Keystone Investment Trust
Restructuring of Borrowings
The Company announces that it intends to redeem all of its outstanding 7.75% Debenture Stock 2020 (the “Stock”) and all of the outstanding 6.5% Bonds 2023 (the “Bonds”), both on 13 March 2020.
The fair values of the Stock and the Bonds used in calculating the Company’s NAV are close to their respective redemption prices and the Board has taken the view that this is therefore an opportune time to redeem these debt securities and introduce replacement borrowings in the form of a bank facility.
Karen Brade, Chairman, commented:
“We are pleased to be able to refinance the Company’s debt, which introduces more flexible and lower cost borrowings in place of the legacy instruments. This is a further initiative towards enhancing Keystone’s proposition, following the move to quarterly dividends, the proposed share split, and the Share Buyback announced in December.”
Redemption of Stock and Bonds
Redemption notices have been posted today to holders of the Stock and the Bonds respectively and copies of the redemption notices have been submitted to the National Storage Mechanism and will shortly be available for inspection at Morningstar.co.uk/uk/NSM*. The Redemption Notices are also available for download from the Company's website, www.invesco.co.uk/keystone*.
Based on valuations as at 6 February 2020 the payment of the aggregate redemption amounts will result in an uplift to NAV with debt at fair value (including current year income) of c.1p per share (c.0.1%). In addition, the Company’s finance costs, which in respect of the Bonds and the Stock currently amount to £2.2m per annum (c16p per share), should be significantly reduced.
Redemption timetable and mechanism
In accordance with the trust deed constituting it, the Stock will be redeemed at £103.87 per £100 in principal amount. Each Stockholder will receive an amount equal to the Redemption Price multiplied by the amount of Stock held (“Stock Redemption Amount“). Accrued interest up to and including the Redemption Date will be sent to Stockholders under separate cover. The Redemption Amount will be paid to all Stockholders on the register as at 10 February 2020.
In accordance with the trust deed constituting them, the Bonds will be redeemed at £118.41 per £100 in principal amount. Each Bondholder will receive an amount equal to the Redemption Price multiplied by the amount of Bonds held (“Bond Redemption Amount“). Accrued interest up to and including the Redemption Date will be sent to Bondholders under separate cover. The Redemption Amount will be paid to all Bondholders as at 10 February 2020.
Bank facility
The redemption of the Stock and Bonds will be funded from a new £45 million committed revolving credit facility provided by The Bank of New York Mellon, London Branch. Under the facility covenants, Keystone will ensure that total financial indebtedness will not exceed 20% of its net assets and that its total assets will at all times exceed £150 million.
The Company’s existing overdraft facility has been cancelled.