Digital 9 Infrastructure outlines the details of its wind down

Further to the announcement made on 29 January 2024, the board of Digital 9 Infrastructure (DGI9) have provided greater clarity around how they foresee their wind down taking shape, and have proposed a change of investment objective and policy to facilitate this. A change which shareholders will be able to vote on in the forthcoming general meeting, to be held on 25 March.

DGI9’s proposed new investment objective is: “The Company will be managed, either by a third party investment manager or internally by the Company’s board of directors,  with the intention of realising all the remaining assets in the Portfolio, in an orderly manner with a view to ultimately returning available cash to Shareholders following the repayment and cancellation of the Company’s revolving credit facility (“RCF”) from the proceeds of the assets realised pursuant to the Investment Policy.”

In more practical terms:

  • The board intends to commence sale preparations for each of DGI9’s wholly owned assets immediately following the passing of the resolution at the forthcoming general meeting, ahead of launching what it currently expects to be competitive sale processes later this year. The Board has instructed advisers to assist with the sale process relating to Aqua Comms and is mandating advisers to assist with the preparation of the other sale processes. The board will seek to achieve a ‘managed wind down’ rather than rushing to seek an immediate sale of the portfolio, as they believe a slower but more controlled approach will be more conducive to maximising shareholder value.
  • The board does note that DGI9’s stake in Arqiva, the British telecoms infrastructure company, will take longer than the rest of the portfolio to be realised. While DGI9 will continue to consider and be open to all options for Arqiva which are value-accretive to shareholders, the board has decided to defer launching a sale process of Arqiva for the time being. The board will remain open to exploring all options, including the possible start of a sale process once the plan intended to fully realise the embedded value in the asset is more advanced.
  • The sale of DGI9’s assets is expected to be carried out by either a third-party manager or the board itself. The board has yet to outline a precise timeframe for the realisation, nor have they outlined the exact form in which they will return cash to shareholders (e.g. dividends, share buybacks, tender offers). The board will be unable to commence distributions to shareholders until its outstanding debt is repaid, though the majority of its RCF is expected to be funded by the sale of the Verne global group of companies. Once the RCF has been repaid, the board will review the potential allocation of any remaining proceeds between the remaining indebtedness and distributions to shareholders. No further dividend distributions are planned in respect of the year ended 31 December 2023 and none are foreseen in the medium term. To the extent possible, the board intends that any cash distributions to Shareholders will take the form of returns of capital.
  • The board intends to terminate its investment management agreement, invoking their right to give a 12 month notice of termination, which will be no the later than 31 March 2024 or the close of the Verne transaction. Pending the termination notice, the board is exploring the possibility of revising the agreement with the investment manager, to put it in terms that would be in the best interest of shareholders and fits the context of DGI9’s managed wind down.
  • DGI9 will remain listed during its wind down, and the board does not foresee implementing a dividend policy during this period, nor do they foresee themselves making any further investments unless they are necessary to facilitate the realisation of a current portfolio company.

Investment company news brought to you by QuotedData by Marten & Co.