Friday 28 June 2019 9:08 am

Woodford trust cuts debt to calm investors

Woodford Patient Capital Trust has revealed plans to cut debt and strengthen its board to reassure investors following a drop in the listed trust’s share price. 

The trust shares holdings with Neil Woodford’s suspended equity income fund and has been hit by concerns that it could be impacted by forced selling of assets. 

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Today the trust announced it plans to reduce debt to below 10 per cent of the value of its holdings. 

The trust has borrowed £126m to fund the companies it invests in, which is equal to 16.8 per cent of the value of its holdings and just less than its 20 per cent cap. 

Debt levels will be cut to below 10 per cent in the next six months and the trust is aiming to be “generally operating ungeared within 12 months”. 

Susan Searle, chair of the board, said: “The dialogue we have had with shareholders has been thoughtful and constructive.  

“The main areas of discussion for shareholders are consistent with the board’s immediate priorities, notably: gearing levels, the share price discount to net asset value, valuations, board composition and the ongoing developments at the portfolio manager.

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“As a result, the board is building on some of the immediate measures taken following the gating of the Woodford Equity Income Fund on 3 June 2019 and as the situation remains fluid, will use the additional controls in place while continuing to monitor and assess the situation as it evolves, to ensure the long-term interests of shareholders are protected. 

“We will continue to update shareholders as appropriate.”