Amedeo Air Four Plus (AA4 ), a plane-leasing fund hit hard by the crisis in the airline industry caused by coronavirus, has terminated the contract of its fund manager Nimrod Capital.
In a short statement to the stock exchange Amedeo, whose share price more than halved last year as the pandemic disrupted air travel worldwide, said it had dismissed Nimrod as sole corporate and shareholder adviser from 31 January.
It has agreed to pay £9.45m and issue 5,975,000 new shares in a complete settlement of obligations to Nimrod, which helped launch the Guernsey-based but London-listed investment company in 2015.
Nimrod is headed by Marc Gordon and Richard Bolchover, who formerly ran Close Fund Management.
Stifel analyst Sachin Saggar said the payment represented about half of what Nimrod could have earned if it had served its full 12-year contract with Amedeo, which unusually had no break clause or notice period, said Numis Securities.
Amedeo’s board, chaired by Robin Hallam, former co-head of asset finance at international law firm Hogan Lovells, has been in dispute with Nimrod over its annual fee for about a year.
In the 2019/20 annual report Hallam, who had previously complained of the £6.1m placing fees Nimrod had earned in the first five years of Amedeo, said Nimrod’s annual fee was ‘unaligned with shareholders’ interests’.
‘Left unchanged, the current arrangement would result in further fees of £27.2m payable during the company’s life to 2030, regardless of whatever might become of the company’s market capitalisation, whether or not it disposes of any more assets and its ability to declare dividends,’ he wrote.
The statement came in the wake of 2019 when its share price tumbled 21% in response to Airbus’ decision to discontinue making A380s, the wide-bodied jets that make up half of Amedeo’s fleet, a move that threatened their re-sale value.
Amedeo’s difficulties - and those of other plane funds - increased last year, with lockdowns and travel restrictions threatening the viability of Thai Airways and the Emirates, the two national airlines that leased its planes. The former high-yielder suspended its quarterly 2.0625p dividends last April but revived distributions in October at 1.15p.
Last month Hallam told investors Hallam he was legally constrained from saying more about the dispute other than ‘we have spent many hours trying to find an appropriate resolution’.
Saggar said the termination of Nimrod should save the fund’s shareholders £13.5m over the next nine years, but was disappointed there was no named replacement for Nimrod. ‘Hopefully, greater clarity will follow soon,’ the analyst said.
Andrew Rees of Numis Securities said: ‘Termination of the advisory agreement will potentially lift a cloud that had been hanging over the company, but we believe the wider outlook remains uncertain.’
Although Emirates continues to pay Amedeo on its leases of eight aircraft following a $2bn government bailout, Thai Airways has ceased payments on its four planes at it undergoes restructuring overseen by the country’s bankruptcy court. Amedeo has been negotiating with the court’s planning committee with a plan to address the airline’s debt and lease obligations due this month.
Amedeo shares slipped half a penny or 1.6% to 30p, down 70% on their launch six years ago and on a 60% discount to Numis’ estimated net asset value of 75.3p.
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