VOLTA FINANCE - MAY 2010 INTERIM MANAGEMENT STATEMENT
(Thomson Reuters ONE) -
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES
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Guernsey, 22 May 2010 - Volta Finance Limited (the "Company" or "Volta Finance"
or "Volta") has published its Interim Management Statement. The full report is
attached to this release and is available on Volta Finance Limited's financial
website (www.voltafinance.com
Dear Shareholders and Investors,
Over the quarter, from the end of January 2010 to the end of April 2010, the
Gross Asset Value (the "GAV") of Volta Finance Limited (the "Company", "Volta
Finance" or "Volta") went from ?86.8m or ?2.87 per share, to ?100.2m or ?3.31
per share. During the quarter, Volta paid, the 6th of April, a ?0.13 per share
dividend for a total of ?3.9m.
During the same period, the Company invested ?1.8m in three different assets
(two mezzanine debt of CLO and one residual tranche of a low leverage CLO) and
sold two assets (two residual tranches of CLO) for ?5.1m.
During the Quarter, cash flows generated by the Company's assets, excluding
asset sales and ?0.4m of principal payments from short term ABS, amounted to
?5.5m (non euro amounts being translated in euro using end of month currency
rate). This amount could be compared to ?4.4m for the most recent comparable
3-month period in 2009 (from the end of July to the end of October 2009).
Relative to the valuation of Volta's assets at the beginning of the period
(?86.8m), the cash generated by the assets is rather significant, slightly above
an annual rate of 25%.
As a consequence of the investments and sales made during the period and after
taking into account the payment of the dividend, as well as the settlement of
some further expenses, the cash position in the Company's accounts went from
?4.2m at the end of January to ?9.7m at the end of April. This amount include
?1.5m posted for margin calls linked to the currency hedge strategy of the
Company. Since the end of April as a result of some further coupon payments and
two investments, the cash position in the company has decreased to ?7.7m at the
time of writing this statement.
The increase of the GAV during the quarter is mainly due to increases in the
price of structured credit products as well as to the generation of cash flows
from the underlying assets.
MARKET ENVIRONMENT AND LATEST DEVELOPMENTS
Over the quarter, the economic recovery, specially outside Europe, continued to
sustain the performance of credit assets despite raising concerns regarding the
financing of some government debts (Republic of Greece amongst others).
Government and central bank demonstrated again their ability to bring some
support to the current economic and financial situation and it contributed to
the stabilization of financial markets over the period. From the end of January
2010 to the end of April 2010, the 5y European iTraxx index (series 12) was
almost unchanged from 83 to 85 bps, the 5y iTraxx European Crossover index
(series 11) tightened significantly from 454 bps to 392 bps and the CSFB
Leverage Loan Index, the average price for US liquid first lien loans, increased
from 88.94% to 91.85%.**
VOLTA FINANCE PORTFOLIO
Corporate Credit
Over the quarter, no event of default materially affected the situation of the
Corporate Credit holdings. However it should be mentioned that the first-loss
positions in Jazz III and ARIA III remain highly sensitive to any credit event
that could occur. Both positions are exposed, through CDS, to a credit name that
was raising public concerns, Republic of Greece, for the same percentage of
their underlying portfolio: 0.5%. Such position if it were to trigger an event
of default could generate some direct losses on both positions. Assuming an
hypothetical recovery of 70%, which is a level commonly discussed among market
participants when a Greece debt restructuring is evocated, such potential
default could represent an immediate direct loss of less than 2% of Volta's end
of April GAV from these positions. According to the most recent market
observations, the probability of a default of Republic of Greece seems to have
diminished in the immediate future.
44% of this bucket is made of two junior-AAA and one A tranche of Corporate
Credit portfolios bought in 2009 that benefited from a significant level of
subordination contrary to the first loss positions. The average price of the
debt tranches of Corporate Credit positions went from 47.5% at the end of
January to 55.8% at the end of April.
The Corporate Credit holdings that were all together valued at ?17.4m at the end
of January generated the equivalent of ?2.5m of cash flows during the quarter
(between end of January to end of April 2010) and are valued for ?19.5m at the
end of April 2010.
CDO
This bucket that accounted, at the end of April for 61% of the GAV, is composed
of residual and mezzanine debt tranches of CLOs. During the quarter, defaults
and downgrades in the underlying loan portfolios continued to occur, albeit at a
slower pace than in the near previous quarters. On average overcollateralisation
tests and residual payments of these structures improved during this quarter
relative to the previous one.
At the end of April, amongst the 14 residual CLO positions, two of them (Carlyle
IX and Northwoods Capital) continued to suffer a diversion of their residual
payment. The 14 positions were valued at ?23.2m at the end of January, have
generated the equivalent of ?1.9m during the quarter and have seen their
valuation increasing to ?27.2m at the end of April 2010 (despite the sale of two
assets for ?5.1m and the purchase of one asset for ?0.5m). The average price of
the 12 classic residual CLO positions (accounting for ?16m and excluding two
investments that are very specific considering their low level of leverage) went
from 25.3% at the end of January to 35.4% at the end of April.
As regards the 22 mezzanine debt tranches held by Volta, which represent 33.8%
of the end of April GAV, two of them continued to suffer a diversion of their
coupon payments (Cheyne Credit Opp. and Alpstar 2A E), but, except for Alpstar
2A E, for all of them a full payment of coupons and principal is expected to be
met under an average scenario for defaults and rating migrations.
The positions in mezzanine debt of CLOs that were valued at ?31.8m at the end of
January, have generated the equivalent of ?0.8m of cash flows during the quarter
and are valued at ?33.9m at the end of April (including 2 assets purchased for
?1.3m). The average price of the mezzanine debt tranches of CLO positions went
from 52.6% at the end of January to 55.6% at the end of April.
ABS
Promise Mobility, a residual position on a very largely diversified portfolio of
small and medium German companies representing, at the end of April, 68% of this
asset class, continued to perform in line or above initial expectations.
However, the difficult situation of the German economy, despite a strong
commitment from the German government to limit the contamination of the German
"Mittelstand" from the global economic crisis could, at some point in time, have
an effect on the cash flows expected from this investment.
This asset, which was valued at ?6.6m at the end of January, has generated ?0.4m
of cash flows during the quarter and is valued at ?6.8m at the end of April
2010.
The remaining portion of this asset class was made, at the end of April, of two
investments (for ?3.2m) in short-term European ABS that have been purchased to
improve the return on its cash position and by 6 positions in residuals of UK
non-conforming residual loans ABS. These six positions valued for ?54 thousand
at the end of January have been valued for almost zero at the end of April
reflecting the very poor cash flows that could be expected from these assets.
Since the end of April and at the date of publishing this statement the
Company's assets have continued to generate cash flows and the Company has
continued investing: the equivalent ?1.5m of cash flows have been received from
existing assets and the equivalent of ?3.6m have been engaged in recent
purchases (two mezzanine debt of CLOs).
At the time of publishing this statement, considering the necessity to maintain
some cash for margin calls that could arise from time to time from the hedging
of the currency risk, the Company had approximately ?2.5m available for
investment.
Unless stated otherwise, the figures in this document are as at end of April
2010 as valuations are available only on a monthly basis with some delays.
Between 30 April 2010 and 22 May 2010, the date of publication of this Interim
Management Statement, the Company is unaware about any significant event,
materially affecting the company's financial position or the company's
controlled undertaking.
** Index data source: Markit, Bloomberg.
(Full Interim Management Statement in attachment or onwww.voltafinance.com
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ABOUT VOLTA FINANCE LIMITED
Volta Finance Limited is incorporated in Guernsey under the Companies (Guernsey)
Laws, 1994 to 1996 (as amended) and listed on Euronext Amsterdam. Its investment
objectives are to preserve capital and to provide a stable stream of income to
its shareholders through dividends. For this purpose, it pursues a multi-asset
investment strategy targeting various underlying assets. Volta Finance's basic
approach to its underlying assets is through vehicles and arrangements that
provide leveraged exposure. The exposure to those underlying assets is gained
through direct and indirect investment in five principal asset classes:
corporate credits, CDOs, ABS, leveraged loans, and infrastructure assets.
Volta Finance has appointed AXA Investment Managers Paris, an investment
management company with a division specialised in structured credit, for the
investment management of all its assets.
ABOUT AXA INVESTMENT MANAGERS
AXA Investment Managers (AXA IM) is a multi-expert asset management company
within the AXA Group, a global leader in financial protection and wealth
management. AXA IM is one of the largest European-based asset managers with
nearly ?500 billion in assets under management as of the end of November 2009.
AXA IM employs approximately 2,875 people around the world and operates out
of 21 countries.
CONTACTS
Company Secretary
Mourant Guernsey Limited
volta.finance(at)mourant.com
+44 (0) 1481 715601
Portfolio Administrator
Deutsche Bank
voltaadmin(at)list.db.com
For the Investment Manager
AXA Investment Managers Paris
Serge Demay
serge.demay(at)axa-im.com
+33 (0) 1 44 45 84 47
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This press release is for information only and does not constitute an invitation
or inducement to acquire shares in Volta Finance. Its circulation may be
prohibited in certain jurisdictions and no recipient may circulate copies of
this document in breach of such limitations or restrictions.
This press release is not an offer of securities for sale in the United States.
Securities may not be offered or sold in the United States absent registration
with the United States Securities and Exchange Commission or an exemption from
registration under the U.S. Securities Act of 1933, as amended (the "Securities
Act"). Volta Finance has not registered, and does not intend to register, any
portion of any offering of its securities in the United States or to conduct a
public offering of any securities in the United States.
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This document is being distributed by Volta Finance Limited in the United
Kingdom only to investment professionals falling within article 19(5) of the
Financial Services and Market Act 2000 (Financial Promotion) Order 2005 (the
"Order") or high net worth companies and other persons to whom it may lawfully
be communicated, falling within article 49(2)(A) to (E) of the Order ("Relevant
persons"). The shares are only available to, and any invitation, offer or
agreement to subscribe, purchase or otherwise acquire the shares will be engaged
only with, relevant persons. Any person who is not a relevant person should not
act or rely on this document or any of its contents. Past performance cannot be
relied on as a guide to future performance.
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This press release contains statements that are, or may deemed to be,
"forward-looking statements". These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms "believes",
"anticipated", "expects", "intends", "is/are expected", "may", "will" or
"should". They include the statements regarding the level of the dividend, the
current market context and its impact on the long-term return of Volta's
investments. By their nature, forward-looking statements involve risks and
uncertainties and readers are cautioned that any such forward-looking statements
are not guarantees of future performance. Volta Finance's actual results,
portfolio composition and performance may differ materially from the impression
created by the forward-looking statements. Volta Finance does not undertake any
obligation to publicly update or revise forward-looking statements.
Any target information is based on certain assumptions as to future events which
may not prove to be realised. Due to the uncertainty surrounding these future
events, the targets are not intended to be and should not be regarded as profits
or earnings or any other type of forecasts. There can be no assurance that any
of these targets will be achieved. In addition, no assurance can be given that
the investment objective will be achieved.
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[HUG#1418100]
May 2010 Interim Management Statement: http://hugin.info/137695/R/1418100/368416.pdf
Unternehmensinformation / Kurzprofil:
Datum: 21.05.2010 - 18:12 Uhr
Sprache: Deutsch
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