Digital 9 Infra shares down 11% as Arqiva drowns in debt

The winding down trust's flagship holding is likely worth nothing, according to its latest market update.

Shares in Digital 9 Infrastructure (DGI9) plummeted today after the board delivered a fresh blow to shareholders, warning its flagship holding Arqiva is likely to be written down to zero.

The now less than £50m trust, which is in the midst of a managed wind-down, saw shares fall as much as 19% to a record low of 4.6p this morning as investors reacted to news that a stake previously valued at £213.2 million may now be worth nothing. 

The share price has slightly recovered since.

A note from the trust today detailed that the collapse in value is a result of the highly leveraged structure of the Arqiva investment, with DGI9’s interest in the UK broadcasting platform sitting behind a substantial Vendor Loan Note. 

The board and investment manager, InfraRed Capital Partners, admitted that the updated long-term forecasts for Arqiva now suggest the total value of the business is lower than the debt sitting ahead of it. The writing was on the wall as early as November, when  Macquarie Asset Management offloaded a 26.5% stake in Arqiva at a fire-sale price of just £16.5m. 

The trust is still preparing a final valuation update for the end of 2025, but investors should expect an around 75% write-down in its NAV per share, according to Panmure Liberum.

Analyst Shonil Chande noted that shares in the trust have traded at sub-10p for ‘a considerable period, reflecting little confidence in the realisable value of Arqiva’.

He added: ‘The fact that Triple Point (the trust’s previous manager) substantially overpaid for Arqiva is no secret, especially given its sensitivity to policy risk, UK broadcast sector risks, the nil capacity to distribute cash given the focus on deleveraging.

‘What really compounded this investment decision was maxing out the RCF and using VLN financing. In theory, the valuation could recover above the levels where the equity value is above zero, but it is difficult to foresee much confidence until (or if) supportive policy developments emerge.’

The wind-down has proven to be an extended process for DGI9 shareholders. While the liquidation was approved in early 2024, the process has been delayed by the need to prioritise debt repayment and a management overhaul.

With the board signalling that a sale process for Arqiva may not even commence until late 2027 − to allow for clarity on major TV contract renewals and government policy − investors face a long wait to see if any residual value can be salvaged.

With Arqiva effectively written off for now, the focus of the DGI9 realisation strategy shifts to the remaining scraps of the portfolio, including the Irish broadband provider Elio Networks.