CRYSTAL AMBER FUND LIMITED
(“Crystal Amber Fund” or the “Fund”)
Monthly Net Asset Value and Interim Dividend Declaration
Crystal Amber Fund announces that its unaudited net asset value (“NAV”) per share on 30 June 2016 was 153.79p (31 May 2016: 165.08p per share).
The proportion of the Fund’s NAV at 30 June 2016 represented by the ten largest holdings, other investments and cash (including accruals), was as follows:
|Top ten holdings||Pence per share||Percentage of investee equity held|
|Hurricane Energy Plc||26.4||15.6%|
|Pinewood Group Plc||17.1||5.7%|
|Leaf Clean Energy Co.||11.8||29.9%|
|STV Group Plc||9.5||7.8%|
|FairFX Group Plc||7.8||24.9%|
|Sutton Harbour Holdings Plc||7.7||29.3%|
|Restaurant Group Plc||6.3||1.1%|
|Hansard Global Plc||4.8||3.3%|
|Total of ten largest holdings||135.1|
|Cash and accruals||0.5|
Investment Adviser’s commentary on the portfolio
Over the quarter to 30 June 2016, NAV per share fell by 1.7 per cent.
The top three positive contributors to NAV growth over the quarter to 30 June 2016 were Hurricane Energy plc (5.0 per cent), Sutton Harbour (0.5 per cent) and Tribal Group (0.5 per cent). The three main detractors were STV Group plc (-2.0 per cent), Northgate (-1.7 per cent) and Grainger plc (-1.1 per cent).
Hurricane Energy plc (“Hurricane”)
On 18 April 2016, Hurricane announced a £52 million fundraising to drill two wells in the Lancaster field over the summer of 2016. The Fund participated in the placing, which attracted a new cornerstone investor, Kerogen Capital, an oil specialist. The Fund was awarded warrants to subscribe for up to 23.3 million shares at 20p per share.
On 8 June 2016, Hurricane announced the suspension of its farm-out discussions whilst it executes the drilling campaign and analyses its results. This is expected to refine the contingent resource range estimate, which is currently 62 to 456 million barrels of oil. The campaign will also provide a second future production well.
As the resource range risk is reduced, the Fund believes that Hurricane will be better positioned to negotiate a farm-out with potential partners.
On 6 July 2016, Hurricane announced the spudding of its new exploration well in the Lancaster field.
Leaf Clean Energy Co. (“Leaf”)
The last quarter was an eventful one for Leaf as it seeks to exit its investment in Invenergy Wind LLC (“Invenergy”), which represents over 90 per cent of its NAV. On 3 May 2016, Leaf reported the disappointing result of a fair valuation process required under the put/call provisions exercised by Leaf and Invenergy. The average of the two fair value appraisals was $55 million, short of the $97 million carrying value. A third appraiser will now be appointed to determine the value.
On 1 July 2016, following the period end, Leaf announced a favourable preliminary decision in its lawsuit against Invenergy regarding an alleged breach of their operating agreement. Leaf is seeking payment of $126 million.
Northgate plc (“Northgate”)
On 4 July 2016, Crystal Amber disclosed that it had acquired 3 per cent of the issued share capital of Northgate.
In September 2012, Crystal Amber invested in Northgate and following successful engagement, exited the position in April 2015, realising a return of 51 per cent on an investment of £7 million (a gain of £3.5 million). Since then, Northgate’s share price has fallen by approximately 50 per cent and is trading at the same price as in January 2013. This represents a discount to the net asset value as at 30 April 2016 and a yield of in excess of 5 per cent (based on the proposed final dividend of 10.9p per share).
The Fund also disclosed that Crystal Amber’s investment adviser met with Bob Contreras, Chief Executive of Northgate, following which it had written to Northgate, setting out its assessment of the company’s prospects together with suggested actions so that stakeholders can better capitalise on the Northgate brand, market positioning, strong cash generation and balance sheet strength. Amongst its proposals, Crystal Amber requested that Northgate carries out a strategic review to include a potential sale of all or part of the business.
Last week, Crystal Amber’s investment adviser met with Andrew Page, Chairman of Northgate. Crystal Amber’s specific proposals were discussed. The meeting was constructive and Crystal Amber awaits developments.
The Board has declared an interim dividend of 2.5p per ordinary share in respect of the year ended 30 June 2016. The dividend will be paid on 19 August 2016 to shareholders on the register on 22 July 2016 (the record date). The shares will be quoted ex-dividend on 21 July 2016.
Transactions in Own Shares
Over the period, the Fund bought back 175,000 of its own shares at an average price of 158.3p per share as part of its buyback programme. These shares are held in Treasury.