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Woodford investors to get second round of payments this month

Written by: Paloma Kubiak
Investors trapped in disgraced Neil Woodford’s former Equity Income fund will receive the second part of their money back later this month, administrators have confirmed.

In a letter to investors, Link Fund Solutions confirmed it is “in a position to make a second capital contribution from the fund”.

It confirmed investors of the LF Equity Income fund (formerly LF Woodford Equity Income fund), would receive the second tranche of payments around 25 March 2020.

Up until 10 March 2020, a further £141.7m has been generated from the sale of assets in the fund – equivalent to 19.9% of the value of the assets of the fund.

This means a total of £2.3bn will have been paid back to trapped investors.

Here are the important dates for your diary:

  • 17 March: scheduled date for payment of the income distribution for period 1 January – 17 January.
  • 18 March: the amount you will receive will be calculated on this day.
  • 20 March: a further letter will be sent out detailing the amount you will receive from this second capital distribution, which will include a share of proceeds from any further sale of assets between now and 17 March 2020.
  • 25 March: money will be paid on or around this day, but could be later for investors who hold money in a platform.

The administrator also confirmed that the annual accounting period for the fund has been extended from 31 December 2019 to 31 March 2020, meaning the fund’s annual report and financial statements will cover a 15-month period from 1 January 2019 to 31 March 2020. This will be published no later than 31 July 2020.

Link Fund Solutions wrote: “It is intended that further capital distributions will be made as and when suitable amounts of cash have been raised from the sale of the remaining assets of the fund.

“At this stage we are unable to advise you of the exact timing and amount of these future capital distributions as this is dependent upon the sale of the fund’s assets. Investors should be aware that the assets that remain to be sold are the less liquid assets of the fund and disposing of these assets may take longer than was the case for the sales to date.”

‘Harder to offload assets’

Ryan Hughes, head of active portfolios at AJ Bell, said Woodford investors will be pleased they are getting a little more of their money back but the second distribution only represents 20% of the remaining assets, so there’s still a long way to go.

“What’s more, we’ve seen market conditions deteriorate considerably, meaning that selling any unlisted and illiquid assets is likely to become much harder. Sadly this means that it looks like investors are in for a long wait before they see the remainder of their money paid out of the fund. This is particularly the case as Link has warned that Park Hill is selling the most liquid assets from the portfolio first, meaning that as it moves through the investments it will be harder and harder to offload assets. While the asset manager will balance the competing needs to sell assets at a good price versus the saga dragging on for years, it seems inevitable that this will rumble on into 2021.

“The latest information also gives us a price update on the fund, with it now standing at 19.9p a unit. Since the last communication to investors the fund’s value has fallen by another 4.85%, however, this is far less than the fall we’ve seen in markets, which have dropped 20.3% during that same period,” he said.

What’s happened so far

The Woodford Equity Income fund was suspended in June 2019 following an increase in redemption requests which couldn’t be readily met. In October 2019, Link confirmed the £3bn fund would be wound-up with cash returned to investors as soon as possible.

BlackRock was appointed to sell the liquid part of the assets while PJT Park Hill were tasked to sell the illiquid part of the portfolio.

In January, trapped investors received the first tranche of payments from the sale of assets.

Neil Woodford, once considered Britain’s best stock picker, was sacked as manager of the fund and Woodford Investment Management was closed down.

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