Pollen Street Secured Lending plc (LON:PSSL) has announced, following its earlier announcement on 14 August 2020, that it has now formalised the appointment of Waterfall as the replacement investment manager. An Investment Management Agreement has now been signed with the new Alternative Investment Fund Manager, Mirabella Financial Services LLP and new Delegated Portfolio Manager, Waterfall, effective from 1 October 2020.
The Board is also pleased to announce that Mirabella and Waterfall have confirmed that they are ready to assume the roles of AIFM and Delegated Portfolio Manager respectively and effect the transition of portfolio management responsibilities from PSC to Waterfall. This follows a period of extensive preparatory work undertaken by Waterfall and its legal advisers, including detailed discussions with the Company’s lending banks and counterparties.
Under the terms of the newly agreed Delegated Portfolio Management Agreement, Waterfall will receive a monthly fee in arrears equal to 1/12th of 0.75 per cent of Net Asset Value, less an amount equal to the AIFM fee payable to Mirabella for the same period, which taken together with the performance fee change, represents a significant reduction compared to the previous management fee arrangements for the Company. Waterfall will also be entitled to a performance fee of 10 per cent of distributions (including by way of dividends and buyback of shares) made by the Company in excess of 105 per cent of the most recently published Net Asset Value prior to the date of the agreement. The AIFM Agreement and the Delegated Portfolio Management Agreement are each terminable on 9 months’ notice save that they are terminable on 30 days’ notice with no additional compensation in the event of a completed offer for the duration of the current Offer Period. In addition, in respect of the period commencing on 14 August 2020 up to and including 31 March 2021, total fees payable to Waterfall and Mirabella are capped at £2.0 million.
Transition from PSC
As part of the transition, the Board has entered into a termination agreement with PSC by which the existing IMA with PSC will terminate on 1 October 2020. PSSL has agreed to pay to PSC a sum representing the approximate balance of the unpaid base management fee, including the unexpired notice period, payable to PSC.
As announced on 14 August 2020, the Board believes that Waterfall’s appointment materially increases the likelihood that a firm all cash offer will be brought to the table for shareholders to consider. As previously stated, if a recommendable offer is not forthcoming the Board is likely to recommend to shareholders that the Company pursues an orderly run-off with capital to be returned to shareholders in as timely a manner as possible during the process. Any change to the Company’s investment policy will be conditional upon the approval of shareholders. Further announcements will be made in due course.
Simon King, Pollen Street Secured Lending Chairman, commented:
“The Board is pleased to effect the change of Investment Manager, something which the Board unanimously and firmly believes is in the best interests of shareholders. This follows a period of intensive and rigorous preparatory work undertaken by Waterfall and its legal advisers.”