Pollen Street Secured Lending clashes with manager amid takeover talks
A war of words has broken out between the board of the Pollen Street Secured Lending (PSSL) investment trust and its manager Pollen Street Capital (PSC).
The board of PSSL has issued a 12 month termination notice to PSC, amid claims that it has failed to provide documents to help with due diligence for a proposed sale of the fund.
The alternative finance-focused investment trust formerly known as P2P Global Investments, revealed in a stock market update this morning (25 January) that it had received an offer from Waterfall Asset Management to acquire the company.
PSSL’s board said it would back the offer, received in January, but revealed the investment manager, Pollen Street, has not provided requested documentation.
“The board has been unable to obtain from the manager all of the company’s own documentation and information, which has been requested, to allow the board to make its own proper assessment of what due diligence materials to pass on to the potential offeror,” PSSL said.
“Further, a number of other serious governance issues have arisen. The board does not believe that it is possible to continue running a listed investment company in this way and has accordingly served 12 months’ notice of termination of the investment management agreement.”
The statement also showed the board was unhappy about the investment manager releasing information about increasing its dividend without approval.
“This decision to give notice to terminate has been taken after very serious consideration,” Simon King, chairman of PSSL, said.
“In the face of a possible offeror’s interest in exploring a recommended offer for the company, the manager has not, in the board’s unanimous view, given the assistance which is reasonably to be expected in such circumstances.
“The board believes that, while portfolio performance has been satisfactory, it is not acceptable to withhold company information from the board, publish very material information about the company without board approval and fail to confirm compliance with clear and important instructions from the company, its client.
“Accordingly, the board considers that it is appropriate to give the manager 12 months’ notice of termination and to explore alternative arrangements for the company.”
PSC said in a statement that it was “deeply disappointed by this action and believe this decision does not reflect the substantial improvement in the performance of the company.”
It said it was unhappy about the “unusually extensive due diligence request” as it would breach confidentiality agreements and could undermine shareholder value if the offer is unsuccessful.
PSC said the board refused its requests to provide confidentiality and indemnity protections for the documentations.
“We have little confidence in the board being able to manage the release of highly commercially sensitive information and welcome the fact that we will now have an opportunity to engage with shareholders to discuss the appropriate course of action from here,” PSC said.
Read more: Alternative finance-focused funds facing ‘existential crisis’
PSC said it should be left to shareholders to determine the appropriate time for the release of sensitive commercial information to the offeror and to determine the future of the company.
Waterfall, which has previously invested in Funding Circle loans, has made a possible cash offer of 900p per PSSL share.
It has been backed by Invesco, which is PSSL’s largest shareholder.
Waterfall is required to make a decision on an offer by no later than 5pm on 24 March 2020.
Read more: P2PGI returns improve as it continues shift away from P2P assets
