Business
Company update
Company update.
About this update from Sancus Lending Group Limited
[{"type":"text","content":"\n RNS Number : 0196K T2 Income Fund Limited 12 December 2008 \n \n\nCompany Update\n\nThe Directors (the 'Board') of T2 Income Fund Limited (the 'Company'; TIDM: T2I) today announce that following the very dramatic declines across the global credit markets, and in view of the recent significant decline in the share price of the Company and a lack of liquidity in its shares, the Board has reviewed a variety of options with a view to maximizing shareholder value. This announcement sets out the Board's conclusions following that review and the Board's plans for the Company going forward. \n\nThe Board continues to consider all options available to it and, especially in view of the recent extreme volatility in the markets in which the Company operates, will reassess those alternatives on a regular basis. \n\nThe Company's Investment Portfolio and Financing Structure\nThe Company's portfolio consists of corporate loans (primarily senior secured, first lien loans), almost all of which are held within the Company's collateralized loan obligation ('CLO') subsidiary, T2 Income Fund CLO I Ltd. ('T2 CLO').\n\nIn order to finance the Company's portfolio, T2 CLO has issued long-term notes to third party investors ('Senior Notes') in the amount of US$249.5 million (representing approximately 305% leverage as of the date of incurrence, which is below the 500% leverage limitation approved by shareholders in December 2006). This funding arrangement has and continues to provide the Company with extremely attractive long-term financing at a low cost of capital (12 years in duration at LIBOR plus 75 basis points). The Company's return on the underlying portfolio held by T2 CLO is generated through its ownership of income notes ('Income Notes') issued by that entity, which securities receive the residual income after payment to the third party CLO noteholders and represent the first loss portion of the CLO structure and which are junior to the Senior Notes.\n\nThe Senior Notes contain a variety of covenants, including collateral coverage tests. Compliance with certain of these covenants may be made more difficult or impossible should credit markets continue to deteriorate and/or the rating agencies...