Ranger Direct Lending makes cash offer to close ZDP share class

RANGER Direct Lending (RDL) has made a cash offer to holders of its zero dividend preference (ZDP) share class as part of the wind down of the beleaguered investment trust.

The alternative finance-focused fund – which has been buying back shares in its ZDP offering as part of its closure – said in a stock market update that it had made an offer of 116p in cash per share to all remaining holders.

This is conditional on receiving acceptances of at least 61 per cent of ZDP shareholders.

The ZDP version had launched at 100p in August 2016 with a final capital entitlement of 127.63p at maturity in July 2021, so investors would be left with less than what was first offered.

RDL, which announced its closure in June, has been purchasing ZDP shares as there is no mechanism to wind it down separately.

It has purchased 13.73 per cent of the stock since October.

Analysts at Numis said the offer may not be the end of the issue as ZDP holders may not be happy with a shortfall.

“The ZDPs represent a significant complication in the wind-down plans,” a Numis analyst note said.

“We are not surprised to see the board making an offer somewhere in between the final capital entitlement of 127.63p per share and the implied current value of 112p.

“The implied 6.3 per cent annual return from issue for investors in the initial ZDP issue appears a decent return, however, the return profile of ZDPs is hard for investors to replace and some ZDP holders have previously stated an intention to pursue the full final capital entitlement.

“As a result, this may not be the end of the negotiation.”

The investment trust took the decision to amid concerns over its performance and management changes.

It has also been embroiled in a lengthy dispute with its Princeton holding, over its exposure to bankrupt lender Argon.

Read more: Pressure mounts for Ranger board overhaul