- Shares rally on wind-down proposal
- Wholly-owned assets to be sold later this year
- Shareholder distributions unclear
Shares in Digital 9 Infrastructure (DG19) rallied 13% to 27.8p after the board proposed a managed wind-down of the digital infrastructure investor’s wholly-owned assets following a strategic review.
The news gives shareholders some hope that the deep discount to net asset value may be narrowed and opens the possibility of a return of capital.
Shares in Digital 9 Infrastructure have lost around two-thirds of their value over the last year and slumped 40% in September after disappointing first-half results which saw the dividend suspended and net asset value fall 8.8%.
A sale of the company’s stake in Arqiva, representing around 28% of the portfolio, is expected to take longer and has been deferred.
WHAT DID THE COMPANY SAY?
Interim independent chair Charlotte Valeur commented:
‘Having carefully considered a number of options, we have ultimately concluded that a Managed Wind-Down of the Company is likely the best route to achieve this objective and seek to address the discount to NAV that impacts our shareholders.
‘The board will assess the progress of the proposed asset sales on an ongoing basis and will continue to monitor other potential opportunities to realise income and capital value for shareholders as they arise.’
The board expects to use the proceeds from the wind-down to repay the revolving credit facility that will be outstanding following the sale of the Verne Group of companies.
Once complete the board said it will review the potential allocation of proceeds between repaying debts related to the company’s acquisition of its interest in Arqiva in October 2022 and making a distribution to shareholders.
EXPERT VIEWS
Stifel analyst Sachin Saggar said: ‘The managed wind-down of the company was expected given the multiple mishaps that have occurred to date.
‘Also, as expected, Arqiva is the problem child with this asset to be excluded from the sales process that will start later this year. In our view, this is admission that the valuation placed on Arqiva is incorrect and needs to be materially revised downwards.’
Numis commented: ‘The independent valuation of the portfolio, including the Verne Global earn out (up to £107 million), will be a major datapoint and will be published as part of the December 2023 results. This will provide a benchmark for shareholders to assess the value of any potential future capital returns.’
