Sector developments and company hires

UK Mortgages offer disclosed
M&G Investment Management (MAGIM), on behalf of one of its managed funds - M&G Specialty Finance Fund (£) SCSp – has disclosed that it has made several approaches to the board of UK Mortgages Limited (UKML) with a view to making a recommended cash offer for UKML, all of which have been rejected. The most recent approach was made on 15 July and proposed a cash offer at 67p per UKML share, which values the existing issued share capital of UKML at approximately £183m and represents a 36% premium over the three-month VWAP of 49.4p per share.

MAGIM says it is publishing details of the proposal it has made to the board, so that it can begin a dialogue with shareholders. The firm acknowledges UKML's distinctive strengths - particularly its asset mix of both buy-to-let and owner-occupied mortgages, as well as the forward flow agreements – but notes that it has “consistently struggled to deliver the returns and dividend levels targeted at its initial public offering in 2015”.

In other news…

BUMF claims struck out
The BUMF 4, 5, 6 and 7 issuers have informed noteholders that a purported announcement dated 9 July was not written nor sanctioned by them and that certain former directors have been attempting to continue to act as duly appointed officers, whereas their actions are invalid, having been removed as directors on 23 June (SCI passim). Further, on 13 July, the court struck out each of the claims brought by Alfred Oyekoya and Rajnish Kalia.

Dividends resumed
In light of the continued performance and the increased resilience of the fund's investments, the Fair Oaks Income board will resume dividend payments, on a quarterly basis and at a variable rate (SCI 31 March). The company expects to announce the first quarterly dividend at the end of July in an amount of approximately 1.5 cents per share. The fund received distributions on all equity investments in April and, with all investments passing their overcollateralisation tests, distributions are also expected on all investments in July. The opportunistic investments made in Q2 have resulted in the portfolio consisting of 48% CLO debt by market value.

FSPV CVA, trustee named
BNY Mellon Corporate Trust Australia has been mandated as security trustee and trust manager for the Australian Office of Financial Management’s Forbearance SPV (SCI 28 April), while Deloitte Touche Tohmatsu has been named collateral verification agent. The FSPV will support the country’s non-bank lending market by allowing wholesale lenders to borrow accrued but unpaid interest on a range of loans impacted by Covid-19 related financial stress, funded through ABS trusts. More than 20 non-bank originators are expected to utilise the vehicle.

Potential EODs eyed
The borrower and certain obligors of DECO 2019-RAM entered into a transitional services agreement with Intu Retail Services (IRS) without prior consent of the borrower facility agent and have also failed to comply with certain other terms of the loan agreement in relation to the appointment of IRS. As such, certain loan defaults are continuing under the CMBS, which - if not remedied within the grace period - will be considered loan EODs. Additionally, the obligors entered into a side deed to the major lease without the consent of the borrower facility agent, as a result of which certain loan defaults are continuing and will be considered loan EODs if not remedied.

Second sidecar issuance
Swiss Re has closed a second private sidecar transaction with PGGM, increasing PGGM’s overall investment in Swiss Re’s sidecar vehicle - Viaduct Re - to over US$500m. The transaction allows PGGM to access a portion of Swiss Re’s core natural catastrophe property treaty reinsurance portfolio. PGGM’s investment fully capitalises a new and distinct sidecar covering worldwide treaty reinsurance business focused on natural catastrophe perils, as well as increasing its investment into an initial sidecar established in July 2019 that focuses on US property reinsurance risks.