4% 1.8 6.68% 4.92% 1.76% 1.80% 12.8% 103.9% 51.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Tymon Park Dec-15 415 21.6 1.6% 2.1 6.79% 4.92% 1.87% 2.00% 14.8% 108.7% 51.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Elm Park May-16 520 30.5 2.1% 2.3 6.62% 4.81% 1.81% 2.03% 15.4% 105.7% 54.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Griffith
Park Sep-16 456 24.8 1.5% 0.0 6.61% 4.79% 1.81% 1.83% 11.4% 76.1% 53.4%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Clarinda
Park Nov-16 417 22.0 1.5% 1.6 6.61% 5.03% 1.58% 1.58% 11.7% 76.0% 51.2%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Palmerston
Park Apr-17 333 22.9 1.0% 0.0 6.52% 4.91% 1.61% 1.84% 12.9% 77.9% 53.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Clontarf
Park Jul-17 273 27.6 1.1% 0.0 6.49% 5.18% 1.31% 1.38% 13.1% 76.4% 66.9%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Willow Park Nov-17 382 22.3 1.0% 0.0 6.38% 4.71% 1.67% 1.90% 16.6% 89.0% 60.9%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Marlay Park Mar-18 396 23.5 1.2% 0.0 6.41% 4.27% 2.15% 2.22% 18.8% 94.7% 60.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Milltown
Park Jun-18 393 23.0 1.4% 0.0 6.49% 4.53% 1.96% 2.14% 18.0% 87.2% 65.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Richmond
Park Jul-18 383 44.0 1.2% 0.0 6.59% 4.92% 1.67% 1.86% 16.1% 76.2% 68.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Sutton Park Oct-18 408 22.9 1.5% 0.0 6.51% 4.87% 1.64% 1.64% 16.9% 73.0% 66.7%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Crosthwaite
Park Feb-19 516 31.5 2.2% 2.2 6.46% 5.13% 1.34% 1.19% 14.7% 63.2% 64.7%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Dunedin Park Sep-19 422 24.1 1.4% 2.9 6.58% 5.13% 1.45% 1.42% 20.0% 73.3% 52.9%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Seapoint
Park Nov-19 403 20.6 2.0% 0.9 6.69% 5.13% 1.55% 1.56% 13.8% 44.7% 70.5%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Holland Park Nov-19 425 37.3 2.1% 0.9 6.64% 5.11% 1.53% 1.53% 11.0% 38.3% 72.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Vesey Park Apr-20 403 23.4 2.6% 1.4 6.68% 5.18% 1.50% 1.42% 17.2% 52.4% 80.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Avondale
Park Jun-20 409 21.6 1.5% 2.7 6.52% 5.33% 1.19% 1.18% 31.9% 96.3% 63.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Deer Park Sep-20 355 19.5 1.6% 2.8 6.75% 4.94% 1.81% 1.97% 31.1% 80.1% 71.9%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Marino Park Dec-20 322 16.2 1.9% 0.5 6.76% 4.78% 1.98% 2.23% 17.8% 41.1% 71.4%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Carysfort
Park Apr-21 404 23.9 2.4% 2.1 6.74% 4.92% 1.82% 1.87% 16.4% 33.7% 80.7%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Rockfield
Park Jul-21 403 22.9 2.3% 2.0 6.65% 4.81% 1.84% 1.99% 15.2% 26.2% 80.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Dillon's
Park Sep-21 405 25.0 2.4% 2.8 6.70% 4.84% 1.85% 2.00% 15.2% 23.5% 84.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Cabinteely
Park Dec-21 404 22.5 2.1% 3.1 6.66% 5.13% 1.53% 1.46% 13.5% 18.8% 75.6%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Otranto Park Mar-22 443 34.2 3.0% 3.4 6.65% 5.36% 1.29% 1.26% 14.1% 15.8% 96.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Clonmore
Park Aug-22 341 22.8 1.8% 3.6 6.78% 6.36% 0.42% 0.45% 4.0% 3.0% 100.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Edmondstown
Park Dec-22 379 30.8 3.2% 4.1 6.94% 5.58% 1.36% 0.72% n/a n/a 100.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Bushy Park Mar-23 405 23.4 2.2% 4.3 6.82% 5.46% 1.37% n/a n/a n/a 61.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Glenbrook
Park Jul-23 351 30.7 3.0% 4.6 n/a n/a n/a n/a n/a n/a 100.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
USD CLO Income Note Investments
Grippen Park Mar-17 $ 508 $ 28.4 0.8% 0.0 8.63% 7.09% 1.54% 1.50% 14.2% 86.7% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Thayer Park May-17 523 26.1 1.6% 2.8 8.70% 6.75% 1.95% 1.82% 14.6% 86.3% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Catskill
Park May-17 857 53.4 1.2% 0.0 8.66% 6.97% 1.69% 1.71% 14.6% 86.6% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Dewolf Park Aug-17 613 30.3 1.3% 0.0 8.68% 6.71% 1.97% 1.94% 15.9% 89.2% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Gilbert Park Oct-17 1,022 49.4 2.0% 0.0 8.61% 6.94% 1.66% 1.66% 15.1% 82.8% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Long Point
Park Dec-17 611 28.1 1.2% 0.0 8.60% 6.68% 1.91% 1.91% 19.4% 102.8% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Stewart Park Jan-18 874 87.9 1.3% 0.0 8.60% 6.73% 1.88% 1.86% 13.9% 72.6% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Cook Park Apr-18 1,025 51.1 2.3% 0.0 8.64% 6.60% 2.03% 2.02% 17.0% 85.4% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Fillmore
Park Jul-18 561 28.8 2.0% 0.0 8.67% 6.65% 2.02% 1.95% 17.0% 80.1% 52.3%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Harbor Park Dec-18 715 37.9 2.7% 0.6 8.66% 6.67% 1.99% 1.89% 14.7% 63.8% 50.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Southwick
Park Aug-19 503 24.8 2.1% 1.1 8.72% 6.60% 2.12% 1.99% 16.6% 60.9% 59.9%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Beechwood
Park Dec-19 816 46.6 3.7% 3.6 8.53% 6.74% 1.80% 1.54% 15.9% 53.0% 61.1%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Allegany
Park Jan-20 506 28.8 2.4% 3.6 8.53% 6.80% 1.73% 1.58% 14.7% 48.0% 66.2%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Harriman
Park Apr-20 500 27.8 2.5% 2.8 8.55% 6.73% 1.82% 1.69% 23.3% 70.0% 70.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Cayuga Park Aug-20 398 21.8 2.0% 3.0 8.51% 6.63% 1.88% 1.80% 27.7% 74.3% 72.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Point Au
Roche Park Jun-21 457 25.3 2.1% 3.1 8.54% 6.74% 1.80% 1.75% 18.2% 32.8% 61.2%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Peace Park Sep-21 661 37.2 3.2% 3.3 8.52% 6.69% 1.83% 1.75% 18.5% 28.8% 60.8%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Whetstone
Park Dec-21 506 27.3 2.4% 3.6 8.63% 6.67% 1.96% 1.85% 19.8% 27.0% 62.5%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Boyce Park Mar-22 762 42.6 3.8% 3.8 8.66% 6.65% 2.01% 1.92% 19.0% 21.1% 61.8%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Vertical Retention Instruments
Tallman Park May-21 $ 410 $ 2.0 0.2% 2.8 8.57% 6.78% 1.79% 1.69% 20.1% 38.0% 5.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
Wehle Park Apr-22 $ 547 $ 2.4 0.3% 3.8 8.54% 6.87% 1.67% 1.59% 22.3% 23.5% 5.0%
---------- ----- -------- ---- --------- ------- --------- -------- ----- ------ ------- -------
As of 30 June 2023, the Company was invested in accordance with
its and BCF's investment policy and was diversified across over 650
issuers through directly held loans and the CLO portfolio, across
27 countries and 29 different industries[22]. No individual
borrower represented more than 2% of the overall portfolio at 30
June 2023.
Key portfolio statistics
% of Current WA Current WA WA Remaining
NAV[23] Asset Coupon[24] Liability 23 RPs (CLOs)
EUR CLOs 50.76 % 6.63% 5.04% 1.8 Years
-------- ----------------- ------------- ------------
US CLOs 41.37% 8.61% 6.75% 1.4 Years
-------- ----------------- ------------- ------------
Directly Held Loans (less
leverage) 14.96% 7.21% 4.74% n/a
-------- ----------------- ------------- ------------
CLO Warehouses n/a n/a n /a n/a
-------- ----------------- ------------- ------------
Net Cash & Expenses -7.10% - - n/a
-------- ----------------- ------------- ------------
Top 10 industries[25]
Industry % of Portfolio
30 June 2023
--------------
Healthcare and Pharmaceuticals 16.5%
--------------
Services Business 10.6%
--------------
High Tech Industries 9.3%
--------------
Banking, Finance, Insurance and Real
Estate (FIRE) 8.0%
--------------
Media Broadcasting and Subscription 7.8%
--------------
Construction and Building 5.9%
--------------
Hotels, Gaming and Leisure 5.1%
--------------
Chemicals, Plastics and Rubber 4.7%
--------------
Telecommunications 4.4%
--------------
Services Consumer 4.4%
--------------
Industry % of Portfolio
31 December 2022
----------------
Healthcare and Pharmaceuticals 16.7%
----------------
Services Business 10.2%
----------------
High Tech Industries 8.8%
----------------
Banking, Finance, Insurance and Real
Estate (FIRE) 8.0%
----------------
Media Broadcasting and Subscription 7.1%
----------------
Construction and Building 5.8%
----------------
Hotels, Gaming and Leisure 5.5%
----------------
Chemicals, Plastics and Rubber 5.1%
----------------
Telecommunications 4.6%
----------------
Services Consumer 4.6%
----------------
Top 5 countries[26]
Country % of Portfolio
30 June 2023
--------------
United States 51.3%
--------------
France 10.0%
--------------
United Kingdom 8.1%
--------------
Netherlands 6.0%
--------------
Luxembourg 6.0%
--------------
Country % of Portfolio
31 December 2022
----------------
United States 52.6%
----------------
France 9.0%
----------------
United Kingdom 8.6%
----------------
Netherlands 6.3%
----------------
Germany 5.5%
----------------
Top 20 Issuers[27]
# Portfolio Total Moody's Industry Country WA WA Spread WA WA
Facilities Par (EURM) Par Price Coupon Maturity
Outstanding (All-In (Years)
(EURM) Rate)
Media Broadcasting
VodafoneZiggo 4 273 6,862 and Subscription Netherlands 90.9 3.09% 5.94% 5.8
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
VodafoneZiggo is a leading operator in the Netherlands that provides
fixed, mobile and integrated communication and entertainment services
to consumers and businesses. The company was created as a result of a
JV between Liberty Global & Vodafone.
Media Broadcasting
Numericable 12 273 14,350 and Subscription France 83.3 4.58% 6.94% 4.8
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Numericable is one of the largest telecommunications operators in France
by revenues and number of subscribers, with major positions in residential
fixed, residential mobile, B2B, wholesale and media.
Media Broadcasting United
Virgin Media 7 216 8,924 and Subscription States 96.1 2.91% 6.49% 5.6
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Virgin Media O2 is an integrated communications provider of mobile, broadband
internet, video and fixed-line telephony services to residential customers
and businesses in the United Kingdom. The company was created as a result
of a JV between Liberty Global & Telefonica.
United
Masmovil 4 208 6,050 Telecommunications Kingdom 96.2 4.06% 7.25% 4.4
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Masmovil is the fourth largest telecommunications operator in Spain and
offers fixed line, mobile and Internet services to customers in Spain.
In Jul-22 Masmovil and Orange (#2 player in the Spanish market) signed
a binding agreement to combine the two businesses in a 50:50 JV with
an enterprise value of c. EUR19bn. The transaction will need regulatory
approval and is expected to close in 4Q-23.
Siemens /WS Healthcare
Audiology 2 202 3,147 and Pharmaceuticals Denmark 94.8 3.93% 8.15% 2.7
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Siemens / WS Audiology was created following the completion of the merger
between Sivantos and Widex. The combined company operates in over 125
markets and holds the third position in the hearing aid market globally.
Banking, Finance,
ION Trading Insurance
Technologies and Real Estate
S.A.R.L. 3 192 3,863 (FIRE) Ireland 96.1 4.49% 8.29% 4.8
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
ION is a global financial software and services company that provides
high performance trading solutions to banks, hedge funds, brokers and
other financial institutions, across electronic fixed income, currencies,
equities, derivatives and commodities markets.
Chemicals,
Plastics and United
Ineos Quattro 6 186 5,222 Rubber States 94.5 2.68% 5.48% 3.1
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Ineos Quattro, through its subsidiaries, manufactures chemicals such
as PVC, caustic soda, styrene plus derivatives, aromatics and acetyls.
Ineos Quattro serves customers worldwide.
EG Group
Ltd/Intervias United
Finco Ltd 13 181 9,384 Retail Kingdom 97.1 5.10% 8.52% 3.5
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
EG Group is a leading global independent convenience retail and fuel
station operator with a fuel, convenience retail and Food-to-Go offering
with partnerships with leading brands such as Esso, BP, Shell, Starbucks,
Burger King, KFC, Greggs, Subway and Pizza Hut among others.
Thyssenkrupp
Elevators 3 168 4,389 Capital Equipment Luxembourg 98.6 3.74% 7.31% 4.1
---------- ----------- ----------- --------------------- ----------- -------- ----------- ------- ----------
Thyssenkrupp Elevators is one of the largest global market leaders for
elevator and escalator technology. The company designs, manufacturers,
installs, services and modernizes elevators, escalators and platform
lifts.
Media
Broadcasting
and
UPC 5 167 4,454 Subscription Switzerland 96.2 2.81% 6.69% 5.7
---------- ----- ----------------- --------------- --------------------- ---------- ----- ------- ----------
UPC is a cable operator in Switzerland, Poland & Slovakia. It offers
broadband, tv and mobile services.
Beverage,
Food and
Froneri 2 162 4,554 Tobacco United Kingdom 98.4 2.17% 5.98% 3.6
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Froneri is a global ice cream manufacturer with its headquarters in North
Yorkshire, England. It is the second largest ice cream producer by volume
in the world, after Unilever. Froneri was created in 2016 as a JV between
Nestle and PAI Partners to combine their ice cream activities.
Banking,
Finance,
Insurance
and Real
Paysafe 4 162 2,307 Estate (FIRE) United States 90.8 3.00% 5.93% 5.2
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Paysafe is a leading specialized payments platform, with revenues derived
from Payment Processing, eWallets and eCash accounts. Paysafe is a global
leader in the Gaming eCash segment, digital gambling wallets and the
Merchant Acquirer segment in the US, with a presence in Europe also.
High Tech
McAfee Corp 2 157 6,266 Industries United States 95.7 3.91% 7.89% 5.7
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
McAfee is the one of the largest security software vendors globally.
McAfee is a major player in the consumer security market, with a focus
on consumer endpoint protection. McAfee simplifies the complexity of
threat detection and response by correlating events, detecting new threats,
reducing false positives, automating and prioritizing incident response
and creating workflows that result in remediation.
Media
Broadcasting
Telenet and
International 3 149 3,754 Subscription Belgium 97 2.20% 6.14% 5.4
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Telenet is one of the largest cable operators in Belgium that provides
internet, TV, fixed and mobile telephony to consumers and businesses
in Flanders and Brussels. It also provides mobile telephony services
in the Wallonia region.
Allied Services
Universal 5 148 6,782 Business United States 92.7 3.76% 7.33% 4.9
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Allied Universal is the largest provider of security systems and services
globally, serving North America, Europe, the Middle East, Africa, Asia
Pacific and Latin America.
Healthcare
Independent and
Vetcare 3 134 2,114 Pharmaceuticals United Kingdom 98.2 4.08% 7.76% 2.6
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Independent Vetcare is the largest veterinary practice group in Europe.
The company generates the majority of its revenue in the UK, where it
is a market leader and is also present in Sweden, the Netherlands, Finland,
Germany, Norway, Denmark, Switzerland and North America.
Healthcare
and
Medline 3 133 11,140 Pharmaceuticals United States 98.3 3.36% 7.68% 5.3
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Medline is the largest US-based privately held manufacturer and distributor
of healthcare supplies to hospitals, post-acute settings, physician offices
and surgery centers. The company manufactures Medline-branded products
and distributes externally sourced items from other healthcare manufacturers.
Medline has 20+ manufacturing facilities and 50+ distribution across
North America.
Healthcare
and
Grifols 4 131 5,779 Pharmaceuticals Spain 94 2.72% 5.58% 4.7
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Grifols is a global healthcare company producing plasma-derived medicines
and transfusion medicine. The company is organised into four divisions:
Bioscience, Diagnostic, Hospital and Bio Supplies & Other.
Chemicals,
Plastics
Ineos Finance 7 131 5,948 and Rubber Luxembourg 97.9 2.97% 6.82% 4.7
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Ineos Finance, through its subsidiaries, manufactures chemicals primarily
in the Olefins and Polymers chains as well as associated chemical intermediate
derivatives across the Oxides, Oligomers, Nitriles and Phenol chains.
Ineos Finance serves customers worldwide.
Media
Broadcasting
and
Altice 9 131 7,089 Subscription Luxembourg 81.9 3.96% 4.97% 4.9
---------- ----------- ----------- --------------- --------------------- ---------- ----- ------- ----------
Altice is a telecom and media company with main operations in Portugal,
Israel and the Dominican Republic. It sells mobile and fixed telecom
services to residential and business clients, also offering services
including media and advertising.
Regulatory update
Blackstone continues to monitor operational resilience and
business continuity risk and there is an ongoing focus on enhancing
and strengthening the operational resilience framework.
On 6 April 2022, the European Commission adopted the Delegated
Regulation (as amended from time to time) supplementing EU
Regulation (EU) 2019/2088 (the "SFDR") with regard to the
regulatory technical standards ("RTS") specifying the details of
the content and presentation of the information in relation to the
principle of "do no significant harm", information in relation to
sustainability indicators and adverse sustainability impacts and
the content and presentation of the disclosure regarding the
promotion of environmental or social characteristics (Article 8
SFDR) and sustainable investment objectives (Article 9 SFDR) in
pre-contractual documents, on websites and in periodic reports. The
SFDR RTS have applied since 1 January 2023. BX Credit continues to
monitor regulatory developments with regards to SFDR on an ongoing
basis.
BX Credit continues to monitor the regulatory environment for
any developments with regard to the EU Securitisation rules.
Interest limitation rules, implemented as part of Directive
2016/1164/EU (the so-called Anti-Tax Avoidance Directive), apply to
certain EU CLO issuers with respect to their accounting periods
commencing on or after 1 January 2022. To date, the interest
limitation rules have not adversely impacted BX Credit's CLO
business.
Risk management
Given the natural asymmetry of fixed income, our experienced
credit team focuses on truncating downside risk and avoiding
principal impairment and believes that the best way to control and
mitigate risk is by remaining disciplined in all market cycles and
by making careful credit decisions while maintaining adequate
diversification.
BCF's portfolio is managed to minimise default risk and credit
related losses, which is achieved through in-depth fundamental
credit analysis and diversified portfolios in order to avoid the
risk of any one issuer or industry adversely impacting overall
performance. As outlined in the Portfolio Update section, BCF is
broadly diversified across issuers, industries and countries.
BCF's base currency is denominated in Euro, though investments
are also made and realised in other currencies. Changes in rates of
exchange may have an adverse effect on the value, price, or income
of the investments of BCF. BCF may utilise different financial
instruments to seek to hedge against declines in the value of its
positions as a result of changes in currency exchange rates.
Through the construction of solid credit portfolios and our
emphasis on risk management, capital preservation and fundamental
credit research, we believe the Company's investment strategy will
continue to be successful.
Blackstone's firmwide approach to ESG
Blackstone aims to develop resilient companies and competitive
assets that deliver long-term value for our investors. ESG
principles have long informed the way we run our firm, approach
investing and partner with the assets in our portfolio. In recent
years we have formalized our approach by building dedicated ESG
teams that look to develop ESG policies and support integration
within the business units and regularly report progress to
stakeholders.
Blackstone's approach to sustainability is rooted in operational
improvements to drive value for our investors. Material and
applicable ESG considerations are incorporated into investment
decisions to help mitigate risk and create value for investors.
Blackstone's portfolio of companies and assets across sectors and
geographies enables us to think about sustainability from multiple
vantage points. As investors, we consider material ESG factors both
during the due diligence of potential investments and throughout
the investment period to drive value. In order to help mitigate
risk and create value for our investors, Blackstone has adopted an
ESG policy that outlines our firmwide approach to integrating
relevant ESG factors in our business and investment activities, as
applicable.
Blackstone has a well-staffed effort focused on using ESG tools
to enhance the value of our investments, consistent with our
fiduciary responsibilities to our clients. Our corporate ESG team
is responsible for firmwide coordination and integration as well as
ensuring that the firm delivers upon its initiatives and provides
transparency for stakeholders. Business unit ESG teams are
responsible for implementing signature ESG programs, evaluating ESG
matters during due diligence, implementing ESG policies and
programs during our ownership period and reporting fund level
progress to investors.
We have experienced ESG leaders across our major businesses,
including Rita Mangalick, Head of ESG for BX Credit. Our ESG
efforts are also supplemented by our Legal and Compliance team,
which, along with our Heads of ESG, is responsible for supporting
and ensuring compliance with additional ESG policies and related
standards and overseeing their annual review.
BX Credit's approach to ESG
At BX Credit, we believe that a key aspect of being a
responsible investor is an active evaluation of certain
environmental, social and governance components of our investments
and recognize the value such evaluation can provide as we seek to
grow and protect investors' assets while managing risk. To that
end, during the due diligence phase of an investment, investment
teams within BX Credit aim to consider material ESG factors that
may impact investment performance to drive value [28] . As
appropriate, ESG due diligence varies by investment strategy and
based on factors that may include (i) the nature of BX Credit's
investment, (ii) the transaction process and timeline, (iii) the
level of access to information, specifically as it pertains to ESG
factors and (iv) the target portfolio company's business model.
Rita Mangalick is the Head of ESG for BX Credit and oversees the
ESG policy integration, reporting, engagement and value creation
initiatives within BX Credit. Ms Mangalick is supported by three
other dedicated members of the BX Credit ESG team. Additionally, BX
Credit has an ESG Working Group that includes senior
representatives from BX Credit's Investment, Institutional Client
Solutions, Asset Management and Legal and Compliance teams and is
chaired by Ms Mangalick. The BX Credit ESG Working Group meets
quarterly and discusses a variety of ESG-related topics to drive
value, including, as applicable: review of investments; investor
requests; market trends and newly adopted or pending legislation,
rules and regulation.
BX Credit's ESG due diligence approach
BX Credit's focus on ESG stems from our commitment to prudent
investing and our culture that prioritizes robust corporate
governance. We seek to consider material ESG risks and
opportunities throughout the diligence process and seek
opportunities to enhance the sustainability profile of our
investments to improve investor returns and drive value, where it
is consistent with the investment strategy and where we have the
ability to do so. We incorporate ESG principles into our investment
process with approaches tailored to our various strategies.
Comprehensive due diligence
To integrate ESG due diligence into our investment process, it
is important for our team to understand the material ESG factors to
review in due diligence, as applicable. We have learned that these
factors can vary significantly across industries and therefore we
partnered with a third-party ESG consultant to create a
sector-specific tool based on the Sustainability Accounting
Standards Board (SASB) standards that provide a framework to
conduct relevant ESG due diligence. This tool is available to our
investment teams to help them evaluate material ESG risks and
opportunities that may impact a company's performance, enabling us
to assess and mitigate these risks in a more targeted fashion to
drive value. The tool includes industry-specific due diligence
questions, potential KPIs to track, detailed guidance on
considerations for evaluating the topic and recommended resources
for additional research.
Investment Committee Engagement and documentation
Documented ESG analysis may be presented for review by the
Investment Committee, which in each case provides feedback on its
views of material ESG risk factors and poses questions and
considerations regarding the due diligence that has been performed.
If material ESG concerns are identified, BX Credit may seek to
address the situation, as appropriate, via additional due
diligence, the hiring of specialist advisors, attempt to facilitate
further discussions with company management.
Active post-investment monitoring
During the holding period of an investment, the investment team
actively monitors the investment and provides updates to the
Investment Committee as needed, including with respect to
ESG-related risks and opportunities for certain investment
strategies, as appropriate. As part of this process, members of the
investment team may facilitate direct dialogue with company
management as well as track material ESG factors that may have an
impact on the company during the anticipated holding period of our
investment.
ESG Disclaimer
Blackstone may select or reject portfolio companies or
investments on the basis of ESG related investment risks, and this
may cause Blackstone's funds and/or portfolio companies to
underperform relative to other sponsors' funds and/or portfolio
companies which do not consider ESG factors at all or which
evaluate ESG factors in a different manner. While Blackstone
believes ESG factors can enhance long term value, Blackstone does
not pursue an ESG based investment strategy or limit its
investments to those that meet specific ESG criteria or standards,
except with respect to products or strategies that are explicitly
designated as doing so in their Offering Documents or other
applicable governing documents. Any such ESG factors do not qualify
Blackstone's objectives to seek to maximize risk adjusted returns.
The ESG practices and initiatives mentioned in these disclosures
may not apply to some or all of the Company's investments and none
are binding aspects of the management of the Company. The Company
does not promote environmental or social characteristics, nor does
it have sustainable investments as its objective.
Blackstone Ireland Limited
25 September 2023
STRATEGIC OVERVIEW
Principal activities
The Company was incorporated on 30 April 2014 as a closed-ended
investment company limited by shares under the laws of Jersey and
is authorised as a listed fund under the Collective Investment
Funds (Jersey) Law 1988. The Company continues to be registered and
domiciled in Jersey. The Company's ordinary shares are quoted on
the Premium Segment of the Main Market of the LSE. Refer to page 26
of the 31 December 2022 Annual Report and Audited Financial
Statements for more details.
The Company has a wholly-owned Luxemburg subsidiary, Blackstone
/ GSO Loan Financing (Luxembourg) S.à r.l. which currently has an
issued share capital of 2,000,000 Class A shares and 1 Class B
share. As at 30 June 2023, 100% of the Class A and Class B shares
were held by the Company together with 224,651,555 Class B CSWs
issued by the Lux Subsidiary. The Lux Subsidiary invests in PPNs
issued by BCF, which in turn invests in CLOs and loans.
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company (the "Managed Wind-Down") with
cash returned to the Shareholders in a timely and efficient manner.
The Board also published a circular ("the Circular") to the
Shareholders to convene an EGM on 15 September 2023 seeking
approval from the Shareholders for the amendments to the Company's
investment objective and policy and to its share capital, in order
to facilitate the Managed Wind-Down.
On 15 September 2023, the Shareholders approved all of the
following by way of an ordinary resolution:
-- the adoption of a new investment objective and policy, as detailed further below;
-- the conversion of all shares held by the Company into
redeemable shares on the terms set out in the Circular; and
-- the issuance of the Deferred Share with the rights and
restrictions set out in section 3.5 of the Circular, in accordance
with article 2.1 of the Articles.
Investment objective and investment policy
On 15 September 2023, Shareholders approved a new investment
objective and a new investment policy as set our below:
New investment objective
The Company's investment objective is to realise all existing
assets in the Company's portfolio in an orderly manner.
New investment policy
The Company will pursue its investment objective by effecting an
orderly realisation of its assets by redeeming and/or by disposing
for cash the profit participating instruments issued by BCF and
held by the Company (indirectly through a subsidiary) (the "LuxCo
PPNs"). The Company will thereafter make timely returns of capital
to Shareholders principally by redeeming multiple portions of its
issued ordinary shares during the course of the Managed Wind-down
(or in such other manner as the Directors consider
appropriate).
The Company does not hold any assets other than the LuxCo PPNs.
Upon redemption of the LuxCo PPNs, the Company will cease to make
any new investments or to undertake capital expenditure except as
deemed necessary or desirable by the Board in connection with the
Managed Wind-Down.
Any amounts received by the Company during the Managed Wind-Down
will be held by the Company as cash on deposit and/or as cash
equivalents, prior to returns being made in cash to Shareholders
(net of provisions for the Company's costs and expenses).
Borrowings and derivatives
The Company will not undertake borrowing other than for
short-term working capital purposes. The Company may use
derivatives for hedging as well as for efficient portfolio
management.
Changes to the Company's investment policy
Any material change to the Company's new investment policy will
be made only with the approval of the Shareholders.
Former investment objective and former investment policy
The former investment objective and former investment policy as
detailed below, which were in place during the six month period
ended 30 June 2023, have been discontinued and replaced with the
new investment objective and the new investment policy as set out
above.
The Company's former investment objective was to provide
Shareholders with stable and growing income returns and to grow the
capital value of the investment portfolio by exposure to floating
rate senior secured loans and bonds directly and indirectly through
CLO securities and investments in Loan Warehouses. The Company
sought to achieve its investment objective through exposure
(directly or indirectly) to one or more companies or entities
established from time to time ("Underlying Companies"), such as
BCF.
The Company's former investment policy was to invest (directly,
or indirectly through one or more Underlying Companies) in a
diverse portfolio of senior secured loans (including broadly
syndicated, middle market or other loans, such investments being
made by the Underlying Companies directly or through investments in
Loan Warehouses, bonds and CLO Securities) and generate attractive
risk-adjusted returns from such portfolios. The Company intended to
pursue its investment policy by investing (through one or more
subsidiaries) in profit participating instruments (or similar
securities) issued by one or more Underlying Companies.
Each Underlying Company would use the proceeds from the issue of
the profit participating instruments (or similar securities),
together with the proceeds from other funding or financing
arrangements it has in place currently or may have in the future,
to invest in: (i) senior secured loans, bonds, CLO Securities and
Loan Warehouses; or (ii) other Underlying Companies which,
themselves, invest in senior secured loans, bonds, CLO Securities
and Loan Warehouses. The Underlying Companies could invest in
European or US senior secured loans, bonds, CLO Securities, Loan
Warehouses and other assets in accordance with the investment
policy of the Underlying Companies. Investments in Loan Warehouses,
which were generally expected to be subordinated to senior finance
provided by third-party banks, will typically be in the form of an
obligation to purchase preference shares or a subordinated loan.
There was no limit on the maximum US or European exposure. The
Underlying Companies did not invest substantially directly in
senior secured loans or bonds domiciled outside North America or
Western Europe.
For information on the Company's former investment objective and
policy, refer to pages 27 to 29 of the 31 December 2022 Annual
Report and Audited Financial Statements.
Mechanics for returning cash to Shareholders
Following the approval of the new investment objective, the
Board proposes to implement the Managed Wind-Down by returning to
Shareholders the net proceeds from the realisation of the Company's
investment in BCF in an orderly manner by way of the compulsory
redemption of redeemable shares (in respect of proceeds received
from BCF attributable to the early redemption, maturity or sale of
underlying investments or pursuant to a disposal of the LuxCo PPNs
for cash).
As part of the Managed Wind-Down, the Company, through the Lux
Subsidiary, has delivered a redemption request in accordance with
the terms of the LuxCo PPNs. A pro-rata portion of the assets and
investments of BCF (including indirect investments held through BCM
LLC) will be placed into a redemption pool (the 'Redemption Pool').
As the assets in the Redemption Pool redeem and are realised, the
proceeds thereof, net of any actual or reasonably anticipated
liabilities, costs, expenses, debt service of BCF, BCM LLC and the
Lux Subsidiary and any actual or reasonably anticipated costs,
liabilities, margin or collateral requirements related to hedging
transactions entered by BCF, will be utilised to redeem the LuxCo
PPNs.
Having consulted with the Portfolio Adviser, the Board currently
anticipates that the redemption of the CLO investments held in BCF
and BCM LLC will require a period of approximately 7 years.
However, this is indicative only and it should not be considered a
guarantee of the Company's actual liquidity profile.
Refer to sections 3.1 and 3.2 of the Circular for further
details.
The Board also intends to continue to pay dividends to
Shareholders in respect of the financial year ending
31 December 2023, in accordance with its dividend policy set out
above. In respect of the financial year commencing 1 January 2024
and thereafter, the Board intends (following such consultation with
its advisers as it may consider appropriate) to continue to
distribute as dividends the interest payments (and any other
amounts other than redemption proceeds) deemed to be received from
BCF during the Managed Wind-down on a quarterly basis, having
regard to any amounts which the Board deem prudent to retain. Refer
to section 3.4 of the Circular for further details.
Directors' interests
The Directors held the following number of ordinary shares in
the Company as at the period end and the date these condensed
interim financial statements were approved:
As at 30 June As at 31 December
Directors Type of shares 2023 2022
Charlotte Valeur (retired on 26 July 2023) [29] Ordinary 11,500 11,500
--------------- ------------- ----------------------
Gary Clark (retired on 26 July 2023) 29 Ordinary 168,200 168,200
--------------- ------------- ----------------------
Heather MacCallum Ordinary - -
--------------- ------------- ----------------------
Mark Moffat Ordinary 771,593 771,593
--------------- ------------- ----------------------
Steven Wilderspin Ordinary 20,000 20,000
--------------- ------------- ----------------------
Giles Adu (appointed on 26 July 2023) 29 Ordinary - -
--------------- ------------- ----------------------
Belinda Crosby (appointed on 24 August 2023)29 Ordinary - -
--------------- ------------- ----------------------
On 9 January 2023, Mr Mark Moffat disposed of 29,799 shares in
the Company, held in his Stocks & Shares ISA Account and
simultaneously acquired 29,799 shares in the Company, via his Fund
& Share Account.
CORPORATE ACTIVITY
Share buybacks
The Company undertakes share buybacks from time to time either
selectively or as part of a share repurchase programme.
On 21 October 2022, the Company announced that a Share
Repurchase Programme had been renewed from
21 October 2022 until 20 January 2023.
Subsequently, on 23 January 2023, the Company announced that the
Share Purchase Programme had been renewed from 23 January until 3
May 2023.
During the six months to 30 June 2023, the Company repurchased a
total of 1,839,619 shares at a weighted average price of EUR0.6676
per ordinary share, for a total cost of EUR1,230,662 (including
transaction costs of EUR2,471). The repurchased shares were held in
treasury during the six months ended 30 June 2023 and remain in
treasury as at date of approval of these condensed interim
financial statements.
The Board has authority to buy back ordinary shares , however
there is currently no buyback programme in progress. The Board
continues to keep this under review.
RISK OVERVIEW
Each Director is aware of the risks inherent in the Company's
business and understands the importance of identifying, evaluating
and monitoring these risks. The Board has adopted procedures and
controls to enable it to manage these risks within acceptable
limits and to meet all of its legal and regulatory obligations.
The Board considers the process for identifying, evaluating and
managing any significant risks faced by the Company on an ongoing
basis and these risks are reported and discussed at Board meetings.
It ensures that effective controls are in place to mitigate these
risks and that a satisfactory compliance regime exists to ensure
all applicable local and international laws and regulations are
upheld.
Risk appetite
Given the Shareholders' vote to wind-down the Company in an
orderly manner and the consequent notice to be given by LuxCo on
the underlying PPNs issued by BCF, the Board's strategic risk
appetite is now to balance the amount distributed by the Company by
way of dividend, redemption of shares or buy backs with the need to
retain sufficient funds as working capital for the Company's
operations and for contingencies. The Board considers that the
retention of approximately two years' worth of operating expenses
as cash is the appropriate policy to maintain this balance.
When considering other risks, the Board's risk appetite is
effectively governed by a cost benefit analysis when assessing
mitigation measures. However , at all times the Company will seek
to follow best practice and remain compliant with all applicable
laws, rules and regulations.
Principal risks and uncertainties
As recommended by the Risk Committee, the Board has adopted a
risk management framework to govern how the Board identifies
existing and emerging risks, determines risk appetite, identifies
mitigation and controls and how the Board assesses, monitors and
measures risk and reports on risks. The Board reviews risks at
least twice a year and receives deep-dive reports on specific risks
as recommended by the Risk Committee.
Throughout the period under review, the Board considered a set
of main risks which have a higher probability and a significant
potential impact on performance, strategy, reputation or operations
(Category A risks). Of these, the five risks identified below were
considered the principal risks faced by the Company where the
combination of probability and impact was assessed as being most
significant. The Board also considered other less significant
existing or emerging risks (Category B risks) which are monitored
on a watch list.
During the period, the macro-economic environment remained
challenging with rising inflation and interest rates and the
Portfolio Adviser has focused on positioning the underlying
portfolio appropriately. The commentary below describes the factors
affecting each of the principal risks during the period.
Principal risks Description
Investment performance Unsatisfactory investment performance in absolute terms
or relative to peers. Remained heightened in the period
given the macro-economic environment.
-------------------------------------------------------------
Share price discount The existence of a share price discount, particularly
to NAV per ordinary one that is wider than that of peers. Remained heightened
share in the period with the discount in the range 14.4% to
23.5%.
-------------------------------------------------------------
Investment valuation Error or misjudgment in valuation of the Company's underlying
CLO investments. Stable in the period.
-------------------------------------------------------------
Income distribution Over distribution of cash flows resulting in an erosion
model of the Company's capital base. Stable in the period.
-------------------------------------------------------------
Operational Reliance on service providers to conduct the Company's
operations and deliver its investment strategy. Increased
in the period with some staff turnover and strategic
pressures on key service providers.
-------------------------------------------------------------
Subsequent to the period end and the vote to wind-down the
Company in an orderly manner, the Board has determined that the
risk relating to the income distribution model is no longer a
principal risk. The risk relating to potential conflicts of
interest has increased and is now considered a principal risk. This
is due to the potential conflicts between the Company, the
Portfolio Adviser, BCF and the other BCF investors as the Company
is wound down.
For further information concerning the Company's principal risks
and uncertainties and how the Company mitigates both principal and
emerging risks during the period and in relation to Managed
Wind-Down, refer to pages 38 to 39 of the 31 December 2022 Annual
Report and Audited Financial Statements and to section 3.9 of the
Circular dated 25 August 2023
Going concern
Given the developments post the period end and the approval of
Shareholders to place the Company into Managed Wind-Down, the
Directors consider that the use of the going concern basis in
preparing the condensed interim financial statements of the Company
is no longer appropriate. As such, the condensed interim financial
statements have been prepared on a basis other than going concern.
Refer to Note 2.2 in the 'notes to the condensed interim financial
statements' for further details.
OTHER INFORMATION
Valuation methodology
As noted above, the Published NAV and the IFRS NAV may diverge
because of different key assumptions used to determine the
valuation of the BCF portfolio. Key assumptions which are different
between the two bases as at 30 June 2023 and 31 December 2022 are
detailed below:
Valuation IFRS Published IFRS Published
Asset methodology Input NAV NAV NAV NAV
30 June 2023 31 December 2022
------------- ----------------------- ----------------- ------------------
Discounted Constant default
CLO securities cash flows rate [30] 2.0% 2.0% 2.0% 2.0%
------------- ----------------------- ------ --------- ------- ---------
Conditional prepayment
rate 20% 25% 20% 25%
----------------------------------------------------- ------ --------- ------- ---------
Reinvestment
spread (bps over
LIBOR/SOFR) 402.42 361.61 363.99 360.36
----------------------------------------------------- ------ --------- ------- ---------
Recovery rate
loans 65.00% 65.00% 65.00% 65.00%
----------------------------------------------------- ------ --------- ------- ---------
Recovery lag
(months) - - - -
------------- ----------------------- ------ --------- ------- ---------
Discount rate 27.75% 15.00% 25.30% 15.00%
----------------------------------------------------- ------ --------- ------- ---------
All of the assumptions above are based on weighted averages.
The below table further explains the rationale regarding the
differences in the assumptions that significantly contributed to
the valuation divergence as at 30 June 2023:
Assumption IFRS NAV Published NAV
Discount rate Intended to reflect the market Based on the expected rate
required rate of return for of return for a newly originated
similar securities and is CLO equity security on a
informed by market research, hold to maturity basis.
BWICs, market colour for The expected rate of return
comparable transactions and is based on a long-term
dealer runs. The discount market average and is periodically
rate may vary based on underlying reviewed and updated to
loan prices, exposure to the extent of secular changes
distressed assets or industries, in the market.
manager performance and time
remaining in reinvestment
period.
---------------------------------- -----------------------------------
Largely weighted by a CLO's Represents a normalised,
current portfolio weighted long-term view of loan spreads
average spread, which assumes to be achieved over the
that the CLO investment manager life of the CLO's remaining
Reinvestment Spread will continue to reinvest reinvestment period. Initially
in collateral with a similar informed by the underwriting
spread and rating composition model at issuance, the assumption
to the existing collateral is periodically reviewed
pool. In addition, weighting and updated to the extent
may be given to primary loan of secular changes in loan
spreads to the extent current spreads.
primary market opportunities
suggest different spreads
than the existing portfolio.
---------------------------------- -----------------------------------
Alternative Investment Fund Managers' Directive
The AIFMD requires certain information to be made available to
investors in AIFs before they invest and requires that material
changes to this information be disclosed in the annual report of
each AIF. There have been no material changes (other than those
reflected in these condensed interim financial statements) to this
information requiring disclosure.
Alternative Performance Measures
In accordance with ESMA Guidelines on APMs, the Board has
considered which APMs are included in the Half Yearly Financial
Report and require further clarification. An APM is defined as a
financial measure of historical or future financial performance,
financial position, or cash flows, other than a financial measure
defined or specified in the applicable financial reporting
framework. APMs included in the condensed interim financial
statements, which are unaudited and outside the scope of IFRS, are
detailed in the table below:
Published NAV total Published NAV per (Discount)/Premium
return per ordinary ordinary share 31 to Published NAV per
share [31] ordinary share
Definition The increase in the Gross assets less The Company's closing
Published NAV per ordinary liabilities (including share price on the
share plus the total accrued but unpaid LSE less the Published
dividends paid per fees) determined in NAV per share as at
ordinary share during accordance with the the period end, divided
the period, with such section entitled "Net by the Published NAV
dividends paid being Asset Value" in Part per share as at that
re-invested at NAV, I of the Company's date.
as a percentage of Prospectus, divided
the NAV per share as by the number of ordinary
at period end. shares at the relevant
time.
--------------------------- -------------------------- ------------------------
Reason NAV total return summarises The Published NAV The discount or premium
the Company's true per share is an indicator per ordinary share
growth over time while of the intrinsic value is a key indicator
taking into account of the Company. of the discrepancy
both capital appreciation between the market
and dividend yield. value and the intrinsic
value of the Company.
--------------------------- -------------------------- ------------------------
Target 11%+ Not applicable Maximum discount of
7.5%
--------------------------- -------------------------- ------------------------
Performance
--------------------------- -------------------------- ------------------------
2023 2.20% 0.8808 (22.80)% [32]
--------------------------- -------------------------- ------------------------
2022 5.22% 0.9081 (26.77)%
--------------------------- -------------------------- ------------------------
2021 21.82% 0.9407 (15.75)%
--------------------------- -------------------------- ------------------------
2020 (0.22)% 0.8435 (20.57)%
--------------------------- -------------------------- ------------------------
2019 14.46% 0.9187 (10.20)%
--------------------------- -------------------------- ------------------------
2018 6.70% 0.8963 (15.21)%
--------------------------- -------------------------- ------------------------
A reconciliation of the APMs to the most directly reconcilable
line items presented in the condensed interim financial statements
for the six months ended 30 June 2023 and the year ended 31
December 2022 is presented below:
Published NAV total return per ordinary share
Six months ended Year ended
30 June 2023 31 December 2022
Opening Published NAV per ordinary share
(A) EUR0.9081 EUR0.9407
---------------- -----------------
Adjustments per ordinary share (B) EUR(0.2297) EUR(0.0253)
---------------- -----------------
Opening IFRS NAV per ordinary share (C=A+B) EUR0.6784 EUR0.9154
---------------- -----------------
Closing Published NAV per ordinary share
(D) EUR0.8808 EUR0.9081
---------------- -----------------
Adjustments per ordinary share (E) EUR(0.2047) EUR(0.2297)
---------------- -----------------
Closing IFRS NAV per ordinary share (F=D+E) EUR0.6761 EUR0.6784
---------------- -----------------
Dividends paid during the period/year (G) EUR0.0475 EUR0.0800
---------------- -----------------
Published NAV total return per ordinary
share
(H=(D-A+G)/A) 2.23% 5.04%
---------------- -----------------
Impact of dividend re-investment (I) (0.03)% 0.18%
---------------- -----------------
Published NAV total return per ordinary
share with dividends re-invested (J=H+I) 2.20% 5.22%
---------------- -----------------
IFRS NAV total return per ordinary share
(K=(F-C+G)/C) 6.65% (17.15)%
---------------- -----------------
Impact of dividend re-investment (L) (1.64)% (2.04)%
---------------- -----------------
IFRS NAV total return per ordinary share
with
dividends re-invested (M=K+L) 5.01% (19.19)%
---------------- -----------------
Refer to Note 13 for further details on the adjustments per
ordinary share.
Published NAV per ordinary share
30 June 2023 31 December 2022
Published NAV per ordinary share (A) EUR0.8808 EUR0.9081
------------ ----------------
Adjustments per ordinary share (B) EUR(0.2047) EUR(0.2297)
------------ ----------------
IFRS NAV per ordinary share (C=A+B) EUR0.6761 EUR0.6784
------------ ----------------
Refer to Note 13 for further details on the adjustments per
ordinary share.
Premium/(discount) per ordinary share
30 June 2023 31 December 2022
Published NAV per ordinary share (A) EUR0.8808 EUR0.9081
------------ ----------------
Adjustments per ordinary share (B) EUR(0.2047) EUR(0.2297)
------------ ----------------
IFRS NAV per ordinary share (C=A-B) EUR0.6761 EUR0.6784
------------ ----------------
Closing share price as at the period end
per the LSE (D) EUR0.6800 EUR0.6650
------------ ----------------
Discount to Published NAV per ordinary share
(E=(D-A)/A) (22.80)% (26.77)%
------------ ----------------
Premium/(discount) to IFRS NAV per ordinary
share (F=(D-C)/C) 0.58% (1.98)%
------------ ----------------
Refer to Note 13 for further details on the adjustments per
ordinary share.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
Dividends
On 21 July 2023, the Company declared a dividend of EUR0.0200
per ordinary share in respect of the period from 1 April 2023 to 30
June 2023. A total payment of EUR8,854,778 was made on 15 August
2023.
Board changes
Ms Charlotte Valeur and Mr Gary Clark did not stand for
re-election at the last AGM of the Company held on
26 July 2023 and so have retired from the Board of Company. On
the same day, Mr Giles Adu has been appointed as a Director at a
Board meeting held after the AGM. The Board thanks Ms Charlotte
Valeur and Mr Gary Clark for their nine years of service.
Following Ms Charlotte Valeur's retirement from the Board, Mr
Steven Wilderspin has been appointed Chair of the Board and also
Chair of the Management Engagement Committee. Mr Giles Adu has
replaced Mr Steven Wilderspin as Chair of the Risk Committee and Mr
Gary Clark as Chair of the Remuneration and Nomination Committee.
Mr Mark Moffat has replaced Mr Gary Clark as Chair of the NAV
Review Committee and as Senior Independent Director.
Ms Heather MacCallum remains as Chair of the Audit Committee but
has indicated that she wishes to step down from the Board on 30
September 2023 after the release of the Company's Half Yearly
Financial Report. Consequently, the Board has conducted a
recruitment exercise and has appointed Ms Belinda Crosby as a
non-executive director, effective 24 August 2023. Ms Belinda Crosby
will succeed Ms Heather MacCallum as Chair of the Audit Committee
when she steps down.
Managed Wind-Down
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company with cash returned to the
Shareholders in a timely and efficient manner. The Board published
a circular to the Shareholders to convene an EGM on 15 September
2023 seeking approval from the Shareholders for a managed wind-down
of the Company and associated amendments to the Company's
investment objective and policy and to its share capital.
On 15 September 2023, the Shareholders approved the resolution
at the EGM. Refer to the Chair's Statement and Strategic Overview
above for further details.
Outlook
It is the Board's intention that the Company will pursue its new
investment objective and investment policy as detailed above,
through an orderly wind-down of the Company and return of cash to
the Shareholders of the Company. Further comments on the outlook
for the Company for the 2023 financial year and the main trends and
factors likely to affect its future development, performance and
position are contained within the Chair's Statement and the
Portfolio Adviser's Review.
RELATED PARTIES
There have been no material changes to the nature of related
party transactions as described in the Annual Report and Audited
Financial Statements for the year ended 31 December 2022. Refer to
Note 14 for information on related party transactions.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Half Yearly
Financial Report and condensed interim financial statements in
accordance with applicable law and regulations.
The Directors confirm to the best of their knowledge that:
-- the condensed interim financial statements within the Half
Yearly Financial Report have been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the EU and give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the Company as at 30 June 2023, as required by
the UK's FCA's DTR 4.2.4R;
-- the Strategic Report and the notes to the condensed interim
financial statements include a fair review of the information
required by:
i. DTR 4.2.7R, being an indication of important events that have
occurred during the first six months ended 30 June 2023 and their
impact on the condensed interim financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
ii. DTR 4.2.8R, being related party transactions that have taken
place in the first six months ended 30 June 2023 and that have
materially affected the financial position or performance of the
Company during the period.
By order of the Board
Steven Wilderspin Heather MacCallum
Director Director
25 September 2023 25 September 2023
INDEPENT REVIEW REPORT TO BLACKSTONE LOAN FINANCING LIMITED
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the condensed
statement of comprehensive income, condensed statement of financial
position, condensed statement of changes in equity, condensed
statement of cash flows and related notes 1 to 17.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with EU adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with EU adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with EU adopted International Accounting Standard 34,
"Interim Financial Reporting".
Emphasis of matter - Financial statements prepared other than on
a going concern basis
We draw attention to note 2 in the condensed set of financial
statements, which indicates that the condensed set of financial
statements have been prepared on a basis other than that of a going
concern following the decision for the managed wind-down of the
Company. Our conclusion is not modified in respect of this
matter.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion is based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Recognised Auditor
St. Helier, Jersey
25 September 2023
CONDENSED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023 (Unaudited)
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
Notes EUR EUR
----- -------------- ------------------
Cash and cash equivalents 8,262,378 6,259,400
----- -------------- ------------------
Prepayments 16,558 52,219
----- -------------- ------------------
Financial assets at fair value through profit or loss 5 293,525,261 297,721,169
----- -------------- ------------------
Total assets 301,804,197 304,032,788
----- -------------- ------------------
Payables 7 (575,177) (723,734)
----- -------------- ------------------
Intercompany loan 6 (1,906,573) (1,694,077)
----- -------------- ------------------
Total liabilities (2,481,750) (2,417,811)
----- -------------- ------------------
Net assets 12,13 299,322,447 301,614,977
----- -------------- ------------------
Capital and reserves
----- -------------- ------------------
Stated capital 8 446,312,100 447,542,762
----- -------------- ------------------
Retained loss (146,989,653) (145,927,785)
----- -------------- ------------------
Shareholders' equity 299,322,447 301,614,977
----- -------------- ------------------
NAV per ordinary share 12 0.6761 0.6784
----- -------------- ------------------
These condensed interim financial statements were authorised and
approved for issue by the Directors on 25 September 2023 and signed
on their behalf by:
Steven Wilderspin Heather MacCallum
Director Director
The accompanying notes below form an integral part of the
condensed interim financial statements.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023 (Unaudited)
Six months ended Six months ended
30 June 2023 30 June 2022
(unaudited) (unaudited)
Notes EUR EUR
----- ----------------- -----------------
Income
----- ----------------- -----------------
Realised gain/(loss) on foreign exchange 9 (7)
----- ----------------- -----------------
Net gain/(loss) on financial assets at fair value through profit or loss 5 20,692,908 (56,210,872)
----- ----------------- -----------------
Total income 20,692,917 (56,210,879)
----- ----------------- -----------------
Expenses
----- ----------------- -----------------
Operating expenses 3 (785,093) (681,956)
----- ----------------- -----------------
Loan interest expense 6 (14,396) (10,676)
----- ----------------- -----------------
Bank interest income/(expense) 81,873 (27,653)
----- ----------------- -----------------
Total expenses (717,616) (720,285)
----- ----------------- -----------------
Profit/(loss) before taxation 19,975,301 (56,931,164)
----- ----------------- -----------------
Taxation - -
----- ----------------- -----------------
Profit/(loss) after taxation 19,975,301 (56,931,164)
----- ----------------- -----------------
Total comprehensive income/(loss) for the period attributable to
Shareholders 19,975,301 (56,931,164)
----- ----------------- -----------------
Basic and diluted earnings/(loss) per ordinary share 11 0.0451 (0.1239)
----- ----------------- -----------------
The Company has no items of other comprehensive income and
therefore the profit/loss for the period is also the total
comprehensive income/loss.
All items in the above statement are derived from continuing
operations. No operations were acquired or discontinued during the
period.
The accompanying notes below form an integral part of the
condensed interim financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023 (Unaudited)
Stated capital Retained loss Total
Notes EUR EUR EUR
----- -------------- ------------- ------------
Shareholders' equity
at 1 January 2023 8 447,542,762 (145,927,785) 301,614,977
----- -------------- ------------- ------------
Total comprehensive income
for the period attributable
to Shareholders - 19,975,301 19,975,301
----- -------------- ------------- ------------
Transactions with owners
----- -------------- ------------- ------------
Dividends 15 - (21,037,169) (21,037,169)
----- -------------- ------------- ------------
Ordinary shares repurchased 8 (1,230,662) - (1,230,662)
----- -------------- ------------- ------------
(1,230,662) (21,037,169) (22,267,831)
----- -------------- ------------- ------------
Shareholders' equity
at 30 June 2023 8 446,312,100 (146,989,653) 299,322,447
----- -------------- ------------- ------------
For the six months ended 30 June 2022 (Unaudited)
Stated capital Retained loss Total
Notes EUR EUR EUR
----- -------------- ------------- ------------
Shareholders' equity
at 1 January 2022 8 459,044,783 (37,045,206) 421,999,577
----- -------------- ------------- ------------
Total comprehensive loss
for the period attributable
to Shareholders - (56,931,164) (56,931,164)
----- -------------- ------------- ------------
Transactions with owners
----- -------------- ------------- ------------
Dividends 15 - (20,697,112) (20,697,112)
----- -------------- ------------- ------------
Ordinary shares repurchased (1,816,040) - (1,816,040)
----- -------------- ------------- ------------
(1,816,040) (20,697,112) (22,513,152)
----- -------------- ------------- ------------
Shareholders' equity
at 30 June 2022 457,228,743 (114,673,482) 342,555,261
----- -------------- ------------- ------------
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2023 (Unaudited)
Six months ended Six months ended
30 June 2023 30 June 2022
(unaudited) (unaudited)
Notes EUR EUR
----- ----------------- -----------------
Cash flow from operating activities
----- ----------------- -----------------
Total comprehensive income/(loss) for the period attributable to
Shareholders 19,975,301 (56,931,164)
----- ----------------- -----------------
Adjustments to reconcile total comprehensive income/(loss) for the period
attributable to
Shareholders to net cash flows:
----- ----------------- -----------------
* Unrealised (gain)/loss on financial assets at fair
value through profit and loss 5 (10,909,291) 65,878,680
----- ----------------- -----------------
* Realised gain on financial assets at fair value
through profit and loss 5 (9,783,617) (9,667,808)
----- ----------------- -----------------
Purchase of financial assets at fair value through profit or loss 5 - (2,336,756)
----- ----------------- -----------------
Proceeds from sale of financial assets at fair value through profit or
loss 5 24,888,816 25,605,538
----- ----------------- -----------------
Changes in working capital
----- ----------------- -----------------
Decrease in other receivables 35,661 30,930
----- ----------------- -----------------
(Decrease)/increase in payables 7 (148,557) 342,076
----- ----------------- -----------------
Net cash generated from operating activities 24,058,313 22,921,496
----- ----------------- -----------------
Cash flow from financing activities
----- ----------------- -----------------
Ordinary shares repurchased 8 (1,230,662) (1,816,040)
----- ----------------- -----------------
Increase in intercompany loan 6 212,496 195,934
----- ----------------- -----------------
Dividends paid 15 (21,037,169) (20,697,112)
----- ----------------- -----------------
Net cash used in financing activities (22,055,335) (22,317,218)
----- ----------------- -----------------
Net increase in cash and cash equivalents 2,002,978 604,278
----- ----------------- -----------------
Cash and cash equivalents at the start of the period 6,259,400 5,671,436
----- ----------------- -----------------
Cash and cash equivalents at the end of the period 8,262,378 6,275,714
----- ----------------- -----------------
The accompanying notes below form an integral part of the
condensed interim financial statements
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2023
1 General information
The Company is a closed-ended limited liability investment
company domiciled and incorporated under the laws of Jersey with
variable capital pursuant to the Collective Investment Funds
(Jersey) Law 1988. It was incorporated on 30 April 2014 under
registration number 115628. The Company's ordinary shares are
quoted on the Premium Segment of the Main Market of the LSE and the
Company has a premium listing on the Official List of the FCA. The
Company's C Shares were quoted on the SFS of the Main Market of the
LSE until 6 January 2020 and converted to ordinary shares on 7
January 2020.
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company (the "Managed Wind-Down") with
cash returned to the Shareholders in a timely and efficient manner.
The Board also published a circular ("the Circular") to the
Shareholders to convene an EGM on 15 September 2023 seeking
approval from the Shareholders for the amendments to the Company's
investment objective and policy and to its share capital, in order
to facilitate the Managed Wind-Down.
On 15 September 2023, the Shareholders approved all of the
following by way of an ordinary resolution:
-- the adoption of a new investment objective and policy. The
new investment objective is to realise all existing assets in the
Company's portfolio in an orderly manner.
-- the conversion of all shares held by the Company into
redeemable shares on the terms set out in the Circular.
-- the issuance of the Deferred Share with the rights and
restrictions set out in section 3.5 of the Circular, in accordance
with article 2.1 of the Articles.
The Company has a wholly owned Luxemburg subsidiary, Blackstone
/ GSO Loan Financing (Luxembourg) S.à r.l., which has an issued
share capital of 2,000,000 Class A shares and 1 Class B share held
entirely by the Company as at 30 June 2023 and 31 December 2022.
The Company also holds 224,651,555 Class B CSWs (31 December 2022:
239,550,782) issued by the Lux Subsidiary.
The Company's registered address is IFC 1, The Esplanade, St
Helier, Jersey, JE1 4BP, Channel Islands.
2 Material accounting policy information
The principal accounting policies applied in the preparation of
these condensed interim financial statements are set out below.
These policies have been applied consistently throughout all the
years presented, unless otherwise stated.
2.1 Statement of compliance
The Annual Report and Audited Financial Statements are prepared
in accordance with the Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority and with International Financial
Reporting Standards as adopted by the EU. The condensed set of
interim financial statements included in this Half Yearly Financial
Report has been prepared in accordance with EU adopted
International Accounting Standard 34 Interim Financial
Reporting.
2.2 Going concern
As a consequence of the Company being put in the process of a
Managed Wind-Down as detailed in Note 1 above, the Directors
consider it appropriate to adopt a basis other than going concern
in preparing this Half Yearly Financial Report given their
intention to wind down the Company.
IFRS 9 requires financial assets to be measured at fair value
through profit or loss with the change in measurement to be
effective in the financial period following the wind down decision,
which occurred post the period end. There will be no substantial
change in this regard as the primary assets of the Company are
financial assets which are shown at fair value. The Board is not
aware of any additional impact on this Half Yearly Financial Report
in regards to the Company going into Managed Wind-Down.
These condensed interim financial statements do not include
provisions for the wind down of the Company that have not been
contractually committed. The Board expects the wind-down of the
Company to be over a 7 year period although this is not
guaranteed.
After making enquiries and supported by the Directors' current
assessment of the Company's ability to pay its debts as they fall
due for the foreseeable future, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence until the anticipated wind down of the
Company. The Directors will ensure that sufficient liquidity is
held back to ensure that liabilities are at all times adequately
covered.
2.3 Accounting standards
New standards, amendments and interpretations issued and
effective for the financial year beginning 1 January 2023
The following new standards, amendments or interpretations are
effective for the financial year beginning 1 January 2023 and the
Directors do not consider that these have a material impact on the
Company's condensed interim financial statements:
-- IFRS 17 Insurance Contracts
-- Amendments to IFRS 17
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
-- Definition of Accounting Estimate (Amendments to IAS 8)
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes
-- Initial Application of IFRS 17 and IFRS 9 - Comparative Information (Amendments to IFRS 17)
New standards, amendments and interpretations issued but not
effective for the financial year beginning 1 January 2023 and not
early adopted
The following standards become effective in future accounting
periods and have not been adopted by the Company and the Directors
do not believe that the application of these will have a material
impact on the Company's condensed interim financial statements:
-- Classification of liabilities as current or non-current
(Amendments to IAS 1) - effective for periods beginning on or after
1 January 2024
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS
16) - effective for periods beginning on or after 1 January
2024
-- Non-current Liabilities with Covenants (Amendments to IAS 1)
- effective for periods beginning on or after 1 January 2024
-- Sale or Contribution of Assets between an Investor and its
Associate or JV (Amendments to IFRS 10 and IAS 28) - optional
2.4 Critical accounting judgements and estimates
The preparation of the condensed interim financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect items reported in the
Condensed Statement of Financial Position and Condensed Statement
of Comprehensive Income. It also requires management to exercise
its judgement in the process of applying the Company's accounting
policies. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the
carrying amount of assets and liabilities affected in future
periods.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Estimates
(a) Fair value
For the fair value of all financial instruments held, the
Company determines fair values using appropriate techniques.
Refer to above, Note 5 and Note 2.9 of the 31 December 2022
Annual Report and Audited Financial Statements for further details
on the significant estimates applied in the valuation of the
Company's financial instruments.
Judgements
(b) Non-consolidation of the Lux Subsidiary
The Company meets the definition of an investment entity as
defined by IFRS 10 Consolidated Financial Statements and is
required to account for its investment in the Lux Subsidiary at
fair value through profit or loss.
The Company has multiple unrelated investors and holds multiple
investments in the Lux Subsidiary. The Company has been deemed to
meet the definition of an investment entity per IFRS 10 as the
following conditions exist:
-- the Company has obtained funds for the purpose of providing
investors with investment management services;
-- the Company's business purpose, which has been communicated
directly to investors, is investing solely for returns from capital
appreciation, investment income, or both; and
-- the performance of investments made through the Lux
Subsidiary are measured and evaluated on a fair value basis.
The Company controls the Lux Subsidiary through its 100% holding
of the voting rights and ownership. The Lux Subsidiary is
incorporated in Luxembourg. Refer to Note 9 for further disclosures
relating to the Company's interest in the Lux Subsidiary.
(c) Non-consolidation of BCF
To determine control, there has to be a linkage between power
and the exposure to risks and rewards. The main
link from ownership would allow a company to control the
payments of returns and operating policies and decisions of a
subsidiary.
To meet the definition of a subsidiary under the single control
model of IFRS 10, the investor has to control the investee. Control
involves power, exposure to variability of returns and a linkage
between the two:
-- the investor has existing rights that give it the ability to
direct the relevant activities that significantly affect the
investee's returns;
-- the investor has exposure or rights to variable returns from
its involvement with the investee; and
-- the investor has the ability to use its power over the
investee to affect the amount of the investor's returns.
In the case of BCF, the relevant activities are the investment
decisions made by it. However, in the Lux Subsidiary's case, the
power to influence or direct the relevant activities of BCF is not
attributable to the Lux Subsidiary. The Lux Subsidiary does not
have the ability to direct or stop investments by BCF; therefore,
it does not have the ability to control the variability of returns.
Accordingly, BCF has been determined not to be a subsidiary
undertaking as defined under IFRS 10 Consolidated Financial
Statements and the Lux Subsidiary's investment in the PPNs issued
by BCF are accounted for at fair value through profit or loss.
3 Operating expenses
Six months ended Six months ended
30 June 2023 30 June 2022
(unaudited) (unaudited)
EUR EUR
----------------- -----------------
Administration fees 152,439 175,807
----------------- -----------------
Directors' fees (see Note 4) 140,311 143,273
----------------- -----------------
Professional fees 116,755 83,489
----------------- -----------------
Audit of the Company 92,557 46,407
----------------- -----------------
Audit related services - review of interim financial report 85,604 89,070
----------------- -----------------
Brokerage fees 68,900 66,858
----------------- -----------------
Regulatory fees 28,536 21,495
----------------- -----------------
Registrar fees 16,849 15,052
----------------- -----------------
Sundry expenses 83,142 40,505
----------------- -----------------
Total operating expenses 785,093 681,956
----------------- -----------------
4 Directors' fees
The Company has no employees. The Company incurred EUR140,311
(30 June 2022: EUR143,273) in Directors' fees (consisting
exclusively of short-term benefits) during the period, of which
EUR70,793 (31 December 2022: EUR 68,470) was outstanding at the
period end. No pension contributions were payable in respect of any
of the Directors. Refer to above for details on the Directors'
interests.
5 Financial assets at fair value through profit or loss
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
EUR EUR
-------------- ------------------
Financial assets at fair value through profit or loss 293,525,261 297,721,169
-------------- ------------------
Financial assets at fair value through profit or loss consist of
224,651,555 CSWs, 2,000,000 Class A shares and 1 Class B share
issued by the Lux Subsidiary (31 December 2022: 239,550,782 CSWs,
2,000,000 Class A shares and 1 Class B share issued by the Lux
Subsidiary). Refer to pages 78 to 79 in the Annual Report and
Audited Financial Statements for the year ended 31 December 2022
for further details.
Fair value hierarchy
IFRS 13 Fair Value Measurement requires an analysis of
investments valued at fair value based on the reliability and
significance of information used to measure their fair value.
The Company categorises its financial assets according to the
following fair value hierarchy detailed in IFRS 13 Fair Value
Measurement that reflects the significance of the inputs used in
determining their fair values:
-- Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable variable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are
valued based on quoted prices for similar instruments where
significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
30 June 2023 (unaudited) Level 1 Level 2 Level 3 Total
EUR EUR EUR EUR
------- ------- ----------- -----------
Financial assets at fair value through profit or loss - - 293,525,261 293,525,261
------- ------- ----------- -----------
31 December 2022 (audited) Level 1 Level 2 Level 3 Total
EUR EUR EUR EUR
------- ------- ----------- -----------
Financial assets at fair value through profit or loss - - 297,721,169 297,721,169
------- ------- ----------- -----------
The Company determines the fair value of the financial assets at
fair value through profit or loss using the unaudited IFRS NAV of
both the Lux Subsidiary and BCF.
The Company determines the fair value of the CLOs held directly
using third party valuations. The Portfolio Adviser can challenge
the marks if they appear off-market or unrepresentative of fair
value.
During the six months ended 30 June 2023 and the year ended 31
December 2022, there were no reclassifications between levels of
the fair value hierarchy.
The Company's maximum exposure to loss from its interests in the
Lux Subsidiary and indirectly in BCF is equal to the fair value of
its investments in the Lux Subsidiary.
Financial assets at fair value through profit or loss
reconciliation
The following table shows a reconciliation of all movements in
the fair value of financial assets categorised within Level 3
between the start and the end of the reporting period:
30 June 2023 (unaudited)
EUR
------------
Balance as at 1 January 2023 297,721,169
------------
Sale proceeds - CSWs (24,888,816)
------------
Realised gain - CSWs 9,783,617
------------
Unrealised gain - CSWs 10,909,291
------------
Balance as at 30 June 2023 293,525,261
------------
Realised gain on financial assets at fair value through profit or loss 9,783,617
------------
Total change in unrealised gain on financial assets for the period 10,909,291
------------
Net gain on financial assets at fair value through profit or loss 20,692,908
------------
31 December 2022 (audited) Total
EUR
--------------
Balance as at 1 January 2022 417,969,559
--------------
Purchases - CSWs 7,608,819
--------------
Sale proceeds - CSWs (56,962,646)
--------------
Realised gain - CSWs 21,319,529
--------------
Unrealised loss - CSWs (92,214,092)
--------------
Balance as at 31 December 2022 297,721,169
--------------
Realised gain on financial assets at fair value through profit or loss 21,319,529
--------------
Total change in unrealised gain on financial assets for the year (92,214,092)
--------------
Net loss on financial assets at fair value through profit or loss (70,894,563)
--------------
Quantitative information of significant unobservable inputs and
sensitivity analysis to significant changes in unobservable inputs
- Level 3
The significant unobservable inputs used in the fair value
measurement of the financial assets at fair value through profit or
loss within Level 3 of the fair value hierarchy together with a
quantitative sensitivity analysis as at 30 June 2023 and 31
December 2022 are as shown below:
Asset class Fair value Unobservable Ranges Weighted Sensitivity to changes
inputs average in significant unobservable
inputs
EUR
----------- --------------- ------ -------- ----------------------------
Undiscounted 20% increase/decrease
NAV of will have a fair value
CSWs 285,901,763 BCF N/A N/A impact of +/- EUR57,180,353
----------- --------------- ------ -------- ----------------------------
Undiscounted 20% increase/decrease
Class A and Class B NAV of the will have a fair value
shares 7,623,498 Lux Subsidiary N/A N/A impact of +/- EUR1,524,700
----------- --------------- ------ -------- ----------------------------
Total as at 30 June
2023 (unaudited) 293,525,261
----------- --------------- ------ -------- ----------------------------
Asset class Fair value Unobservable Ranges Weighted Sensitivity to changes
inputs average in significant unobservable
inputs
EUR
------------- --------------- ------ -------- ----------------------------
20% increase/decrease
Undiscounted will have a fair value
NAV of impact of +/-
CSWs 290,426,295 BCF N/A N/A EUR58,085,259
------------- --------------- ------ -------- --------------------------------
20% increase/decrease
Undiscounted will have a fair
Class A and Class B NAV of the value impact of +/-
shares 7,294,874 Lux Subsidiary N/A N/A EUR EUR1,458,975
------------- --------------- ------ -------- ----------------------------
Total as at
31 December 2022
(audited) 297,721,169
------------- --------------- ------ -------- ----------------------------
6 Intercompany loan
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
EUR EUR
-------------- ------------------
Intercompany loan - payable to the Lux Subsidiary 1,906,573 1,694,077
-------------- ------------------
The intercompany loan - payable to the Lux Subsidiary is a
revolving unsecured loan between the Company and the Lux
Subsidiary. The intercompany loan has a maturity date of 13
September 2033 and is repayable at the option of the Company up to
the maturity date. Interest is accrued at a rate of 1.6% per annum
and is payable annually only when a written request has been
provided to the Company by the Lux Subsidiary. During the period
ended 30 June 2023, loan interest expense incurred by the Company
was EUR14,396 (30 June 2022: EUR10,676).
7 Payables
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
EUR EUR
-------------- ------------------
Audit fees 174,077 169,062
-------------- ------------------
Professional fees 108,818 142,314
-------------- ------------------
Administration fees 78,692 80,685
-------------- ------------------
Intercompany loan interest payable 73,639 59,242
-------------- ------------------
Directors' fees 70,793 68,470
-------------- ------------------
Payable on share buyback - 160,322
-------------- ------------------
Other payables 69,158 43,639
-------------- ------------------
Total payables 575,177 723,734
-------------- ------------------
All payables are due within the next twelve months.
8 Stated capital
Authorised
The authorised share capital of the Company is represented by an
unlimited number of shares of any class at no par value.
Allotted, called up and fully-paid
Number of shares Stated capital
EUR
---------------- --------------
As at 1 January 2023 444,578,522 447,542,762
---------------- --------------
Shares repurchased during the period and held in treasury (1,839,619) (1,230,662)
---------------- --------------
Total ordinary shares as at 30 June 2023 (unaudited) 442,738,903 446,312,100
---------------- --------------
Number of shares Stated capital
EUR
---------------- --------------
As at 1 January 2022 460,984,702 459,044,783
---------------- --------------
Shares repurchased during the period and held in treasury (16,406,180) (11,502,021)
---------------- --------------
Total ordinary shares as at 31 December 2022 (audited) 444,578,522 447,542,762
---------------- --------------
Ordinary shares
At the 2022 AGM, held on 17 June 2022, the Directors were
granted authority to repurchase up to 14.99% of the issued share
capital as at the date of the 2022 AGM for cancellation or to be
held as treasury shares.
Under this authority, during the six month period ended 30 June
2023, the Company repurchased 1,839,619 (year ended 31 December
2022: 16,406,180) of its ordinary shares of no par value at a total
cost of EUR1,230,662, including transaction costs of EUR2,471 (for
the year ended 31 December 2022, a total cost of EUR11,502,021,
including transaction costs of EUR23,095). These ordinary share are
being held as treasury shares.
At the Company's 2023 AGM held on 26 July 2023, the Company
received shareholder approval to resell up to 44,273,890 shares
held by the Company in treasury. Under this authority, these shares
are permitted to be sold or transferred out of treasury for cash at
a price representing a discount to NAV per ordinary share not
greater than the discount at which such shares were repurchased by
the Company.
As at 30 June 2023, the Company had 40,163,891 shares held as
treasury shares (31 December 2022: 38,324,272 shares). During the
period 1 January 2023 to the date of approval of these condensed
interim financial statements, no treasury shares have been resold
by the Company under this authority.
At the EGM held on 15 September 2023, the Shareholders approved
the conversion of the ordinary shares into redeemable shares in
order to allow for proceeds of realising assets in accordance with
the Managed-Wind Down, to be returned to Shareholders by way of pro
rata compulsory redemptions of the redeemable shares.
Voting rights
Holders of ordinary shares have the right to receive income and
capital from assets attributable to such class. Ordinary
shareholders have the right to receive notice of general meetings
of the Company and have the right to attend and vote at all general
meetings.
Dividends
Refer to above for details on the Company's dividend policy and
dividends declared by the Board during the six month period ended
30 June 2023 and Note 17 for dividends declared after the period
end.
Repurchase of ordinary shares
The Board intends to seek annual renewal of this authority from
the ordinary shareholders at the Company's AGM, to make one or more
on-market purchases of ordinary shares in the Company for
cancellation or to be held as treasury shares. The Board may, at
its absolute discretion, use available cash to purchase Shares in
issue in the secondary market at any time.
Capital management
As explained in Note 1, at an EGM on 15 September 2023, a
resolution was passed to approve changes to the investment
objective and policy of the Company to facilitate the Managed
Wind-Down of the Company and to convert the shares of the Company
into redeemable shares and to issue a Deferred Share.
The Company is closed-ended and has no externally imposed
capital requirements. The Company's capital as at 30 June 2023
comprises shareholders' equity at a total of EUR299,322,447 (31
December 2022: EUR301,614,977). The Company's objectives for
managing capital during the six months period to 30 June 2023
were:
-- to invest the capital in investments meeting the description,
risk exposure and expected return indicated in its Prospectus;
-- to achieve consistent returns while safeguarding capital by
investing via the Lux Subsidiary in BCF and other Underlying
Companies;
-- to maintain sufficient liquidity to meet the expenses of the
Company and to meet dividend commitments; and
-- to maintain sufficient size to make the operation of the Company cost efficient.
The Board monitors the capital adequacy of the Company on an
on-going basis and the Company's objectives regarding capital
management have been met.
Refer to Note 10c Liquidity Risk in the Annual Report and
Audited Financial Statements for the year ended
31 December 2022 for further discussion on capital management,
particularly on how the distribution policy was managed.
9 Interests in other entities
Interests in unconsolidated structured entities
IFRS 12 Disclosure of Interests in Other Entities defines a
structured entity as an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity, such as when any voting rights relate to
the administrative tasks only and the relevant activities are
directed by means of contractual agreements.
Involvement with unconsolidated structured entities
The Directors have concluded that the CSWs and voting shares of
the Lux Subsidiary in which the Company invests, but that it does
not consolidate, meet the definition of a structured entity.
The Directors have also concluded that BCF also meets the
definition of a structured entity.
The Directors have also concluded that CLOs in which the Company
invests, that are not subsidiaries for financial reporting
purposes, meet the definition of structured entities because:
-- the voting rights in the CLOs are not dominant rights in
deciding who controls them, as they relate to administrative tasks
only;
-- each CLO's activities are restricted by its Prospectus; and
-- the CLOs have narrow and well-defined objectives to provide
investment opportunities to investors.
Interests in subsidiary
As at 30 June 2023, the Company owns 100% of the Class A and
Class B shares in the Lux Subsidiary comprising 2,000,000 Class A
shares and 1 Class B share (31 December 2022: 2,000,000 Class A
shares and 1 Class B share).
The Lux Subsidiary's principal place of business is
Luxembourg.
Other than the investments noted above, the Company did not
provide any financial support for the period ended 30 June 2023 and
the year ended 31 December 2022, nor had it any intention of
providing financial or other support.
The Company has an intercompany loan payable to the Lux
Subsidiary as at 30 June 2023 and 31 December 2022. Refer to Note 6
for further details.
10 Segmental reporting
In accordance with IFRS 8 Operating Segments, the Board, who is
the chief operating decision maker, views the operations of the
Company as one operating segment, being the ordinary share class in
issue during the period ended 30 June 2023 and the year ended 31
December 2022.
During the period ended 30 June 2023 and the year ended 31
December 2022, the Company's primary exposure was to the Lux
Subsidiary in Europe. The Lux Subsidiary's primary exposure is to
BCF, an Irish entity. BCF's primary exposure is to the US and
Europe.
11 Basic and diluted earnings per share
As at As at
30 June 2023 30 June 2022 (unaudited)
(unaudited)
Total comprehensive income/(loss) for the period EUR19,975,301 EUR(56,931,164)
-------------- --------------------------
Weighted average number of ordinary shares during the period [33] 442,889,811 459,613,813
-------------- --------------------------
Basic and diluted earnings/(loss) per ordinary share 0.0451 (0.1239)
-------------- --------------------------
12 IFRS NAV per ordinary share
As at As at
30 June 2023 31 December 2022 (audited)
(unaudited)
IFRS NAV EUR299,322,447 EUR301,614,977
-------------- ----------------------------
Number of ordinary shares at period end 442,738,903 444,578,522
-------------- ----------------------------
IFRS NAV per ordinary share 0.6761 0.6784
-------------- ----------------------------
13 Reconciliation of Published NAV to IFRS NAV
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
NAV NAV per NAV NAV per
ordinary share ordinary share
------------ --------------- ------------- ---------------
EUR EUR EUR EUR
------------ --------------- ------------- ---------------
Published NAV attributable to Shareholders 389,973,882 0.8808 403,726,181 0.9081
------------ --------------- ------------- ---------------
Adjustment - valuation (90,651,435) (0.2047) (102,111,204) (0.2297)
------------ --------------- ------------- ---------------
IFRS NAV 299,322,447 0.6761 301,614,977 0.6784
------------ --------------- ------------- ---------------
As noted above, there can be a difference between the Published
NAV and the IFRS NAV per the financial statements, because of the
different bases of valuation used. The above table reconciles the
Published NAV to the IFRS NAV per the condensed interim financial
statements.
14 Related party transactions
All transactions between related parties were conducted on terms
equivalent to those prevailing in an arm's length transaction. In
accordance with IAS 24 Related Party Disclosures, the related
parties and related party transactions during the period
comprised:
Transactions with entities with significant influence
As at 30 June 2023, Blackstone Asia Treasury Pte held 43,000,000
ordinary shares in the Company (31 December 2022: 43,000,000).
Transactions with key management personnel
The Directors are the key management personnel as they are the
persons who have the authority and responsibility for planning,
directing and controlling the activities of the Company. The
Directors are entitled to remuneration for their services. Refer to
Note 4 for further details.
Transactions with other related parties
At 30 June 2023, current employees of the Portfolio Adviser and
its affiliates and accounts managed or advised by them, hold 41,380
ordinary shares (31 December 2022: 39,875) which represents 0.009%
(31 December 2022: 0.009%) of the issued ordinary shares of the
Company.
The Company has exposure to the CLOs originated by BCF, through
its investment in the Lux Subsidiary. BIL is also appointed as a
service support provider to BCF and as the collateral manager to
the Direct CLO Subsidiaries. BLCS has been appointed as the
collateral manager to BCM LLC, Dorchester Park CLO Designated
Activity Company and the Indirect CLO Subsidiaries.
Transactions with subsidiaries
The Company held 224,651,555 CSWs as at 30 June 2023 (31
December 2022: 239,550,782) following the redemption of 14,899,227
(31 December 2022: issuance of 7,608,819 and redemption of
35,146,135) CSWs by the Lux Subsidiary. Refer to Note 5 for further
details.
As at 30 June 2023, the Company held 2,000,000 Class A shares
and 1 Class B share in the Lux Subsidiary with a nominal value of
EUR2,000,001 (31 December 2022: 2,000,000 Class A shares and 1
Class B share in the Lux Subsidiary with a nominal value of
EUR2,000,001).
As at 30 June 2023, the Company also held an intercompany loan
payable to the Lux Subsidiary amounting to EUR1,906,573 (31
December 2022: EUR1,694,077).
15 Dividends
The Company declared and paid the following dividends on
ordinary shares during the six months ended 30 June 2023:
Period in respect of Date declared Ex-dividend date Payment date Amount per ordinary share Amount paid
EUR EUR
-------------- ----------------- ------------- ------------------------- -----------
1 Oct 2022 to 31 Dec 2022 23 Jan 2023 2 Feb 2023 3 Mar 2023 0.0275 12,182,391
-------------- ----------------- ------------- ------------------------- -----------
1 Jan 2023 to 31 Mar 2023 25 Apr 2023 4 May 2023 2 Jun 2023 0.0200 8,854,778
-------------- ----------------- ------------- ------------------------- -----------
Total 21,037,169
------------------------- -----------
The Company declared and paid the following dividends on
ordinary shares during the six months ended 30 June 2022:
Period in respect of Date declared Ex-dividend date Payment date Amount per ordinary share Amount paid
EUR EUR
-------------- ----------------- ------------- ------------------------- -----------
1 Oct 2021 to 31 Dec 2021 24 Jan 2022 4 Feb 2022 4 Mar 2022 0.0275 12,658,930
-------------- ----------------- ------------- ------------------------- -----------
1 Jan 2022 to 31 Mar 2022 25 Apr 2022 5 May 2022 9 Jun 2022 0.0175 8,038,182
-------------- ----------------- ------------- ------------------------- -----------
Total 20,697,112
------------------------- -----------
16 Controlling party
In the Directors' opinion, the Company has no ultimate
controlling party.
17 Events after the reporting period
The Board has evaluated subsequent events for the Company
through to 25 September 2023, the date the condensed interim
financial statements are available to be issued and other than
those listed below, concluded that there are no material events
that require disclosure or adjustment to the condensed interim
financial statements.
Dividends
On 21 July 2023, the Company declared a dividend of EUR0.0200
per ordinary share in respect of the period from 1 April 2023 to 30
June 2023. A total payment of EUR8,854,778 was made on 15 August
2023.
Redemption of CSWs
On 4 August 2023, the Company redeemed 7,971,415 CSWs issued by
the Lux Subsidiary, for total proceeds of EUR13,566,929.
Board changes
Ms Charlotte Valeur and Mr Gary Clark did not stand for
re-election at the last AGM of the Company held on 26 July 2023 and
so have retired from the Board of Company.
Mr Giles Adu and Ms Belinda Crosby have been appointed as
additional non-executive directors, effective 26 July 2023 and 24
August 2023 respectively.
Ms Heather MacCallum has indicated that she wishes to step down
from the Board on 30 September 2023 after the release of the
Company's Half Yearly Financial Report.
Summary of results of EGM
On 25 August 2023, the Board announced that it had decided to
put forward proposals to Shareholders for the implementation of a
managed wind-down of the Company with cash returned to the
Shareholders in a timely and efficient manner. The Board published
a circular to the Shareholders to convene an EGM on 15 September
2023 seeking approval from the Shareholders for the amendments to
the Company's investment objective and policy and to its share
capital, to facilitate the Managed Wind-Down.
On 15 September 2023, the Shareholders approved all of the
following by way of an ordinary resolution:
-- the adoption of a new investment objective and policy. The
new investment objective is to realise all existing assets in the
Company's portfolio in an orderly manner.
-- the conversion of all shares held by the Company into
redeemable shares on the terms set out in the Circular.
-- the issuance of the Deferred Share with the rights and
restrictions set out in section 3.5 of the Circular, in accordance
with article 2.1 of the Articles.
On 17 September 2023, the Lux Subsidiary issued a notice
requesting the redemption of the LuxCo PPNs in BCF in whole, with
the redemption exercise date of 18 December 2023, being at least 90
days after the date of the notice. The allocation to the Redemption
Pool will be effective on 2 January 2024.
COMPANY INFORMATION
Directors Registered Office
Mr Steven Wilderspin (Chair) IFC 1
Ms Heather MacCallum The Esplanade
Mr Mark Moffat St Helier
Mr Giles Adu (appointed on 26 July 2023) Jersey
Ms Belinda Crosby (appointed on 24 August 2023) JE1 4BP, Channel Islands
Ms Charlotte Valeur (retired on 26 July 2023)
Mr Gary Clark (retired on 26 July 2023)
All c/o the Company's registered office
--------------------------------------
Portfolio Adviser Registrar
--------------------------------------
Blackstone Ireland Limited Link Asset Services (Jersey) Limited
30 Herbert Street 12 Castle Street
2(nd) Floor St Helier
Dublin 2, Ireland Jersey, JE2 3RT, Channel Islands
--------------------------------------
Administrator / Company Secretary / Custodian / Depositary / Banker Auditor
--------------------------------------
BNP Paribas S.A., Jersey Branch Deloitte LLP
IFC 1 Gaspé House
The Esplanade 66-72 Esplanade
St Helier St Helier
Jersey JE2 3QT, Channel Islands
JE1 4BP, Channel Islands
--------------------------------------
Legal Adviser to the Company (as to Jersey Law) Legal Adviser to the Company
(as to English Law)
--------------------------------------
Carey Olsen Herbert Smith Freehills LLP
47 Esplanade Exchange House
St Helier Primrose Street
Jersey London
JE1 0BD, Channel Islands EC2A 2EG, United Kingdom
--------------------------------------
Joint Broker Joint Broker
--------------------------------------
Singer Capital Markets Winterflood Investment Trusts
1 Bartholomew Lane The Atrium Building
London, EC2N 2AX , United Kingdom Cannon Bridge House, 25 Dowgate Hill
London, EC4R 2GA, United Kingdom
--------------------------------------
GLOSSARY
AGM Annual General Meeting
AIC The Association of Investment Companies, of which
the Company is a member
----------------------------------------------------------
AIC Code AIC Code of Corporate Governance 2019
----------------------------------------------------------
AIF Alternative Investment Fund
----------------------------------------------------------
AIFMD Alternative Investment Fund Managers Directive
----------------------------------------------------------
APM Alternative Performance Measure
----------------------------------------------------------
BCF Blackstone Corporate Funding Designated Activity
Company
----------------------------------------------------------
BCM LLC Blackstone CLO Management LLC (formerly known as
Blackstone / GSO CLO Management LLC)
----------------------------------------------------------
BGLF or the Company Blackstone Loan Financing Limited
----------------------------------------------------------
BGLP Ticker for the Company's Sterling Quote
----------------------------------------------------------
BIL or the Portfolio Blackstone Ireland Limited
Adviser
----------------------------------------------------------
BLCS Blackstone Liquid Credit Strategies LLC
----------------------------------------------------------
Board The Board of Directors of the Company
----------------------------------------------------------
bp Basis points
----------------------------------------------------------
BWIC Bids Wanted In Competition
----------------------------------------------------------
BX Credit Blackstone Alternative Credit Advisors LP or its
affiliates in the credit-focused business of Blackstone
Inc. (together with its affiliates, "Blackstone")
----------------------------------------------------------
CFO Chief Financial Officer
----------------------------------------------------------
CLO Collateralised Loan Obligation
----------------------------------------------------------
CSW Cash Settlement Warrant
----------------------------------------------------------
DTR Disclosure Guidance and Transparency Rules
----------------------------------------------------------
Dividend yield calculated as the last four quarterly dividends
declared divided by the share price as at the relevant
date
----------------------------------------------------------
ECB European Central Bank
----------------------------------------------------------
EGM Extraordinary General Meeting
----------------------------------------------------------
ESG Environmental, Social and Governance
----------------------------------------------------------
ESMA European Securities and Markets Authority
----------------------------------------------------------
EU European Union
----------------------------------------------------------
EUR Euro
----------------------------------------------------------
Fed The Federal Reserve
----------------------------------------------------------
FCA Financial Conduct Authority (UK)
----------------------------------------------------------
FRC Financial Reporting Council (UK)
----------------------------------------------------------
GDP Global Domestic Product
----------------------------------------------------------
IAS International Accounting Standard
----------------------------------------------------------
IFRS International Financial Reporting Standards
----------------------------------------------------------
IFRS NAV Gross assets less liabilities (including accrued
but unpaid fees) determined in accordance with
IFRS as adopted by the EU
----------------------------------------------------------
ISA Individual Savings Account
----------------------------------------------------------
ITD Inception-to-date
----------------------------------------------------------
KPI Key Performance Indicator
----------------------------------------------------------
JV Joint venture
----------------------------------------------------------
LCD S&P Global Market Intelligence's Leveraged Commentary
& Data provides in-depth coverage of the leveraged
loan market through real-time news, analysis, commentary
and proprietary loan data
----------------------------------------------------------
LIBOR London Inter-Bank Offered Rate
----------------------------------------------------------
LSE London Stock Exchange
----------------------------------------------------------
LTM Last twelve months. LTM return is calculated over
the period July 2022 to June 2023.
----------------------------------------------------------
Lux Subsidiary Blackstone / GSO Loan Financing (Luxembourg) S.à
r.l.
----------------------------------------------------------
NAV Net Asset Value
----------------------------------------------------------
NAV total return per Calculated as the increase / decrease in the NAV
ordinary share per ordinary share plus the total dividends paid
per ordinary share during the period, with such
dividends paid being re-invested at NAV, as a percentage
of the NAV per ordinary share
----------------------------------------------------------
NIM Net interest margin
----------------------------------------------------------
PPN Profit Participating Note
----------------------------------------------------------
Premium/Discount Calculated as the NAV per share as at a particular
date less BGLF's closing share price on the LSE,
divided by the NAV per share as at that date
----------------------------------------------------------
PRI Principles for Responsible Investment
----------------------------------------------------------
Published NAV Gross assets less liabilities (including accrued
but unpaid fees) determined in accordance with
the section entitled "Net Asset Value" in Part
I of the Company's Prospectus and published on
a monthly basis
----------------------------------------------------------
Return Calculated as the increase /decrease in the NAV
per ordinary share plus the total dividends paid
per ordinary share, with such dividends paid being
re-invested at NAV, as a percentage of the NAV
per ordinary share. LTM return is calculated over
the period July 2022 to June 2023.
----------------------------------------------------------
RP Recognition period
----------------------------------------------------------
RTS Regulatory technical standards
----------------------------------------------------------
SFDR Sustainable Finance Disclosure Regulation
----------------------------------------------------------
SFS Specialist Fund Segment
----------------------------------------------------------
SOFR Secured Overnight Financing Rate
----------------------------------------------------------
S&P Standard & Poor's
----------------------------------------------------------
TCFD Task Force on Climate-related Financial Disclosures
----------------------------------------------------------
UBS Union Bank of Switzerland
----------------------------------------------------------
UK United Kingdom
----------------------------------------------------------
UK Code UK Corporate Governance Code 2018
----------------------------------------------------------
US United States
----------------------------------------------------------
USD United States Dollar
----------------------------------------------------------
WA Weighted Average
----------------------------------------------------------
Y TD Year to date
----------------------------------------------------------
[1] Refer to the glossary for an explanation of the terms used
above and elsewhere within this report. The calculation for the
IFRS NAV per ordinary share is found in Note 12 in the 'notes to
the condensed interim financial statements' and the calculation for
the IFRS and Published NAV total return and premium/discount is
found under 'Alternative Performance Measures' above. These
calculations remain consistent with prior years.
[2] Bloomberg closing price at period end.
[3] Annual dividend yield as at 30 June 2023 and 31 December
2022 is based on the four quarterly dividends announced and paid by
the Company during the 12 months prior to the period end/year end
as applicable.
[4] BGLP is the ticker for the Company's Sterling Quote and has
been presented for information purposes only.
[5] Past performance is not necessarily indicative of future
results and there can be no assurance that the Company will achieve
comparable results, will meet its target returns, achieve its
investment objectives, or be able to implement its investment
strategy.
[6] The target dividend is a target only and not a profit
forecast. It should not be taken as an indication of expected
future performance or results.
[7] Credit Suisse: Leveraged Loan Index for US Loans, Western
European Leveraged Loan Index (hedged to EUR) for EUR Loans as of
30 June 2023. Indices are provided for illustrative purposes only.
They have not been selected to represent benchmarks or targets for
the Company. The indices may include holdings that are
substantially different than investments held by BCF and do not
reflect the strategy of BCF. Comparisons to indices have
limitations because indices have risk profiles, volatility, asset
composition, leverage and other material characteristics that may
differ from BCF. The indices do not reflect the deduction of fees
or expenses.
[8] Credit Suisse: As of 30 June 2023. BX Credit's data used for
BCF defaults, calculated on a look through basis. BCF defaults
defined as (a) missed a payment, (b) filed bankruptcy or (c) were
downgraded by Moody's, Fitch, or S&P to D. Recovery rate
excluded from years with zero defaults. Past performance does not
predict future returns and there can be no assurance that a fund
will continue to achieve comparable results or that a fund will be
able to implement its investment strategy or achieve its investment
objectives or avoid substantial losses.
[9] Represents BGLF's NAV.
[10] The web link to the 31 December 2022 Annual Report and
Audited Financial Statements is:
https://www.blackstone.com/wpcontent/uploads/sites/2/blackstone-secure/Blackstone-Loan-Financing-AR-2022.pdf
[11] Credit Suisse Default Report, as of 30 June 2023
[12] JP Morgan Research - 1Q23 High Yield Credit Fundamentals,
as of 12 June 2023
[13] LCD Global Interactive Volume Report, as of 30 June
2023.
[14] LCD, July 2023.
[15] LCD Quarterly Wrap, as of 30 June 2023.
[16] S&P LCD CLO Global Databank, as of 30 June 2023.
[17] Bloomberg CLO Quarterly, as of 31 July 2023.
[18] As of 30 June 2023.
[19] BX Credit's data, as of 30 June 2023
[20] Debt tranches of certain US CLOs are referenced against
SOFR. Some proportion of US CLO collateral may be based on SOFR and
subject to change over time.
[21] Calculated on BCF's net assets as of 30 June 2023.
[22] Portfolio data by Issuer, Industry, Country, Rating and
Loan Price Bands are presented using the gross par amount of assets
held directly and indirectly by BCF. Indirect asset holdings are
held within CLOs BCF has invested in. The total par amount of all
assets held within each CLO are included on a fully consolidated
basis and added to those assets held directly by BCF. Portfolio
holdings, Rating, Country, Industry and Loan Price Band
distributions are subject to change and are not recommendations to
buy or sell any security. CLO Income Note investments are excluded
from all figures. Data as of 30 June 2023, calculated by BX Credit
as of 10 July 2023.
[23] Calculated on BCF's net assets as of 30 June 2023.
[24] Data for EUR and US CLOs calculated based on data available
on Kanerai as of 10 July 2023 for non-redeemed CLOs. Data for
Directly Held Loans calculated by BX Credit.
[25] Please note that the High Tech exposure is defined by
Moody's as "computer hardware, software, component equipment,
consumer electronics, semiconductor and contract manufacturers; IT
services and distributors; transaction processors." The BCF
portfolio is not exposed to "start up" type risk but rather is
defensively positioned and includes established businesses with
recurring revenues.
[26] Portfolio data by Issuer, Industry, Country, Rating and
Loan Price Bands are presented using the gross par amount of assets
held directly and indirectly by BCF. Indirect asset holdings are
held within CLOs BCF has invested in. The total par amount of all
assets held within each CLO are included on a fully consolidated
basis and added to those assets held directly by BCF. Portfolio
holdings, Rating, Country, Industry and Loan Price Band
distributions are subject to change and are not recommendations to
buy or sell any security. CLO Note investments are excluded from
all figures. Data calculated by BX Credit, as of 30 June 2023.
[27] Portfolio data by Issuer, Industry, Country, Rating and
Loan Price Bands are presented using the gross par amount of assets
held directly and indirectly by BCF. Indirect asset holdings are
held within CLOs BCF has invested in. The total par amount of all
assets held within each CLO are included on a fully consolidated
basis and added to those assets held directly by BCF. Portfolio
holdings, Rating, Country, Industry and Loan Price Band
distributions are subject to change and are not recommendations to
buy or sell any security. CLO Note investments are excluded from
all figures. Data calculated by BX Credit, as of 30 June 2023. The
top 20 issuers aggregated to 15.0% (31 December 2022: 14.4%) of the
portfolio.
[28] The word "material" as used herein should not necessarily
be equated to or taken as a representation about the "materiality"
of such ESG factors under the US federal securities laws or any
similar legal or regulatory regime globally.
[29] Refer to above for more details on Board changes.
[30] Deal level constant default rate
[31] Published NAV is an APM from which these metrics are
derived.
[32] Refer to details on discount management in the Chair's
Statement.
[33] Average number of shares weighted against the effect of
ordinary shares buybacks during the period (refer to Note 8 for
further details on the ordinary shares buybacks).
A copy of the Company's Half Yearly Financial Report will be
available shortly on the Company's website
(https://www.blackstone.com/fund/bglfln-blackstone-loan-financing-limited),
on the National Storage Mechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism), and will
also be provided to those shareholders who have requested a printed
copy.
IFC1 - The Esplanade - St Helier - Jersey - JE1 4BP
Company Secretary
Tel: +44 (0) 1534 709178 / 813783
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FELLLXKLFBBL
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
Blackstone Loan Financing (LSE:BGLP)
過去 株価チャート
から 10 2024 まで 11 2024
Blackstone Loan Financing (LSE:BGLP)
過去 株価チャート
から 11 2023 まで 11 2024
