VOLTA FINANCE - MAY 2009 INTERIM MANAGEMENT STATEMENT
VOLTA FINANCE - MAY 2009 INTERIM MANAGEMENT STATEMENT
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, IN
OR INTO THE UNITED STATES
Guernsey, 25 May 2009 - 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
Dear Shareholders and Investors,
Over the quarter, from the end of January to the end of April 2009,
the Gross Asset Value (the "GAV") of Volta Finance Limited (the
"Company", "Volta Finance" or "Volta") went from Â¤57.5m or Â¤1.91 per
share, to Â¤51.6m or Â¤1.71 per share.
During the same period, the Company made only one investment worth
Â¤0.2m in a short term maturity Euro Auto Loans ABS senior tranche.
Overall, the cash flows generated by the Company's assets amounted to
Â¤5.3m, compared to Â¤7.4m for the same period in 2008 (non Euro
amounts being translated in Euro using end of month currency rate).
As a consequence of this investment and considering the payment of a
dividend of Â¤0.06 per share at the end of March (Â¤1.8m), the
settlement of the remaining commitment that was due on Tennenbaum
Opportunities Fund (USD1.5m), as well as the settlement of fees and
expenses during the quarter, the cash position of the Company went
from Â¤24.5m at the end of January to Â¤26.4m at the end of April 2009.
The decline of the GAV during the quarter is mainly due to the
continual increase in the discount margin of structured credit
products as well as to the ongoing rating downgrades and defaults in
underlying assets, especially loans related assets, in the midst of a
worsening economic environment. However, over the quarter, the assets
continued to pay significant cash flows, especially when compared to
their value as of the beginning of the period (Â¤33.8m).
MARKET ENVIRONMENT AND LATEST DEVELOPMENTS
Over the quarter, the economic crisis continued to affect the
performances of credit assets. However, government and central bank
measures started to gain traction in the second half of the quarter,
contributing to a relative stabilisation and even an improvement of
credit spreads by the end of the period. The 5y European iTraxx index
(series 10) was finally almost stable from 160 bps to 163 bps, the 5y
iTraxx European Crossover index (series 10) tightened from 1078 bps
to 945 bps and the CSFB Leverage Loan Index, the average price for US
liquid first lien loans, increased from 64.72% to 70.28%.**
During the quarter, rating agencies downgraded all but the most
senior CLO tranches following the review of the underlying asset
ratings, of their assumptions on corporate defaults and of their
rating models. Numerous defaults and rating downgrades, especially in
the loan market, occurred during the quarter, which affected the
rating of the mezzanine tranches of CLOs as well as the payments on
CLO residual positions.
VOLTA FINANCE PORTFOLIO
As regards the Company's Corporate Credit holdings, the default of
IDEARC Inc, which was expected, occurred and had the following
impact: ARIA II, that was priced for 1.16% of par as of the end of
January 2009, lost its remaining principal and no more payments are
now expected from this asset; Jazz III, that paid a coupon of
respectively, 7.8% for the Euro tranche and 7.5% for the USD tranche,
at the end of March 2009, was able to absorb part of the losses
incurred by the default of Idearc Inc. At the end of April, Jazz III
has a remaining principal of 58.7% for the EUR8.6m nominal tranche
and of 54.4% for the USD2m nominal tranche, almost unchanged from
respectively 59% and 57% six months ago after the default of Lehman
Brothers. The last Corporate Credit holding, ARIA III, was not
affected by Idearc default and did not suffer any default over the
The Corporate credit holdings that were valued at Â¤8.7m as of the end
of January have generated Â¤2.3m and USD0.2m of cash flows during the
quarter and are valued for Â¤4.8m as of the end of April.
The situation of the remaining Corporate Credit holdings (Jazz IIII
and ARIA III) is unchanged since the end of January: they are still
expected to continue paying cash flows until their respective
maturity. However, due to their first loss position, Jazz III and
Aria III remain at risk of the occurrence of defaults in this
particularly difficult economic environment.
Following the occurrence of numerous downgrades in the loan market
and the occurrence of a significant number of defaults, the situation
of the CLO residual holdings has continued to deteriorate. During the
quarter, as stated in the last Semi Annual Report of the Company,
partial or full diversions of cash flows have continued to occur and
are still expected to occur at some point in time in 2009 for the
majority of these positions.
The residual CLO positions that were valued at Â¤8.6m as of the end of
January, have generated Â¤0.4m and USD1.8m of cash flows during the
quarter and are valued at Â¤7.4m as of the end of April.
The situation of the eight positions in mezzanine debt of CLOs held
by the Company is almost unchanged since the end of January: some of
these positions could suffer, from time to time, some delays in their
payments but, globally, under an average scenario for defaults and
rating migrations, payments are expected to be met. However
considering their second or third loss position, under more
pessimistic scenarios, these positions could suffer significant
losses. As of the end of April, this possibility seems reflected in
an average price of 14.4% of par for these eight positions.
The mezzanine debt CLO positions that were valued at Â¤5.9m as of the
end of January, have generated Â¤0.3m and USD0.2m of cash flows during
the quarter and are valued at Â¤3.9m as of the end of April.
No particular event affected the six UK non-conforming residual
holdings. These six positions that were valued at Â¤0.9m as of the end
of January, have generated GBP0.3m of cash flows during the quarter
and are valued at Â¤0.5m as of the end of April.The cash flows
received and expected from these assets are still very limited, as
reflected by their combined value as of the end of April 2009.
Promise Mobility, a residual position on a very largely diversified
portfolio of small and medium German companies representing 16% of
the end of April GAV, continues to perform in line or above initial
expectations. However, the worsening situation of the German economy,
despite a strong commitment from the German government to limit the
contamination of the German "Mittelstand" by 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 Â¤8.9m as of the end of January, has
generated Â¤0.4m of cash flows during the quarter and is valued at
Â¤8.3m as of the end of April.
During the period, Volta has invested Â¤0.2m in one European Auto
Loans ABS in order to improve the return on its cash position. This
asset had an expected WAL (weighted average life) of less than six
months at the time of purchase.
At the end of April, the Company held the equivalent of Â¤26.4m of
cash (Â¤0.88 per share). Most of the cash held by the Company can be
made available for purposes such as investing as well as paying
Unless stated otherwise, the figures in this document are as of end
of April as valuations are available only on a monthly basis.
Between 30 April 2009 and 25 May 2009, the date of publication of
this Interim Management Statement, The Company is unaware about any
significant event or transaction, materially affecting the company's
financial position or the company's controlled undertaking. Between
these two dates the Company's assets continued to generate cash flows
at a pace comparable to previous month : Â¤0.7m and USD1.1m have been
(Full Interim Management Statement attachment or on
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 Â¤485 billion in assets under management as of the
end of December 2008. AXA IM employs approximately 2,900 people
around the world and operates out of 21 countries.
Mourant Guernsey Limited
+44 (0) 1481 715601
For the Investment Manager
AXA Investment Managers Paris
+33 (0) 1 44 45 84 47
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.
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
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.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.