22nd Aug 2025 07:00
NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2025 INTERIM Report
unaudited CONSOLIDATED interim Financial Statements
For the six month period ended 30 june 2025
COMPANY OVERVIEW | Features
NB Distressed Debt Investment Fund Limited (the "Company")
The Company is a closed-ended investment company incorporated and registered in Guernsey on 20 April 2010 with registration number 51774. The Company is governed under the provisions of the Companies (Guernsey) Law, 2008 (as amended) (the "Law"), and the Registered Collective Investment Scheme Rules and Guidance 2021 issued by the Guernsey Financial Services Commission ("GFSC"). It is a non-cellular company limited by shares and has been declared by the GFSC to be a registered closed-ended collective investment scheme. The Company trades on the Specialist Fund Segment ("SFS") of the London Stock Exchange ("LSE").
The Company is a member of the Association of Investment Companies (the "AIC") and is classified within the Debt - Loans & Bonds Category.
Investment Objective
The Company's primary objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic exposure to stressed, distressed and special situation credit-related investments while seeking to limit downside risk by, amongst other things, focusing on senior and senior secured debt with both collateral and structural protection.
Investment Policy
More information on the Company's investment policy is provided on page 4 of the Annual Report and Financial Statements for the year ended 31 December 2024.
Alternative Investment Fund Manager ("AIFM") and Manager
Investment management services are provided to the Company by Neuberger Berman Investment Advisers LLC (the "AIFM") and Neuberger Berman Europe Limited (the "Manager"), collectively the "Investment Manager". The AIFM is responsible for risk management and discretionary management of the Company's Portfolio and the Manager provides, amongst other things, certain administrative services to the Company.
Share Capital
As at 30 June 2025 the Company's share capital comprised the following1:
Ordinary Share Class ("NBDD")
15,382,770 Ordinary Shares, none of which were held in treasury.
Extended Life Share Class ("NBDX")
38,731,819 Extended Life Shares, none of which were held in treasury.
New Global Share Class ("NBDG")
22,750,376 New Global Shares, none of which were held in treasury.
For the purposes of efficient portfolio management, the Company has established a number of wholly-owned subsidiaries domiciled in Luxembourg. All references to the Company in this document refer to the Company together with its wholly-owned subsidiaries.
UK Regulatory Compliance
The Company currently conducts its affairs so that the shares issued by the Company can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority's ("FCA") rules in relation to non-mainstream pooled investment ("NMPI") products and intends to continue to do so for the foreseeable future.
The Company's shares are excluded from the FCA's restrictions which apply to NMPI products.
As set out in the Prospectus, at the time of IPO, the Company will comply with the UK's Offshore Funds tax rules to ensure that any profits arising from capital distributions are treated as capital gains for UK tax residents. This will require the final 10% of the total return (NAV plus cumulative distributions) in respect of any class of participating shares in NBDDIF will be returned to shareholders with a final compulsory redemption of all of the outstanding shares of that class.
Company Numbers
Ordinary Shares
LSE ISIN code: GG00BDFZ6F78
Bloomberg code: NBDD: LN
Extended Life Shares
LSE ISIN code: GG00BPNZ1C58
Bloomberg code: NBDX:LN
New Global Shares
LSE ISIN code: GG00BTLMK410
Bloomberg code: NBDG:LN
Legal Entity Identifier
YRFO7WKOU3V511VFX790
Website
www.nbddif.com
1 In addition the Company has two Class A Shares in issue. Further information is provided in the Capital Structure section of this report on page 3
COMPANY OVERVIEW | Capital Structure |
Capital Structure
The Company's share capital consists of three different share classes, all of which are in the harvest period: the Ordinary Share Class; the Extended Life Share Class; and the New Global Share Class. These share classes each have different capital return profiles and, in one instance a different geographical remit. In addition, the Company has two Class A Shares in issue. While the Company's share classes are all now in harvest, returning capital to shareholders, the Company's corporate umbrella itself has an indefinite life to allow for flexibility for the Company to add new share classes if demand, market opportunities and shareholder approval supported such a move, although the Company has no current plans to create new share classes. Each share class is considered in turn below.
Ordinary Share Class
NBDD was established at the Company's launch on 10 June 2010 with a remit to invest in the global distressed debt market with a focus on North America. The investment period of NBDD expired on 10 June 2013.
Voting rights: Yes
Denomination: US Dollars
Hedging: Portfolio hedged to US Dollars
Authorised share capital: Unlimited
Par value: Nil
Extended Life Share Class
A vote was held at a class meeting of NBDD shareholders on 8 April 2013 where the majority of shareholders voted in favour of a proposed extension.
Following this meeting and with the NBDD shareholders' approval of the extension, on 9 April 2013 a new Class, NBDX, was created and the NBDX Shares were issued to 72% of initial NBDD investors who elected to convert their NBDD Shares to NBDX Shares. NBDX had a remit to invest in the global distressed debt market with a focus on North America. The investment period of NBDX expired on 31 March 2015.
Voting rights: Yes
Denomination: US Dollars
Hedging: Portfolio hedged to US Dollars
Authorised share capital: Unlimited
Par value: Nil
New Global Share Class
NBDG was created on 4 March 2014 and had a remit to invest in the global distressed market with a focus on Europe and North America. The investment period of NBDG expired on 31 March 2017.
Voting rights: Yes
Denomination: Pound Sterling
Hedging: Unhedged portfolio
Authorised share capital: Unlimited
Par value: Nil
Class A Shares
The Class A Shares are held by a trustee pursuant to a purpose trust established under Guernsey law. Under the terms of the Trust Deed the Trustee holds the Class A Shares for the purpose of exercising the right to receive notice of general meetings of the Company but the Trustee shall only have the right to attend and vote at general meetings of the Company when there are no other Shares of the Company in issue.
Voting rights: No
Denomination: US Dollars
Authorised share capital: 10,000 Class A Shares
Par value: US Dollar $1
2025 INTERIM PERFORMANCE REVIEW | Financial Highlights |
Financial Highlights
Key Figures
| AS At 30 JUNE 2025 (UNAUDITED) | Ordinary Share Class | Extended Life Share Class | New Global Share Class1 | Aggregated |
| Net Asset Value ("NAV") ($ millions) | 11.4 | 34.8 | 15.1 | 61.3 |
| NAV per Share ($) | 0.7385 | 0.8996 | 0.6656 | - |
| Share Price ($) | 0.6000 | 0.6400 | 0.4111 | - |
| NAV per Share (£) | - | - | 0.4857 | - |
| Share Price (£) | - | - | 0.3000 | - |
| Premium /(Discount) to NAV per Share | (18.75%) | (28.86%) | (38.24%) | - |
| Portfolio of Distressed Investments ($ millions) | 6.3 | 12.2 | 14.5 | 33.0 |
| Cash and Cash Equivalents ($ millions) | 5.2 | 23.4 | 0.4 | 29.0 |
| Total Expense Ratio ("TER")2 | 1.79% | 1.97% | 2.93% | - |
| Ongoing Charges 3 | 1.66% | 1.75% | 2.55% | - |
| |||||
AS At 31 December 2024 | Ordinary Share Class | Extended Life Share Class | New Global Share Class1 | Aggregated | |
Net Asset Value ("NAV") ($ millions) | 11.6 | 35.9 | 16.0 | 63.5 | |
NAV per Share ($) | 0.7557 | 0.9271 | 0.6354 | - | |
Share Price ($) | 0.6200 | 0.7000 | 0.4008 | - | |
NAV per Share (£) | - | - | 0.5073 | - | |
Share Price (£) | - | - | 0.3200 | - | |
Premium /(Discount) to NAV per Share | (17.96%) | (24.50%) | (36.93%) | - | |
Portfolio of Distressed Investments ($ millions) | 6.3 | 15.2 | 15.2 | 36.7 | |
Cash and Cash Equivalents ($ millions) | 4.9 | 20.3 | 0.2 | 25.4 | |
Total Expense Ratio ("TER")2 | 1.43% | 1.45% | 2.34% | - | |
Ongoing Charges 3 | 1.37% | 1.38% | 2.28% | - | |
1 Stated in US Dollars, the £ price as at 30 June 2025 and 31 December 2024 converted to US Dollars using respective period/year end exchange rates.
2 The TERs represent the operating expenses, as required by US Generally Accepted Accounting Principles ("US GAAP"), expressed as a percentage of average net assets.
3 In the period to 30 June 2025, the Company's Ongoing Charges were 0.96%. This figure is based on an expense figure for the period to 30 June 2025 of $604,662. This figure, which has been prepared in accordance with AIC guidance represents the Company's operating expenses, excluding finance costs payable, expressed as a percentage of average net assets. Effective 18 March 2021, the Investment Manager had waived its entitlement to all fees from the Company. The Ongoing Charges by share class are disclosed above.
Summary of Value in Excess of Original Capital Invested
AS At 30 June 2025 | OrdinaryShare Class ($) | Extended LifeShare Class ($) | New GlobalShare Class (£) |
Original Capital Invested | (124,500,202) | (359,359,794) | (110,785,785) |
Total Capital Distributions | 129,627,394 | 299,562,041 | 54,151,125 |
Total Income Distributions 1 | 3,166,835 | 21,349,930 | 6,478,775 |
Distributions as % of Original Capital | 107% | 89% | 55% |
Total Buybacks | - | 12,112,379 | 10,924,963 |
NAV | 11,359,606 | 34,842,721 | 11,049,736 |
Total of NAV Plus Capital and Income Returned ("Value") | 144,153,835 | 367,867,071 | 82,604,599 |
Value in Excess of Original Capital Invested | 19,653,633 | 8,507,277 | (28,181,186) |
Value as % of Original Capital Invested | 116% | 102% | 75% |
AS At 31 December 2024 | OrdinaryShare Class ($) | Extended LifeShare Class ($) | New GlobalShare Class (£) |
Original Capital Invested | (124,500,202) | (359,359,794) | (110,785,785) |
Total Capital Distributions | 129,627,394 | 299,562,041 | 52,938,252 |
Total Income Distributions 1 | 3,166,835 | 21,349,930 | 5,682,362 |
Distributions as % of Original Capital | 107% | 89% | 53% |
Total Buybacks | - | 12,112,379 | 10,924,963 |
NAV | 11,624,114 | 35,907,610 | 12,746,359 |
Total of NAV Plus Capital and Income Returned ("Value") | 144,418,343 | 368,931,960 | 82,291,936 |
Value in Excess of Original Capital Invested | 19,918,141 | 9,572,166 | (28,493,849) |
Value as % of Original Capital Invested | 116% | 103% | 74% |
1 By way of dividend
2025 INTERIM PERFORMANCE REVIEW | Chairman's Statement
Chairman's Statement
The optimism I expressed in my report accompanying the 2024 Annual Report has been dampened by the macro-economic and political developments since then. So, while two assets were realised in the early part of 2025 the pace of negotiations regarding the disposal of others has slowed.
As set out in the Prospectus, at the time of IPO the Company undertook to comply with the UK's Offshore Funds tax rules to ensure that any profits arising from capital distributions are treated as capital gains for UK tax residents. This requires the final 10% of the total return (NAV plus cumulative distributions) in respect of any class of participating shares in NBDDIF to be returned to shareholders with a final liquidation of the relevant class. Consequently, there have been limitations on the extent to which the Company has been able to make distributions of realisation proceeds in respect of the NBDD and NBDX shares.
The Board is conscious that certain holders of NBDD and NBDX shares are keen for the Company to distribute the cash which has been held back in these classes and in terms of determining the optimal timing for the liquidation of these classes has sought to balance that with the desire to maximise the realisation values of the assets remaining in those classes and meet the needs of shareholders who wish to remain invested in listed and tradeable securities. The Board believes that the time has now arrived to wind-up the Company and therefore expects to put proposals to Shareholders by the end of the year to appoint a liquidator and place the Company into voluntary liquidation. Whilst the listing of the Shares of each class will be cancelled as a result, this will enable cash held by the Company (to the extent not required to meet expenses and any liabilities) to be distributed to Shareholders in the short term. The liquidator will then work with Neuberger Berman to realise the final assets held within each of the NBDD, NBDX and NBDG share classes and make further distributions to shareholders at the appropriate time. The Board expects that the Company will make material cost savings as a result of being placed into voluntary liquidation.
Company Performance
As at 30 June 2025, the Company had returned a total of $132.8m or 107% of NBDD investors' original capital of $124.5m, $333.0m or 93% of NBDX investors' original capital of $359.4m and £71.4m or 65% of NBDG investors' original capital of £110.8m. Currently we are still in what we hope to be the final stages of harvesting a number of investments and we will keep investors informed as they occur. The Board continues to monitor all costs to ensure that they are appropriate as we are conscious that shareholders may be concerned about the impact of costs on a reducing portfolio during the harvest period. We would therefore remind shareholders that with effect from 18 March 2021 our investment manager agreed to waive all future fees and that as noted above, the Company will benefit from material cost savings if Shareholders approve proposals to place the Company into voluntary liquidation.
Annual General Meeting ("AGM") Results
The results of the recent AGM were notable for the significant vote against my reappointment which, we are given to understand, was an expression of dissatisfaction at the pace of asset realisations and the distribution of free cash.
Distributions
During 2025, we made further progress on the realisation of assets. Following the receipt of proceeds from the sales of an Oil & Gas investment and a Surface Transport investment the Board resolved on 6 March 2025 to make a capital distribution of £0.0511 per share in respect of the NBDG classes. This distribution was made by a compulsory pro rata redemption of shares held as at 25 March 2025 with payment being made on 8 April 2025.
The Board was also pleased to announce an income distribution by way of dividend of £0.0317 per share which was paid on 7 April 2025.
We will continue to put our income distribution policy to a shareholder vote at each annual general meeting. I would like to remind shareholders that such distributions occur on an ad-hoc basis and are not expected to be either material or equal for each share class.
Outlook
As noted above, the Board believes that the time has now arrived to wind-up the Company and therefore expects to put proposals to Shareholders by the end of this year to appoint a liquidator and place the Company into voluntary liquidation. Whilst the listing of the Shares of each class will be cancelled as a result, this will enable cash retained by the Company (to the extent not required to meet expenses and any liabilities) to be distributed to Shareholders in the short term. The liquidator will then work with Neuberger Berman to realise the final assets held within each of the NBDD, NBDX and NBDG share classes and make further distributions to shareholders at the appropriate time. The Board expects that the Company will make material cost savings as a result of being placed into voluntary liquidation.
If proposals to place the Company into voluntary liquidation are rejected by shareholders, it is my intention to step down from the board as soon as my replacement is appointed.
John Hallam
Chairman
21 August 2025
2025 INTERIM PERFORMANCE REVIEW | Investment Manager's Report
Investment Manager's Report
Ordinary Share Class
Summary
The NAV per share decreased by 2.28% for the period ended 30 June 2025.
Portfolio Update
NBDD ended the period with a NAV per share of $0.7385 compared to $0.7557 at end of 2024. As of 30 June 2025, 44% of NBDD's NAV was invested in distressed assets, and $4m in US Government securities which represented a further 38% of NAV, with cash net of payables (see table below). Cash balances will continue to increase as assets are realised, subject to variations in collateral cash, but as noted previously cannot be distributed until the final liquidation of the share class. The portfolio consisted of 2 issuers across two sectors, surface transportation and containers & packaging.
Cash Analysis | |
Balance Sheet - Cash | $5.2m |
Collateral cash | ($3.1m) |
Other payables | ($0.1m) |
Total available cash | $2.0m |
Significant Price Movement during period ended 30 June 2025 (more than 1% of NBDD NAV or $110,000)
INDUSTRY | INSTRUMENT | TOTAL RETURN (US DOLLARS MILLIONS) | COMMENT |
Containers & packaging | Private Equity | (0.12) | Volume weakness in the business |
Exits
During the period ended June 30, 2025, we had no exits. The total number of exits since inception in NBDD is 53, with a total return of $29.3m.
Distributions
To date, $132.8m or 107% of original capital has been distributed to investors in the form of capital distributions via redemptions and income dividends. Total value to investors including NAV and all distributions paid is $144.2m (116% of original capital). As noted on page 2, the final 10% of the total return (NAV plus cumulative distributions) in respect of any class of participating shares in NBDDIF will be returned to shareholders with a final compulsory redemption of all of the outstanding shares of that class. The next distribution for NBDD will be the final distribution to shareholders and will wind down the share class. Our current expectation is to wind down the share class during the coming months. We will continue to update investors as we gain clarity on the realisations.
Extended Life Share Class
Summary
The NAV per share decreased by 2.97% for the period ended 30 June, 2025.
Portfolio Update
NBDX ended the period with a NAV per share of $0.8996 compared to $0.9271 at end of 2024. At 30 June 2025, 54% of NBDX's NAV was invested in distressed assets, and $2m in US Government securities which represented a further 6% of NAV with cash net of payables (see table below). Cash balances will continue to increase as assets are realised, subject to variations in collateral cash, but as noted previously not all cash can be distributed until the final liquidation of the share class. The NBDX portfolio consists of 3 issuers across 3 sectors, surface transportation, commercial mortgage and containers & packaging.
Cash Analysis | |
Balance Sheet - Cash | $23.4m |
Collateral cash | ($9.3m) |
Other payables | ($0.2m) |
Total available cash | $13.9m |
Significant Price Movements during period ended 30 June 2025 (more than 1% of NBDX NAV or $350,000)
INDUSTRY | INSTRUMENT | TOTAL RETURN (USD MILLIONS) | COMMENT |
Commercial Mortgage | Private Equity | 0.61 | Leasing activity & execution of LOI for sale of building |
Exits
During period ended 30 June 2025 we had two exits. This brought the total number of exits since inception in NBDX to 75 with total return of $24.4m.
Distributions
During period ended June 30, 2025 NBDX made no distributions. The total distributions to date (dividends, redemptions and buy-backs) amount to $333.m or 93% of original capital. Total value to investors including NAV and all distributions paid is $367.9m or 102% of original capital. As noted on page 2, the final 10% of total return in respect of any class of participating shares in NBDDIF will be returned to shareholders with the final compulsory redemption of all of the outstanding shares of that class. Our current expectation is to wind down the share class during the coming year. We will continue to update investors as we gain clarity on the realisations.
New Global Share Class
Summary
The NAV per share decreased by 4.26% for the year ended 30 June 2025.
Portfolio Update
NBDG ended the period with a NAV per share of £0.4857 compared to £0.5073 at the end of 2024. At 30 June 2025, 98% of NBDG's NAV was invested in distressed assets with a minimal amount of cash net of payables (see table below). The portfolio consisted of 2 issuers across 2 sectors, lodging & casinos and commercial mortgage.
Cash Analysis | |
Balance Sheet - Cash | $0.4m |
Other payables | ($0.1m) |
Total available cash | $0.3m |
Significant Price Movements during period ended 30 June 2025 (more than 1% of NBDG NAV or £110,000)
INDUSTRY | INSTRUMENT | TOTAL RETURN(GBP in millions) | COMMENT |
Lodging & Casinos | Bank Debt Investments | 0.18 | Closer to execution of sale |
Exits
During period ended 30 June 2025 there were two exits. The total number of exits since inception is 35 with a total return of £ (14.5m). Detailed descriptions of the exit are at the end of this report.
Distributions
During period ended 30 June 2025, there were distributions of £1.2m. The total distributions to date (dividends, redemptions, and buy-backs) have been £71.55m or 64.6% of original capital. Total value to investors including NAV and all distributions paid is £82.6m or 75% of original capital. As noted on page 2, the final 10% of total return in respect of any class of participating shares in NBDDIF will be returned to shareholders with the final compulsory redemption of all the outstanding shares of that class. Our current expectation is to wind down the share class during the coming year. We will continue to update investors as we gain clarity on the realisations.
Summary of Exits across all Share Classes
Exits experienced from inception to date were as follows:
NBDD 53 exits with a total return of $29.3m, IRR1 of 8% and ROR of 16%
NBDX 75 exits with a total return of $24.4m, IRR1 of 2% and ROR of 6%
NBDG 35 exits with a total return of £ (14.5) m, IRR1 of (8) % and ROR of (10) %
The annualised internal rate of return ("IRR") is computed based on the actual dates of the cash flows of the security (purchases, sales, interest and principal pay downs), calculated in the base currency of each portfolio. The Rate of Return ("ROR") represents the change in value of the security (capital appreciation, depreciation, and income) as a percentage of the purchase amount. The purchase amount can include multiple purchases. Total Return represents the inception to date gain/loss on an investment.
Exit Exit 74 for NBDX and Exit 34 for NBDG
Class | Exit | Cash Invested (millions) | Cash Received (millions) | Total Return (millions) |
IRR |
ROR | Months Held |
NBDX | 74 | $10.5 | $5.0 | ($5.5) | (11.4) % | (52.5) % | 127 |
NBDG | 34 | £2.6 | £1.5 | (£1.1) | (8.2) % | (40.7) % | 127 |
Exit 75 for NBDX and Exit 35 for NBDG
CLASS | Exit | Cash Invested (millions) | Cash Received (millions) | Total Return (millions) |
IRR |
ROR | Months Held |
NBDX | 75 | $9.6 | $1.7 | ($7.9) | (12.5) % | (82.2) % | 133 |
NBDG | 35 | £5.9 | £2.7 | (£3.2) | (6.4) % | (53.8) % | 133 |
Neuberger Berman Investment Advisers LLC Neuberger Berman Europe Limited
21 August 2025 21 August 2025
2025 INTERIM PERFORMANCE REVIEW | Portfolio Information
Portfolio Information
Ordinary Share Class
Top 31 Holdings as at 30 June 2025
Holding | Sector | Purchased Instrument |
Status |
Country | % of NAV |
Primary Asset |
1 | Surface Transport2 | Trade Claim | Defaulted | Brazil | 31% | Municipal Claim |
2 | Containers & Packaging | Post-Reorg Equity | Post-Reorg | Luxembourg | 16% | Manufacturing Plant and Equipment |
3 | Containers & Packaging | Post-Reorg Equity | Post-Reorg | Luxembourg | 2% | Manufacturing Plant and Equipment |
Total | 49% |
Sector Breakdown3
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 1 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
1 Ordinary Share Class holds three investments by issuer.
2 As at 30 June 2025 collateral pledged is included in the Surface Transport Market Value.
3 Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank Global Fund Services (Ireland) Limited as Administrator / Sub-Administrator to the Company. Surface Transport - Trade Claims have not been included in the Sector breakdown chart.
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 2 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
4 Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 30 June 2025 and 31 December 2024.
5 As at 30 June 2025 collateral pledged is included in the Brazil Market Value.
Extended Life Share Class
Top 41 Holdings as at 30 June 2025
Holding |
Sector | Purchased Instrument |
Status |
Country | % of NAV |
Primary Asset |
1 | Surface Transport2 | Trade Claim | Defaulted | Brazil | 26% | Municipal Claim |
2 | Commercial Mortgage | Secured Loan | Defaulted | Netherlands | 14% | Commercial Real Estate |
3 | Containers & Packaging | Post-Reorg Equity | Post-Reorg | Luxembourg | 13% | Manufacturing Plant and Equipment |
4 | Containers & Packaging | Post-Reorg Equity | Post-Reorg | Luxembourg | 2% | Manufacturing Plant and Equipment |
Total |
|
|
|
| 55% |
|
Sector Breakdown3
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 3 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
1 Extended Share Class holds four investments by issuer.
2 As at 30 June 2025 collateral pledged is included in the Surface Transport Market Value.
3 Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank Global Fund Services (Ireland) as Administrator / Sub-Administrator to the Company. Surface Transport - Trade Claims have not been included in the Sector breakdown chart.
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 4 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
4 Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 30 June 2025 and 31 December 2024.
5 As at 30 June 2025 collateral pledged is included in the Brazil Market Value.
New Global Share Class
Top 21 Holdings as at 30 June 2025
Holding |
Sector | Purchased Instrument |
Status |
Country | % of NAV |
Primary Asset | ||
1 | Lodging & Casino | Secured Loan / Private Equity | Current | Spain | 55% | Hotel/Casino | ||
2 | Commercial Mortgage | Secured Loan | Defaulted | Netherlands | 41% | Commercial Real Estate | ||
Total |
|
|
|
| 96% |
| ||
Sector Breakdown2
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 5 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
1 Global Share Class holds two investments by issuer
2 Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank Global Fund Services (Ireland) Limited as Administrator / Sub-Administrator to the Company.
For Investment Structure of the Company, click on, or paste the following link into your web browser, to view page 6 in the associated PDF document
http://www.rns-pdf.londonstockexchange.com/rns/3358W_1-2025-8-21.pdf
3 Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 30 June 2025 and 31 December 2024.
2025 INTERIM PERFORMANCE REVIEW | GOVERNANCE |
Interim Management Report and Directors' Responsibility Statement
Principal and Emerging Risks and Uncertainties
The principal and emerging risks of the Company are in the following areas:
· investment activity and performance;
· principal risks associated with harvest periods;
· level of premium or discount;
· market price risk;
· fair valuation of illiquid assets;
· accounting, legal and regulatory risk;
· operational risk;
· climate related risks; and
· issuance of new regulations.
These risks, and the way in which they are managed, are described in more detail in the Strategic Report on pages 22 to 24 of the Company's latest annual report and audited financial statements for the year ended 31 December 2024, which can be found on the Company's website at www.nbddif.com. The Board's view is that these risks remain appropriately identified for the remainder of 2025.
In addition to the Principal Risks, the macroeconomic environment and global conflicts are of concern and the Company has considered its potential impact on asset values. Market disruptions associated with current geopolitical events have had a global impact, and uncertainty exists as to their implications. Such disruptions can potentially adversely affect the assets, and thus the performance, of the Company. The Board continues to monitor this situation.
Going Concern
The financial position of the Company is set out on page 22. In addition, note 4 to the Unaudited Consolidated Interim Financial Statements includes the Company's objectives, policies and processes for managing its capital, its financial risk management and its exposures to credit risk and liquidity risk.
The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances, the likely liquidity of investments and any income deriving from those investments as of the reporting date as well as taking into consideration the impact of emerging risks and have determined that the Company has adequate financial resources to meet its liabilities as they fall due.
Having reassessed the principal and emerging risks, the Directors consider it appropriate to prepare the Unaudited Consolidated Interim Financial Statements (the "Financial Statements") on a going concern basis.
Related Party Transactions
The contracts with the Investment Manager and Directors are the only related party transactions currently in place. Other than fees payable in the ordinary course of business, there have been no material transactions with related parties, which have affected the financial position or performance of the Company in the six month period ended 30 June 2025. Additional related party disclosures are given in Note 6 on pages 48 to 49.
Directors' Responsibilities Statement
The Board of Directors confirms that, to the best of its knowledge:
· The Financial Statements have been prepared in conformity with US generally accepted accounting principles ("US GAAP"), give a true and fair view of the assets, liabilities, financial position and the return of the undertakings included in the consolidation as a whole as required by DTR 4.2.4R of the Disclosure Guidance and Transparency Rules ("DTR") of the UK's Financial Conduct Authority (the "UK FCA"); and
· The combination of the Chairman's Statement, the Investment Manager's Report, this Interim Management Report and the notes to the Financial Statements meet the requirements of an interim management report, and include a fair view of the information required by:
1. DTR 4.2.7R, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the set of financial statements together with a description of the principal risks and uncertainties for the remaining six months of the year; and
2. DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website and for the preparation and dissemination of Financial Statements. Legislation in Guernsey governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.
These Interim Report and Financial Statements have been reviewed by the Company's auditor and their report is set out on pages 20 and 21.
By order of the Board
John Hallam Christopher Legge
Chairman Director
21 August 2025 21 August 2025
Independent Review Report to NB Distressed Debt Investment Fund Limited
Conclusion
We have been engaged by NB Distressed Debt Investment Fund Limited (the "Company") to review the consolidated financial statements (the "financial statements") in the half-yearly financial report for the six months ended 30 June 2025 of the Company and its subsidiaries (together, the "Group"), which comprises the unaudited consolidated statement of assets and liabilities, the unaudited consolidated statement of operations, the unaudited consolidated statement of changes in net assets, the unaudited consolidated statement of cash flows, the unaudited consolidated condensed schedule of investments and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the financial statements in the half-yearly financial report for the six months ended 30 June 2025 do not give a true and fair view of the financial position of the Group as at 30 June 2025 and of its financial performance and its cash flows for the six month period then ended, in accordance with U.S. generally accepted accounting principles and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the Financial Reporting Council for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Scope of review section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However future events or conditions may cause the Group and the Company to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group and the Company will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the DTR of the UK FCA.
The financial statements included in this interim report have been prepared in accordance with U.S. generally accepted accounting principles.
In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless liquidation is imminent.
Our responsibility
Our responsibility is to express to the Company a conclusion on the financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the scope of review paragraph of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Andrew J. Salisbury
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Guernsey
21 August 2025
FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Assets and Liabilities
Unaudited Consolidated Statement of Assets and Liabilities
AS AT 30 JUNE 2025 AND 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS EXCEPT WHERE STATED OTHERWISE) | 30 June 2025 (unaudited) |
| 31 December 2024 (AUDITED) |
Assets |
|
|
|
Investments, at fair value (2025: cost of $35,677,369; 2024: cost of $60,011,510) | 32,931,974 | 36,677,885 | |
Forward currency contracts, at fair value | 65,973 | 2,459,931 | |
Total return swaps, at fair value (2025: cost of $Nil, 2024: cost of $Nil) | 1,679,761 | - | |
Cash and cash equivalents | 16,636,727 | 14,403,459 | |
Restricted cash: | |||
Forward currency contracts collateral | 1,431,070 | - | |
Total return swap collateral | 10,970,000 | 10,970,000 | |
63,715,505 |
| 64,511,275 | |
Other assets | |||
Interest receivables | 354,978 | 763,745 | |
Other receivables and prepayments | 26,644 | 53,065 | |
Total assets | 64,097,127 |
| 65,328,085 |
|
|
| |
Liabilities |
|
|
|
Forward currency contracts, at fair value | 2,447,756 | 11,319 | |
Accrued expenses and other liabilities | 273,495 | 375,287 | |
Credit default swap, at fair value (2025: cost of $61,957, 2024: cost of $61,957) | 31,544 | 19,525 | |
Total return swaps, at fair value (2025: cost of $Nil, 2024: cost of $Nil) | - | 126,689 | |
Due to broker | - | 1,300,000 | |
Total liabilities | 2,752,795 |
| 1,832,820 |
| |||
Net assets | 61,344,332 |
| 63,495,265 |
Net assets attributable to Ordinary Shares (shares 2025: 15,382,770; 2024: 15,382,770) | 11,359,606 |
| 11,624,114 |
Net asset value per Ordinary Share | 0.7385 |
| 0.7557 |
|
|
|
|
Net assets attributable to Extended Life Shares (shares 2025: 38,731,819; 2024: 38,731,819) | 34,842,721 |
| 35,907,610 |
Net asset value per Extended Life Share | 0.8996 |
| 0.9271 |
|
|
|
|
Net assets attributable to New Global Shares (shares 2025: 22,750,376; 2024: 25,123,440) | £11,049,736 |
| £12,746,359 |
Net asset value per New Global Share | £0.4857 |
| £0.5073 |
|
|
|
|
Net assets attributable to New Global Shares (USD equivalent) | 15,142,005 |
| 15,963,541 |
Net asset value per New Global Share (USD equivalent) | 0.6656 |
| 0.6354 |
The Financial Statements were approved and authorised for issue by the Board of Directors on 21 August 2025 and signed on its behalf by:
John Hallam Christopher Legge
Chairman Director
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Operations
Unaudited Consolidated Statement of Operations |
FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2025 AND 30 JUNE 2024
(UNAUDITED)
(EXPRESSED IN US DOLLARS) |
| 30 JUNE 2025 (UNAUDITED) |
|
| 30 JUNE 2024 (UNAUDITED) |
Income |
|
|
|
|
|
Interest income | 909,633 | 1,539,010 | |||
|
| 909,633 |
|
| 1,539,010 |
|
|
|
| ||
Expenses |
|
|
| ||
Professional and other expenses | 243,128 | 298,802 | |||
Audit fee | 180,081 | 135,634 | |||
Directors' fees and expenses | 98,984 | 97,550 | |||
Company secretary fee | 70,314 | 58,671 | |||
Administration fee | 42,423 | 42,918 | |||
D&O insurance fee | 36,400 | 57,301 | |||
Loan administration and custody fees | 9,952 | 14,910 | |||
|
| 681,282 |
|
| 705,786 |
Net investment income | 228,351 |
|
| 833,224 | |
|
|
|
|
|
|
Realised and unrealised (loss)/gain from investments and foreign exchange transactions |
|
|
|
|
|
Net realised loss on investments, credit default swap, total return swap and forward currency transactions | (18,644,286) | (16,391,216) | |||
Net change in unrealised gain on investments, credit default swap, total return swap and forward currency transactions | 18,868,516 | 13,435,868 | |||
| |||||
Realised and unrealised gain/(loss) from investments and foreign exchange transactions | 224,230 | (2,955,348) | |||
|
|
|
|
|
|
Net increase/(decrease) in net assets resulting from operations |
| 452,581 |
|
| (2,122,124) |
|
|
|
|
|
|
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Changes in Net Assets |
Unaudited Consolidated Statement of Changes in Net Assets
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2025 (UNAUDITED)
(EXPRESSED IN US DOLLARS) | 30 june 2025 Ordinary Shares | 30 JUNE 2025 Extended Life Shares | 30 JUNE 2025 New Global Shares | 30 JUNE 2025 Aggregated |
Net assets at the beginning of the period | 11,624,114 | 35,907,610 | 15,963,541 | 63,495,265 |
Net investment income | 1,488 | 28,995 | 197,868 | 228,351 |
Net realised gain/(loss) on investments, credit default swap and forward currency transactions | (73,514) | (8,518,528) | (10,052,244) | (18,644,286) |
Net change in unrealised (loss)/gain on investments, credit default swap and forward currency transactions | (192,482) | 7,424,644 | 11,636,354 | 18,868,516 |
Dividends | - | - | (1,033,147) | (1,033,147) |
Shares redeemed during the period | - | - | (1,570,367) | (1,570,367) |
Net assets at the end of the period | 11,359,606 | 34,842,721 | 15,142,005 | 61,344,332 |
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024 (UNAUDITED)
(EXPRESSED IN US DOLLARS) | 30 jUNE 2024 Ordinary Shares | 30 jUNE 2024 Extended Life Shares | 30 jUNE 2024 New Global Shares | 30 jUNE 2024 Aggregated |
Net assets at the beginning of the period | 12,415,231 | 45,614,485 | 22,128,022 | 80,157,738 |
Net investment income | 6,556 | 399,596 | 427,072 | 833,224 |
Net realised loss on investments, credit default swap and forward currency transactions | (998,209) | (14,455,094) | (937,913) | (16,391,216) |
Net change in unrealised gain/(loss) on investments, credit default swap and forward currency transactions | 487,657 | 13,296,125 | (347,914) | 13,435,868 |
Net assets at the end of the period | 11,911,235 | 44,855,112 | 21,269,267 | 78,035,614 |
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Statement of Cash Flows
Unaudited Consolidated Statement of Cash Flows
FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2025 AND 30 JUNE 2024
(EXPRESSED IN US DOLLARS) |
| 30 JUNE 2025 (UNAUDITED) |
| 30 JUNE 2024 (UNAUDITED) | |
Cash flows from operating activities: | |||||
Net increase/(decrease) in net assets resulting from operations | 452,581 | (2,122,124) | |||
Adjustment to reconcile net /increase/(decrease) in net assets resulting from operations to net cash flow provided by operations: | |||||
Net realised loss on investments, credit default swap, total return swap and forward currency transactions | 18,644,286 | 16,391,216 | |||
Net change in unrealised gain on investments, credit default swap, total return swap and forward currency transactions | (18,868,516) | (13,435,868) | |||
Accretion of discount on loans and bonds | 28,257 | 28,106 | |||
Changes in due to broker | (1,300,000) | 820,000 | |||
Changes in interest receivable | 408,767 | 188,777 | |||
Changes in receivables for investments sold | - | (4,122,515) | |||
Changes in other receivables and prepayments | 26,421 | 29,662 | |||
Changes in accrued expenses and other liabilities | (101,792) | 67,551 | |||
Cash received/(paid) on settled forward currency contracts and spot currency contracts | 1,234,554 | (152,212) | |||
Payment in kind interest | (988,117) | (1,385,257) | |||
Purchase of investments | - | 59,443 | |||
Sale of investments | 6,763,039 | 5,827,588 | |||
Net cash provided by operating activities | 6,299,480 | 2,194,367 | |||
|
|
|
| ||
Cash flows from financing activities: | |||||
Shares redeemed during the period | (1,570,367) | - | |||
Dividend paid | (1,033,147) | - | |||
Net cash used in from financing activities | (2,603,514) | - | |||
|
|
|
|
| |
Net increase in cash, cash equivalents and restricted cash | 3,695,966 | 2,194,367 | |||
Cash and cash equivalents at the beginning of the period | 14,403,459 | 4,809,578 | |||
Restricted cash at the beginning of the period | 10,970,000 | 11,760,000 | |||
Effect of exchange rate changes on cash and cash equivalents | (31,628) | (12,989) | |||
Cash and cash equivalents at the end of the period | 16,636,727 | 7,780,956 | |||
Restricted cash at the end of the period |
| 12,401,070 |
| 10,970,000 | |
Supplemental cash flow information |
| ||
There were no reorganisations requiring disclosure during the periods ended 30 June 2025 and 30 June 2024. | |||
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Condensed Schedule of Investments
Unaudited Consolidated Condensed Schedule of Investments (by financial instrument)
AS AT 30 JUNE 2025 (UNAUDITED) (EXPRESSED IN US DOLLARS) | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Portfolio of Distressed Investments | ||||||
Bank Debt Investments | 23,528,238 | 19,395,969 | - | 14.09 | 95.68 | 31.61 |
Private Equity | 4,907,312 | 7,224,992 | 17.77 | 14.94 | - | 11.78 |
|
|
|
|
|
|
|
Short term Investments |
|
|
|
|
|
|
US Treasury Bills | 7,241,819 | 6,311,013 | 37.64 | 5.84 | - | 10.29 |
|
|
|
|
|
|
|
Total Investments | 35,677,369 | 32,931,974 | 55.41 | 34.87 | 95.68 | 53.68 |
Portfolio per share class |
| |||||
Ordinary Shares | 5,439,966 | 6,294,306 | 55.41 | - | - | 10.26 |
Extended Life Shares | 10,532,564 | 12,150,372 | - | 34.87 | - | 19.81 |
New Global Shares | 19,704,839 | 14,487,296 | - | - | 95.68 | 23.61 |
| 35,677,369 | 32,931,974 | 55.41 | 34.87 | 95.68 | 53.68 |
| ||||||
Credit Default Swap | ||||||
Ordinary Shares | (17,367) | (8,842) | (0.08) | - | - | (0.01) |
Extended Life Shares | (44,590) | (22,702) | - | (0.07) | - | (0.04) |
| (61,957) | (31,544) | (0.08) | (0.07) | - | (0.05) |
| ||||||
Forward Currency Contracts | ||||||
Assets | ||||||
Ordinary Shares | - | 16,586 | 0.15 | - | - | 0.03 |
Extended Life Shares | - | 49,387 | - | 0.14 | - | 0.08 |
| - | 65,973 | 0.15 | 0.14 | - | 0.11 |
Liabilities |
|
|
|
|
|
|
Ordinary Shares | - | (592,101) | (5.21) | - | - | (0.97) |
Extended Life Shares | - | (1,855,655) | - | (5.33) | - | (3.02) |
| - | (2,447,756) | (5.21) | (5.33) | - | (3.99) |
|
|
|
|
|
|
|
Total Return Swap2 |
|
|
|
|
|
|
Ordinary Shares | - | 469,032 | 4.13 | - | - | 0.76 |
Extended Life Shares | - | 1,210,729 | - | 3.46 | - | 1.98 |
| - | 1,679,761 | 4.13 | 3.46 | - | 2.74 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
2 The trade claim was structured through a fully funded total return swap with a major US financial institution. See Note 3.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
AS AT 31 DECEMBER 2024 (AUDITED) (EXPRESSED IN US DOLLARS) | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Portfolio of Distressed Investments | ||||||
Bank Debt Investments | 47,834,123 | 21,784,252 | 0.00 | 19.18 | 93.33 | 34.31 |
Private Equity | 4,907,312 | 8,837,916 | 18.51 | 17.71 | 2.04 | 13.92 |
|
|
|
|
|
|
|
Short term Investments |
|
|
|
|
|
|
US Treasury Bills | 7,270,075 | 6,055,717 | 35.29 | 5.44 | 0.00 | 9.54 |
| ||||||
Total Investments | 60,011,510 | 36,677,885 | 53.80 | 42.33 | 95.37 | 57.77 |
Portfolio per share class |
| |||||
Ordinary Shares | 5,459,638 | 6,254,171 | 53.80 | - | - | 9.85 |
Extended Life Shares | 22,446,527 | 15,199,913 | - | 42.33 | - | 23.94 |
New Global Shares | 32,105,345 | 15,223,801 | - | - | 95.37 | 23.98 |
| 60,011,510 | 36,677,885 | 53.80 | 42.33 | 95.37 | 57.77 |
| ||||||
Credit Default Swap | ||||||
Ordinary Shares | (17,367) | (5,473) | (0.05) | - | - | (0.01) |
Extended Life Shares | (44,590) | (14,052) | - | (0.04) | - | (0.02) |
| (61,957) | (19,525) | (0.05) | (0.04) | - | (0.03) |
| ||||||
Forward Currency Contracts | ||||||
Assets | ||||||
Ordinary Shares | - | 549,259 | 4.73 | - | - | 0.87 |
Extended Life Shares | - | 1,910,672 | - | 5.32 | - | 3.01 |
| - | 2,459,931 | 4.73 | 5.32 | - | 3.88 |
Liabilities |
|
|
|
|
|
|
Ordinary Shares | - | (4,289) | (0.04) | - | - | (0.01) |
Extended Life Shares | - | (7,030) | - | (0.02) | - | (0.01) |
| - | (11,319) | (0.04) | (0.02) | - | (0.02) |
|
|
|
|
|
|
|
Total Return Swap2 |
|
|
|
|
|
|
Ordinary Shares | - | (35,412) | (0.30) | - | - | (0.06) |
Extended Life Shares | - | (91,277) | - | (0.26) | - | (0.14) |
| - | (126,689) | (0.30) | (0.26) | - | (0.20) |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
2 The trade claim was structured through a fully funded total return swap with a major US financial institution. See Note 3.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
Unaudited Consolidated Condensed Schedule of Investments
Investments with the following issuers comprised greater than 5% of Total Company NAV
AS AT 30 JUNE 2025 (UNAUDITED) (EXPRESSED IN US DOLLARS) | Country | Industry | Nominal | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Investments at fair value | |||||||||
AB Zwolle Term Loan 4.36% 5/31/2025 (Bank Debt Investments) | Netherlands | Commercial Mortgage | 21,895,687 | 15,421,666 | 11,072,530 | - | 14.09 | 40.71 | 18.05 |
Package Holdings 1 (Private Equity) | Luxembourg | Containers & Packaging | 11,108,610 | - | 6,345,187 | 15.61 | 13.12 | - | 10.34 |
Package Holdings 6 (Private Equity) | Luxembourg | Containers & Packaging | 2,948,481 | 1,893,980 | 879,805 | 2.16 | 1.82 | - | 1.43 |
Hotel Puerta America PIK T/L EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 4,475,941 | 4,907,037 | 5,080,699 | - | - | 33.55 | 8.28 |
Hotel Puerta America PIK Addon EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 1,766,752 | 1,917,637 | 2,005,464 | - | - | 13.25 | 3.27 |
Hotel Puerta America PIK PPL EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 1,090,003 | 1,281,898 | 1,237,276 | - | - | 8.17 | 2.02 |
US Treasury N/B 1.500% 02/15/30 (US Treasury Bills) | United States | United States | 6,975,000 | 7,241,819 | 6,311,013 | 37.64 | 5.84 | - | 10.29 |
Hotel Puerta America (Private Equity) | Spain | Lodging & Casinos | 934 | 3,013,332 | - | - | - | - | - |
35,677,369 | 32,931,974 | 55.41 | 34.87 | 95.68 | 53.68 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
Investments with the following issuers comprised greater than 5% of Total Company NAV
AS AT 31 DECEMBER 2024 (AUDITED) (EXPRESSED IN US DOLLARS) | Country | Industry | Nominal | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Investments at fair value | |||||||||
AB Zwolle Term Loan 4.36% 5/31/2025 (Bank Debt Investments) | Netherlands | Commercial Mortgage | 21,413,112 | 15,194,276 | 9,691,940 | - | 11.61 | 33.80 | 14.91 |
Package Holdings 1 (Private Equity) | Luxembourg | Containers & Packaging | 11,108,610 | - | 6,762,594 | 15.69 | 13.17 | - | 10.40 |
Package Holdings 6 (Private Equity) | Luxembourg | Containers & Packaging | 2,948,481 | 1,893,980 | 937,623 | 2.18 | 1.83 | - | 1.44 |
TP Ferro Concesionaria, S.A EUR Term Loan 25% 6/1/2025 (Bank Debt Investments) | Spain | Surface Transport | 18,787,735 | 18,531,522 | 3,890,940 | - | 5.28 | 12.14 | 5.99 |
TP Ferro Concesionaria, S.A 2017 EUR Term Loan B 25% 6/1/2025 (Bank Debt Investments) | Spain | Surface Transport | 755,816 | 842,679 | 156,529 | - | 0.21 | 0.49 | 0.24 |
TP Ferro PIK 5C 7/23 (Bank Debt Investments) | Spain | Surface Transport | 462,210 | 462,210 | 92,442 | - | 0.12 | 0.29 | 0.14 |
TP Ferro Concesionaria, S.A 2017 USD Term Loan A 25% 6/1/2025 (Bank Debt Investments) | Spain | Surface Transport | 3,753,886 | 3,753,886 | 750,777 | - | 1.01 | 2.35 | 1.15 |
TP Ferro Concesionaria, S.A 2017 USD Term Loan C 25% 6/1/2025 (Bank Debt Investments) | Spain | Surface Transport | 326,958 | 326,958 | 65,392 | - | 0.09 | 0.20 | 0.10 |
TP Ferro PIK 5A 25% 6/1/2025 (Bank Debt Investments) | Spain | Surface Transport | 665,658 | 665,658 | 133,132 | - | 0.18 | 0.42 | 0.20 |
TP Ferro PIK 5B 25% 6/1/2026 (Bank Debt Investments) | Spain | Surface Transport | 379,839 | 379,839 | 75,968 | - | 0.10 | 0.24 | 0.12 |
Hotel Puerta America PIK T/L EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 4,178,566 | 4,599,106 | 4,184,118 | - | - | 26.21 | 6.44 |
Hotel Puerta America PIK Addon EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 1,649,372 | 1,796,090 | 1,651,563 | - | - | 10.35 | 2.54 |
Hotel Puerta America PIK PPL EUR (Bank Debt Investments) | Spain | Lodging & Casinos | 1,090,003 | 1,281,898 | 1,091,451 | - | - | 6.84 | 1.68 |
Hotel Puerta America (Private Equity) | Spain | Lodging & Casinos | 934 | 3,013,333 | - | - | - | - | - |
US Treasury N/B 1.500% 02/15/30 (US Treasury Bills) | United States | United States | 6,975,000 | 7,270,075 | 6,055,717 | 34.05 | 5.28 | - | 9.32 |
60,011,510 | 35,540,186 | 51.92 | 38.88 | 93.33 | 54.67 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Condensed Schedule of Investments |
Unaudited Consolidated Condensed Schedule of Investments (by geography)
AS AT 30 JUNE 2025 (UNAUDITED) (EXPRESSED IN US DOLLARS) |
| Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Geographic diversity of Portfolios | |||||||
| |||||||
Portfolio of Distressed Investments | |||||||
Luxembourg | 1,893,980 | 7,224,992 | 17.77 | 14.94 | - | 11.78 | |
Netherlands | 15,421,666 | 11,072,530 | - | 14.09 | 40.71 | 18.05 | |
Spain | 11,119,904 | 8,323,439 | - | - | 54.97 | 13.56 | |
| |||||||
Short term Investments (US Treasury Bills) | |||||||
United States | 7,241,819 | 6,311,013 | 37.64 | 5.84 | - | 10.29 | |
35,677,369 | 32,931,974 | 55.41 | 34.87 | 95.68 | 53.68 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
AS AT 31 DECEMBER 2024 (AUDITED) (EXPRESSED IN US DOLLARS) |
| Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Geographic diversity of Portfolios | |||||||
| |||||||
Portfolio of Distressed Investments | |||||||
Luxembourg | 1,893,980 | 7,700,216 | 18.51 | 15.45 | - | 12.13 | |
Netherlands | 15,194,275 | 9,691,940 | - | 11.97 | 33.80 | 15.26 | |
Spain | 35,653,180 | 12,092,312 | - | 7.21 | 59.53 | 19.05 | |
United States | - | 1,137,700 | - | 2.26 | 2.04 | 1.79 | |
| |||||||
Short term Investments (US Treasury Bills) | |||||||
United States | 7,270,075 | 6,055,717 | 35.29 | 5.44 | - | 9.54 | |
60,011,510 | 36,677,885 | 53.80 | 42.33 | 95.37 | 57.77 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Unaudited Consolidated Condensed Schedule of Investments |
Unaudited Consolidated Condensed Schedule of Investments (by sector)
AS AT 30 JUNE 2025 (UNAUDITED) (EXPRESSED IN US DOLLARS) | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Industry diversity of Portfolios | ||||||
| ||||||
Portfolio of Distressed Investments | ||||||
Commercial Mortgage | 15,421,666 | 11,072,530 | - | 14.09 | 40.71 | 18.05 |
Containers & Packaging | 1,893,980 | 7,224,992 | 17.77 | 14.94 | - | 11.78 |
Lodging & Casinos | 11,119,904 | 8,323,439 | - | - | 54.97 | 13.56 |
|
| |||||
Short term Investments | ||||||
US Treasury Bills | 7,241,819 | 6,311,013 | 37.64 | 5.84 | - | 10.29 |
35,677,369 | 32,931,974 | 55.41 | 34.87 | 95.68 | 53.68 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
AS AT 31 DECEMBER 2024 (AUDITED) (EXPRESSED IN US DOLLARS) | Cost | Fair Value | Ordinary Shares (%)1 | Extended Life Shares (%)1 | New Global Shares (%)1 | Total Company (%)1 |
Industry diversity of Portfolios | ||||||
| ||||||
Portfolio of Distressed Investments | ||||||
Commercial Mortgage | 15,194,275 | 9,691,940 | - | 11.97 | 33.80 | 15.27 |
Containers & Packaging | 1,893,980 | 7,700,217 | 18.51 | 15.45 | - | 12.13 |
Lodging & Casinos | 10,690,426 | 6,927,131 | - | - | 43.39 | 10.91 |
il & Gas | - | 1,137,700 | - | 2.26 | 2.04 | 1.79 |
Surface Transport | 24,962,754 | 5,165,180 | - | 7.21 | 16.14 | 8.13 |
|
| |||||
Short term Investments | ||||||
US Treasury Bills | 7,270,075 | 6,055,717 | 35.29 | 5.44 | - | 9.54 |
60,011,510 | 36,677,885 | 53.80 | 42.33 | 95.37 | 57.77 |
1 This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 34 to 51 are an integral part of the Unaudited Consolidated Interim Financial Statements.
FINANCIAL STATEMENTS | Notes to the Unaudited Consolidated Interim Financial Statements
NOTE 1 - ORGANISATION AND DESCRIPTION OF BUSINESS
NB Distressed Debt Investment Fund Limited (the "Company") is a closed-ended investment company registered and incorporated in Guernsey under the provisions of the Companies (Guernsey) Law, 2008 (as amended) (the "Companies Law") with registration number 51774. The Company's shares are traded on the Specialist Fund Segment ("SFS") of the London Stock Exchange ("LSE"). All share classes are in the harvest period.
The Company's objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed and special situation credit-related investments while seeking to limit downside risk by, amongst other things, focusing on senior and senior secured debt with both collateral and structural protection.
The Company's share capital is denominated in US Dollars for Ordinary Shares and Extended Life Shares and Pounds Sterling for New Global Shares.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
(a) Basis of Preparation
The accompanying Unaudited Consolidated Interim Financial Statements ("Financial Statements") give a true and fair view of the assets, liabilities, financial position and return and have been prepared in conformity with U.S. generally accepted accounting principles ("US GAAP") and Companies Law and are expressed in US Dollars. All adjustments considered necessary for the fair presentation of the financial statements, for the period presented, have been included.
The Company is regarded as an Investment Company and follows the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and Financial Services - Investment Companies Topic 946: Amendments to the Scope, Measurement, and Disclosure Requirements (Topic 946). Accordingly, the Company reflects its investments on the Unaudited Consolidated Statement of Assets and Liabilities at their estimated fair values, with unrealised gains and losses resulting from changes in fair value reflected in net change in unrealised gain/(loss) on investments, credit default swap, total return swap and forward currency transactions in the Unaudited Consolidated Statement of Operations.
The Board recognises that the Portfolios (the Ordinary Share Class; the Extended Life Share Class; and the New Global Share Class) are now in their harvest periods. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the twelve months from the date these accounts are signed and the foreseeable future. Thus, they continue to prepare the Financial Statements on a going concern basis, as liquidation is not imminent.
There have been no significant changes in accounting policies from the year ending 31 December 2024.
(b) Principles of Consolidation
The Financial Statements include the results of the Company and its wholly-owned subsidiaries, whose accounting policies are consistent with those of the Company. The Financial Statements include full consolidation of any owned subsidiaries, except where the effect on the Company's financial position and results of operations are immaterial. Transactions between the Company and the subsidiaries have been eliminated on consolidation.
Wholly-owned subsidiaries, London Lux Masterco 1 S.a.r.l., London Lux Debtco 1 S.a.r.l. and London Lux Propco 1 S.a.r.l. are incorporated in Luxembourg.
(c) Use of Estimates
The preparation of these Financial Statements in conformity with US GAAP requires that the Directors make estimates and assumptions (as mentioned in detail in note 2 (f) below) that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period.
Actual results could differ significantly from these estimates.
(d) Cash and Cash Equivalents and Restricted Cash
The Company holds cash and cash equivalents in US Dollar and non-US Dollar denominated currencies with original maturities of less than 90 days that are both readily convertible to known amounts of cash. As at 30 June 2025, the Company has cash balances in various currencies equating to $29,037,797 (Cost: $29,037,114) (31 December 2024: $25,373,459 (Cost: $25,392,830) including cash and cash equivalents of $16,636,727 (31 December 2024: $14,403,459) as well as restricted cash of $12,401,070 (31 December 2024: $10,970,000). Restricted cash of $10,970,000 (31 December 2024: $10,970,000) is collateral for the total return swap positions and restricted cash of $1,431,070 (31 December 2024: $Nil) is collateral for forward currency contracts.
(e) Foreign Currency Translation
Assets and liabilities denominated in foreign currency are translated into US Dollars at the currency exchange rates on the date of valuation. On initial recognition, foreign currency sales and purchases transactions are recorded and translated at the spot exchange rate at the transaction date and for all other transactions, the average rate is applied. Non-monetary assets and liabilities are translated at the historic exchange rate.
The Company does not separate the changes relating to currency exchange rates from those relating to changes in fair value of the investments. These fluctuations are included in the net realised gain/(loss) and net change in unrealised gain/(loss) on investments, credit default swap, total return swap and forward currency transactions in the Unaudited Consolidated Statements of Operations.
(f) Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities that qualify as financial instruments under FASB ASC 825, Financial Instruments, approximate the carrying amounts presented in the Unaudited Consolidated Statement of Assets and Liabilities.
Fair value prices are estimates made at a discrete point in time, based on relevant market data, information about the financial instruments, and other factors.
The Company follows guidance in ASC 820, Fair Value Measurement ("ASC 820"), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair value is determined using available market information and appropriate valuation methodologies. Estimates of fair value of financial instruments without quoted market prices are subjective in nature and involve various assumptions and estimates that are matters of judgement. Accordingly, fair values are not necessarily indicative of the amounts that will be ultimately realised on disposal of financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.
The following estimates and assumptions were used as at 30 June 2025 and 31 December 2024 to estimate the fair value of each class of financial instruments:
· Cash and cash equivalents - The carrying value reasonably approximates fair value due to the short-term nature of these instruments.
· Quoted investments are valued according to their bid price at the close of the relevant reporting date. Investments in private securities are priced at the bid price using a pricing service for private loans. If a price cannot be ascertained from the above sources, the Company will seek bid prices from third party broker/dealer quotes for the investments.
· In cases where no third-party price is available, or where the Investment Manager determines that the provided price is not an accurate representation of the fair value of the investment (e.g. level 3 investments included overleaf), the Investment Manager determines the valuation based on its fair valuation policy. Further information on valuations is provided in Note 2 (g), "Investment transactions, investment income/expenses and valuation", on page 39.
· Forward currency contracts are revalued using the forward exchange rate prevailing at the Unaudited Consolidated Statement of Assets and Liabilities date.
· Total Return Swaps are priced using mark to market prices provided by a third-party broker.
· Credit Return Swaps are priced using a pricing service provided by Markit Partners.
Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximises the use of observable market data and minimises the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable.
Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices are available in active markets for identical investments as of the reporting date.
Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.
Level 3: Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of the fair value require significant management judgement or estimation.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement and considers factors specific to each investment.
The following is a summary of the levels within the fair value hierarchy in which the Company invests:
FAIR VALUE OF FINANCIAL INSTRUMENTS AS AT 30 JUNE 2025 (UNAUDITED) | ||||
(EXPRESSED IN US DOLLARS) | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL |
Bank Debt Investments | - | - | 19,395,969 | 19,395,969 |
Private Equity | - | - | 7,224,992 | 7,224,992 |
US Treasury Bills | 6,311,013 | - | - | 6,311,013 |
Investments at fair value | 6,311,013 | - | 26,620,961 | 32,931,974 |
Credit Default Swap | - | (31,544) | - | (31,544) |
Total Return Swap | - | - | 1,679,761 | 1,679,761 |
Forward Currency Contracts - Assets | - | 65,973 | - | 65,973 |
Forward Currency Contracts - Liabilities | - | (2,447,756) | - | (2,447,756) |
Total investments that are accounted for at fair value | 6,311,013 | (2,413,327) | 28,300,722 | 32,198,408 |
| ||||
FAIR VALUE OF FINANCIAL INSTRUMENTS AS AT 31 DECEMBER 2024 (AUDITED) | ||||
(EXPRESSED IN US DOLLARS) | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL |
Bank Debt Investments | - | - | 21,784,252 | 21,784,252 |
Private Equity | - | - | 8,837,916 | 8,837,916 |
US Treasury Bills | 6,055,717 | - | - | 6,055,717 |
Investments at fair value | 6,055,717 | - | 30,622,168 | 36,677,885 |
Credit Default Swap | - | (19,525) | - | (19,525) |
Total Return Swap | - | - | (126,689) | (126,689) |
Forward Currency Contracts - Assets | - | 2,459,931 | - | 2,459,931 |
Forward Currency Contracts - Liabilities | - | (11,319) | - | (11,319) |
Total investments that are accounted for at fair value | 6,055,717 | 2,429,087 | 30,495,479 | 38,980,283 |
The following table summarises the significant unobservable inputs the Company used to value its investments categorised within Level 3 as at 30 June 2025. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to our determination of fair values.
Type | Sector | Fair Value ($) | Primary Valuation Technique | Significant unobservable Inputs | Range Input | |
Bank Debt Investments | Commercial Mortgage | 11,072,530 | Market Comparatives | Discount Rate | 10% | |
Bank Debt Investments | Lodging & Casinos | 8,323,439 | Market Comparatives | Unadjusted Broker Quote | N/A | |
Private Equity | Containers & Packaging | 7,224,992 | Market Comparatives | EBITDA Multiple | 10.3x | |
Total Return Swap | Surface Transport | 1,679,761 | Market Information | Unadjusted Broker Quote | N/A | |
Total |
| 28,300,722 | ||||
The following table summarises the significant unobservable inputs the Company used to value its investments categorised within Level 3 as at 31 December 2024. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to our determination of fair values.
Type | Sector | Fair Value ($) | Primary Valuation Technique | Significant unobservable Inputs | Range Input | |
Bank Debt Investments | Commercial Mortgage | 9,691,939 | Market Comparatives | Discount Rate | 10% | |
Bank Debt Investments | Lodging & Casinos | 6,927,132 | Market Comparatives | Discount Rate | 15% | |
Bank Debt Investments | Surface Transport | 5,165,180 | Market Information | Unadjusted Broker Quote | N/A | |
Private Equity | Containers & Packaging | 7,700,217 | Market Comparatives | EBITDA Multiple | 10.75x | |
Private Equity | Oil & Gas | 1,137,700 | Market Information | Unadjusted Broker Quote | N/A | |
Total Return Swap | Surface Transport | (126,689) | Market Information | Unadjusted Broker Quote | N/A | |
Total |
| 30,495,479 | ||||
Changes in any of the above inputs may positively or adversely impact the fair value of the relevant investments.
Level 3 assets are valued using single bid-side broker quotes or by good faith methods of the Investment Manager. For single broker quotes the Investment Manager uses unobservable inputs to assess the reasonableness of the broker quote. For good faith valuations, the Investment Manager directly uses unobservable inputs to produce valuations. The significant unobservable inputs used in Level 3 assets as at 30 June 2025 and 31 December 2024 are outlined in the tables above.
These inputs vary by asset class. For example, real estate asset valuations may utilise discounted cash flow models using an appropriate discount rate. Other assets may be valued based on analysis of the liquidation of the underlying assets. In general, increases/(decreases) to per unit valuation inputs will result in increases/(decreases) to investment value.
Similarly, increases/(decreases) of asset realisation inputs (liquidation estimate, letter of intent, etc.) will also result in increases/(decreases) in value. In situations where discounted cash flow models are used, increasing/(decreasing) discount rates or increasing/(decreasing) weighted average life, in isolation, will generally result in (decreased)/increased valuations.
The following is a reconciliation of opening and closing balances of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
FOR THE PERIOD ENDED 30 JUNE 2025 (UNAUDITED) (EXPRESSED IN US DOLLARS) |
| |||||||||
Bank Debt Investments |
| Private Equity |
| Trade Claim |
| Private Note |
| Total | ||
Balance, 31 December 2024 | 21,784,252 |
| 8,837,916 |
| (126,689) |
| - |
| 30,495,479 | |
Purchases (includes purchases-in-kind) | 988,117 | - | - | - | 988,117 | |||||
Sales and distributions | (5,345,449) | (1,468,006) | - | - | (6,813,455) | |||||
Realised (loss)/gain on sale of investments | (19,948,553) | 1,468,000 | (1,306,978) | - | (19,787,531) | |||||
Unrealised gain/(loss) on investments | 21,917,602 | (1,612,918) | 3,113,428 | - | 23,418,112 | |||||
Balance, 30 June 2025 | 19,395,969 |
| 7,224,992 |
| 1,679,761 |
| - |
| 28,300,722 | |
Change in unrealised gain/(loss) on investments included in Unaudited Consolidated Statement of Operation for Level 3 investments held as at 30 June 2025 | 21,917,602 |
| (1,612,918) |
| 3,113,428 |
| - |
| 23,418,112 | |
The Company's policy is to recognise transfers into and out of Level 3 as of the actual date of the event or change in circumstances that caused the transfer. During the period the Company had no transfers out of Level 3 into Level 2 of fair value amounting to $Nil. The Company had no transfers across fair value amounting levels during the period.
The following is a reconciliation of opening and closing balances of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
FOR THE YEAR ENDED 31 DECEMBER 2024 (AUDITED) (EXPRESSED IN US DOLLARS) |
| |||||||||
Bank Debt Investments |
| Private Equity |
| Trade Claim |
| Private Note |
| Total | ||
Balance, 31 December 2023 | 27,125,693 |
| 23,948,613 |
| 3,648,201 |
| 3,724,142 |
| 58,446,649 | |
Purchases (includes purchases-in-kind) | 2,405,907 | - | - | - | 2,405,907 | |||||
Sales and distributions | - | (11,090,945) | - | (5,480,178) | (16,571,123) | |||||
Realised loss on sale of investments | - | (1,789,836) | - | (14,261,195) | (16,051,031) | |||||
Unrealised (loss)/gain on investments | (7,747,348) | (2,229,916) | (3,774,890) | 16,017,231 | 2,265,077 | |||||
Balance, 31 December 2024 | 21,784,252 |
| 8,837,916 |
| (126,689) |
| - |
| 30,495,479 | |
Change in unrealised (loss)/gain on investments included in Audited Consolidated Statement of Operation for Level 3 investments held as at 31 December 2024 | (7,747,348) |
| (2,229,916) |
| (3,774,890) |
| 16,017,231 |
| 2,265,077 | |
The Company's policy is to recognise transfers into and out of Level 3 as of the actual date of the event or change in circumstances that caused the transfer. During the year the Company had no transfers out of Level 3 into Level 2 of fair value amounting to $Nil. The Company had no transfers across fair value amounting levels during the year.
(g) Investment transactions, investment income/expenses and valuation
Investment transactions are accounted for on a trade-date basis. Upon sale or maturity, the difference between the consideration received and the cost of the investment is recognised as a realised gain or loss under Net realised gain/(loss) on investments, credit default swap, total return swap and forward currency transactions in the Unaudited Consolidated Statement of Operations. The cost is determined based on the specific identification method. All transactions relating to the restructuring of current investments are recorded at the date of such restructuring. The difference between the fair value of the new consideration received and the cost of the original investment is recognised as a realised gain or loss. Unrealised gains and losses on an investment are the difference between the cost if purchased during the period or fair value at the previous period end and the fair value at the current period end. Unrealised gains and losses are included under Net change in unrealised (loss)/gain on investments, credit default swap, warrants and forward currency transactions in the Unaudited Consolidated Statement of Operations.
For the period ended 30 June 2025, $28,257 (30 June 2024: $28,106) was recorded to reflect accretion of discount on loans and bonds during the period and is included as Interest Income in the Unaudited Consolidated Statement of Operations.
Interest earned on debt instruments is accounted for, net of applicable withholding taxes and it is recognised as income over the terms of the loans and bonds. Discounts received or premiums paid in connection with the acquisition of loans and bonds are amortised into interest income using the effective daily interest method over the contractual life of the related loan and bond. If a loan is repaid prior to maturity, the recognition of the fees and costs is accelerated as appropriate. The Company raises a provision when the collection of interest is deemed doubtful. Dividend income is recognised on the ex-dividend date net of withholding tax.
Payment-in-kind ("PIK") interest is computed at the contractual rate specified in the loan agreement for any portion of the interest which may be added to the principal balance of a loan rather than paid in cash by the obligator on the scheduled interest payment date. PIK interest is periodically added to the principal balance of the loan and recorded as interest income. The Investment Manager places a receivable on non-accrual status when the collection of principal or interest is deemed doubtful. The amount of interest income recorded, plus initial costs of underlying PIK interest is reviewed periodically to ensure that these do not exceed fair value of those assets.
The Company carries investments on its Unaudited Consolidated Statement of Assets and Liabilities at fair value in accordance with US GAAP, with changes in fair value recognised in the Unaudited Consolidated Statement of Operations in each reporting period. Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability (i.e. the "exit price") in an orderly transaction between market participants at the measurement date.
Quoted investments are valued according to their bid price at the close of the relevant reporting date. Investments in private securities are priced at the bid price using a pricing service for private loans.
If a price cannot be ascertained from the above sources the Company will seek bid prices from third party broker/dealer quotes for the investments. The Investment Manager believes that bid price is the best estimate of fair value and is in line with the valuation policy adopted by the Company.
In cases where no third party price is available, or where the Investment Manager determines that the provided price is not an accurate representation of the fair value of the investment, the Administrator will value such investments with the input of the Investment Manager who will determine the valuation based on its fair valuation policy. As part of the investment fair valuation policy, the Investment Manager prepares a fair valuation memorandum for each such investment presenting the methodology and assumptions used to derive the price. This analysis is presented to the Investment Manager's Valuation Committee for approval.
The following criteria are considered when applicable:
· The valuation of other securities by the same issuer for which market quotations are available;
· The reasons for absence of market quotations;
· The soundness of the security, its interest yield, the date of maturity, the credit standing of the issue and the current general interest rates;
· Any recent sales prices and/or bid and ask quotations for the security;
· The value of similar securities of issuers in the same or similar industries for which market quotations are available;
· The economic outlook of the industry;
· The issuer's position in the industry;
· The financial statements of the issuer; and
· The nature and duration of any restriction on disposition of the security.
(h) Derivative Contracts
The Company may, from time to time, hold derivative financial instruments for the purposes of managing foreign currency exposure and to provide a measure of protection against defaults of corporate or sovereign issuers. These derivatives are measured at fair value in conformity with US GAAP with changes in fair value recognised under Realised and unrealised (loss)/gain from investments and foreign exchange in the Unaudited Consolidated Statement of Operations in each reporting period.
As part of the Company's investment strategy, the Company enters into over-the-counter ("OTC") derivative contracts which may include forward currency contracts, credit default swaps and total return swaps.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies on the reporting date and the value recorded in the financial statements represents net unrealised gain and loss on forwards as at 30 June 2025 and 31 December 2024. Forward contracts are generally categorised in Level 2 of the fair value hierarchy.
The credit default swap has been entered into on the OTC market. The fair value of the credit default swap contract is derived using a pricing service provided by Markit Partners. Markit Partners use a pricing model that is widely accepted by marketplace participants. Their pricing model takes into account multiple inputs including specific contract terms, interest rate yield curves, interest rates, credit curves, recovery rates, and current credit spreads obtained from swap counterparties and other market participants. Many inputs into the model do not require material subjectivity as they are observable in the marketplace or set per the contract. Other than the contract terms, valuation is mainly determined by the difference between the contract spread and the current market spread. The contract spread (or rate) is generally fixed and the market spread is determined by the credit risk of the underlying debt or reference entity. If the underlying debt is liquid and the OTC market for the current spread is active, credit default swaps are categorised in Level 2 of the fair value hierarchy. If the underlying debt is illiquid and the OTC market for the current spread is not active, credit default swaps are categorised in Level 3 of the fair value hierarchy.
The total return swap is valued using a mark to market prices provided by a third-party broker.
(i) Taxation
The Company is not subject to income taxes in Guernsey; however, it may be subject to taxes imposed by other countries on income it derives from investments.
Such taxes are reflected in the Unaudited Consolidated Statement of Operations. In accordance with US GAAP, management is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognised is measured as the largest amount of benefit that is greater than fifty percent likely of being realised upon ultimate settlement. De-recognition of a tax benefit previously recognised could result in the Company recording a tax liability that would reduce net assets. US GAAP also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities.
There were no uncertain tax positions as at 30 June 2025 or 31 December 2024. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and certain state, local, and other foreign tax regulators. State, local and foreign tax returns, if applicable, are generally subject to audit according to varying limitations dependent upon the jurisdiction. As of 30 June 2025, the Company's U.S. federal income tax returns are subject to examination under the three-year statute of limitations.
During the period ended 30 June 2025, the Company recorded current income tax expense $Nil (30 June 2024 income tax expense: $Nil). Deferred taxes are recorded to reflect the tax consequences of future years' differences between the tax basis of assets and their financial reporting basis. The deferred tax benefit recorded for the period ended 30 June 2025 was $Nil (30 June 2024 deferred tax benefit: $Nil). The net total income tax benefit/expense from realised/unrealised gains/(losses) on investments for the period ended 30 June 2025 was $Nil (30 June 2024 income tax expense: $Nil).
(j) Operating Expenses
Operating expenses are recognised on an accruals basis. Operating expenses include amounts directly or indirectly incurred by the Company as part of its operations. Each share class will bear its respective pro-rata share based on its respective Net Asset Value ('NAV') of the ongoing costs and expenses of the Company. Each share class will also bear all costs and expenses of the Company determined by the Directors to be attributable solely to it. Any costs incurred by a share buyback are charged to that share class.
(k) Payables/Receivables on Investments Purchased/Sold
At 30 June 2025, $Nil (31 December 2024: $Nil) was receivable on investments purchased/sold represents amounts due for investments purchased/sold that have been contracted for but not settled on the Unaudited Consolidated Statement of Assets and Liabilities.
NOTE 3 - DERIVATIVES
In the normal course of business, the Company uses derivative contracts in connection with its proprietary trading activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of the derivative investment. The Company's derivative activities and exposure to derivative contracts are classified by the following primary underlying risks: foreign currency exchange rate, credit, and equity price. In addition to its primary underlying risks, the Company is also subject to additional counterparty risk due to inability of its counterparties to meet the terms of their contracts.
Forward Currency Contracts
The Company enters into forwards for the purposes of managing foreign currency exposure.
Credit Default Swap
The Company uses credit default swap agreements on corporate or sovereign issues to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Company owns or has exposure to the referenced obligation) from time to time.
There was one credit default swap position (Brazilian Government) held as at 30 June 2025 (31 December 2024: one).
Total Return Swap
The Company entered into two fully funded total return swaps on 2 May 2011 and 18 April 2012. These swaps matured on 25 February 2020 and rolled over into a new swap agreement. New ISDA regulations enacted in 2019 require booking the total return swaps with cash collateral maintained vs fully funded swaps.
The new swap rolls on an annual basis. The swap was booked on 02 February 2024 and matured on 01 February 2025. A realised event occurred on the value of the swap as at 01 February 2025 of $1,306,978. The next maturity will occur on 01 February 2026. The value of the swap, exclusive of related cash collateral, as at 30 June 2025 is $1,679,761 (31 December 2024: ($126,749)) representing a change in market value of ($230,822) in the period since the 01 February 2024 maturity.
As at 30 June 2025 the net value of the swap and related cash collateral was $12,649,761 (31 December 2024: $10,843,311) (comprised of restricted cash collateral of $10,970,000 (31 December 2024: $10,970,000) and total return swap asset of $1,679,761 (31 December 2024: swap liability of ($126,689)), as reflected in the Unaudited Consolidated Statement of Assets and Liabilities. The underlying asset of the swaps is denominated in Brazilian Real and the foreign exchange exposure is hedged to offset any change in value in underlying asset due to the FX movements.
Derivative activity
For the period ended 30 June 2025 and 31 December 2024 the volume of the Company's derivative activities based on their notional amounts and number of contracts, categorised by primary underlying risk, are as follows:
30 JUNE 2025 (UNAUDITED) | LONG EXPOSURE | SHORT EXPOSURE | ||
Primary underlying risk | NOTIONAL AMOUNTS | NUMBER OF CONTRACTS | NOTIONAL AMOUNTS | NUMBER OF CONTRACTS |
Foreign exchange risk | ||||
Forward Currency Contracts | $52,392,214 | 23 | $56,331,985 | 48 |
Credit risk | ||||
Credit Default Swap | - | - | $9,971,000 | 1 |
Total Return Swap | $10,960,348 | 2 | - | - |
31 DECEMBER 2024 (AUDITED) | LONG EXPOSURE | SHORT EXPOSURE | ||
Primary underlying risk | NOTIONAL AMOUNTS | NUMBER OF CONTRACTS | NOTIONAL AMOUNTS | NUMBER OF CONTRACTS |
Foreign exchange risk | ||||
Forward Currency Contracts | $129,525,308 | 68 | $104,814,523 | 76 |
Credit risk | ||||
Credit Default Swap | - | 1 | $9,971,000 | - |
Total Return Swap | - | - | $10,960,348 | 2 |
The following tables show, as at 30 June 2025 and 31 December 2024, the fair value amounts of derivative contracts included in the Unaudited Consolidated Statement of Assets and Liabilities, categorised by primary underlying risk. Balances are presented on a gross basis prior to application of the impact of counterparty and collateral netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into account the effects of master netting arrangements and, where applicable, have been adjusted by the application of cash collateral receivables and payables with its counterparties. The tables also identify, as at 30 June 2025 and 31 December 2024, the realised and unrealised gain and loss amounts included in the Unaudited Consolidated Statement of Operations, categorised by primary underlying risk:
30 JUNE 2025 (UNAUDITED) Primary underlying risk | Derivative Assets ($) | Derivative Liabilities ($) | Realised gain (loss) ($) | NET CHANGE IN Unrealised gain (loss) ($) |
Foreign currency exchange rate | ||||
Forward Currency Contracts | 65,973 | (2,447,756) | 1,234,554 | (4,830,394) |
Credit | ||||
Purchased protection | ||||
Credit Default Swap | - | (31,544) | (50,409) | (12,020) |
Total Return Swap | 1,679,761 | - | (1,306,978) | 1,806,448 |
31 DECEMBER 2024 (AUDITED) Primary underlying risk | Derivative Assets ($) | Derivative Liabilities ($) | Realised gain (loss) ($) | NET CHANGE IN Unrealised gain (loss) ($) |
Foreign currency exchange rate | ||||
Forward Currency Contracts | 2,459,931 | (11,319) | (32,722) | 3,975,946 |
Credit | ||||
Purchased protection | ||||
Credit Default Swap | - | (19,525) | (48,132) | 43,882 |
Total Return Swap | - | (126,689) | - | (3,774,889) |
Offsetting assets and liabilities
Amounts due from and to brokers are presented on a net basis, by counterparty, to the extent the Company has the legal right to offset the recognised amounts and intends to settle on a net basis.
The Company presents on a net basis the fair value amounts recognised for OTC derivatives executed with the same counterparty under the same master netting agreement.
The Company is required to disclose the impact of offsetting assets and liabilities presented in the Unaudited Consolidated Statement of Assets and Liabilities to enable users of the Financial Statements to evaluate the effect or potential effect of netting arrangements on its financial position for recognised assets and liabilities.
These recognised assets and liabilities include financial instruments and derivative contracts that are either subject to an enforceable master netting arrangement or similar agreement or meet the following right of set off criteria:
· each of the two parties owes the other determinable amounts;
· the Company has the right to set off the amounts owed with the amounts owed by the other party;
· the Company intends to set off; and
· the Company's right of set off is enforceable at law.
The Company is subject to enforceable master netting agreements with its counterparties of credit default swap, the total return swaps and foreign currency exchange contracts. These agreements govern the terms of certain transactions and reduce the counterparty risk associated with relevant transactions by specifying offsetting mechanisms and collateral posting arrangements at pre‑arranged exposure levels.
Derivative activity
The following tables, as at 30 June 2025 and 31 December 2024, show the gross and net derivatives assets and liabilities by contract type and amount for those derivatives contracts for which netting is permissible.
30 JUNE 2025 (UNAUDITED)
(EXPRESSED IN US DOLLARS)
AMOUNTS NOT OFFSET IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES |
| |||||
DESCRIPTION | GROSS AMOUNTS OF RECOGNISED ASSETS | GROSS AMOUNTS OFFSET IN THE CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | NET AMOUNTS OF RECOGNISED ASSETS PRESENTED IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES | FINANCIAL INSTRUMENTS (POLICY ELECTION) | FINANCIAL COLLATERAL RECEIVED1 | NET AMOUNT |
Forward currency contracts | 65,973 | - | 65,973 | (65,973) | - | - |
Total return swaps | 1,679,761 | - | 1,679,761 | - | - | 1,679,761 |
Total | 1,745,734 | - | 1,745,734 | (65,973) | - | 1,679,761 |
AMOUNTS NOT OFFSET IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES |
| |||||
DESCRIPTION | GROSS AMOUNTS OF RECOGNISED LIABILITIES | GROSS AMOUNTS OFFSET IN THE CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | NET AMOUNTS OF RECOGNISED ASSETS PRESENTED IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES | FINANCIAL INSTRUMENTS (POLICY ELECTION) | FINANCIAL COLLATERAL PLEDGED1 | NET AMOUNT |
Forward currency contracts | (2,447,756) | - | (2,447,756) | 65,973 | 1,431,070 | (950,713) |
Credit default swap | (31,544) | - | (31,544) | - | - | (31,544) |
Total | (2,479,300) | - | (2,479,300) | 65,973 | 1,431,070 | (982,257) |
1 The amount netted off is a portion of the total collateral as per the Unaudited Consolidated Statement of Assets and Liabilities.
The following table, as at 31 December 2024, show the gross and net derivatives assets and liabilities by contract type and amount for those derivatives contracts for which netting is permissible.
30 DECEMBER 2024 (AUDITED)
(EXPRESSED IN US DOLLARS)
AMOUNTS NOT OFFSET IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES |
| |||||
DESCRIPTION | GROSS AMOUNTS OF RECOGNISED ASSETS | GROSS AMOUNTS OFFSET IN THE CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | NET AMOUNTS OF RECOGNISED ASSETS PRESENTED IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES | FINANCIAL INSTRUMENTS (POLICY ELECTION) | FINANCIAL COLLATERAL RECEIVED1 | NET AMOUNT |
Forward currency contracts | 2,459,931 | - | 2,459,931 | (11,319) | - | 2,448,612 |
Total | 2,459,931 | - | 2,459,931 | (11,319) | - | 2,448,612 |
AMOUNTS NOT OFFSET IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES |
| |||||
DESCRIPTION | GROSS AMOUNTS OF RECOGNISED LIABILITIES | GROSS AMOUNTS OFFSET IN THE CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | NET AMOUNTS OF RECOGNISED ASSETS PRESENTED IN THE CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES | FINANCIAL INSTRUMENTS (POLICY ELECTION) | FINANCIAL COLLATERAL PLEDGED1 | NET AMOUNT |
Forward currency contracts | (11,319) | - | (11,319) | 11,319 | - | - |
Total return swaps | (126,689) | - | (126,689) | - | 10,843,311 | 10,716,622 |
Credit default swap | (19,525) | - | (19,525) | - | - | (19,525) |
Total | (157,533) | - | (157,533) | 11,319 | 10,843,311 | 10,697,097 |
1 The amount netted off is a portion of the total collateral as per the Consolidated Statement of Assets and Liabilities.
NOTE 4 - RISK FACTORS
The Company's investments are subject to various risk factors including market and credit risk, interest rate and foreign exchange risk, and the risks associated with investing in private securities. Investments in private securities and partnerships are illiquid, and there can be no assurances that the Company will be able to realise the value of such investments in a timely manner. Additionally, the Company's investments may be highly concentrated in certain industries. Non-US dollar denominated investments may result in foreign exchange losses caused by devaluations and exchange rate fluctuations. In addition, consequences of political, social, economic, diplomatic changes or public health condition may have disruptive effects on market prices or fair valuations of foreign investments.
Market Risk
Market risk is the potential for changes in the value of investments. Categories of market risk include, but are not limited to, interest rates. Interest rate risks primarily result from exposures to changes in the level, slope and curvature of the yield curve, the volatility of interest rates and credit spreads. Details of the Company's investment Portfolio as at 30 June 2025 and 31 December 2024 are disclosed in the Unaudited Consolidated Condensed Schedule of Investments. Each separate investment exceeding 5% of net assets is disclosed separately.
Credit Risk
The Company may invest in a range of corporate and other bonds and other credit sensitive securities. Until such investments are sold or are paid in full at maturity, the Company is exposed to credit risk relating to whether the issuer will meet its obligations when the securities fall due. Distressed debt securities by nature are securities in companies which are in default or are heading into default and will expose the Company to a higher than normal amount of credit risk.
The Company may invest a relatively large percentage of its assets in issuers located in a single country, a small number of countries, or a particular geographic region. As a result, the Company's performance may be closely aligned with the market, currency or economic, political or regulatory conditions and developments in those countries or that region, and could be more volatile than the performance of more geographically diversified investments. Refer to the Unaudited Consolidated Condensed Schedules of Investments on pages 26 to 33 for concentration of credit risk.
The Company maintains positions in a variety of securities, derivative financial instruments and cash and cash equivalents in accordance with its investment strategy and guidelines. The Company's trading activities expose the Company to counterparty credit risk from brokers, dealers and other financial institutions (collectively, "counterparties") with which it transacts business. "Counterparty credit risk" is the risk that a counterparty to a trade will fail to meet an obligation that it has entered into with the Company, resulting in a financial loss to the Company. The Company's policy with respect to counterparty credit risk is to minimise its exposure to counterparties with perceived higher risk of default by dealing only with counterparties that meet the credit standards set out by the Investment Manager.
All the Company's cash and investment assets other than derivative financial instruments are held by the Custodian. The Custodian segregates the assets of the Company from the Custodian's assets and other Custodian clients. Management believes the risk is low with respect to any losses as a result of this concentration. The Company conducts its trading activities with respect to non-derivative positions with a number of counterparties. Counterparty credit risk borne by these transactions is mitigated by trading with multiple counterparties.
In addition, the Company may trade in OTC derivative instruments and in derivative instruments which trade on exchanges with generally a limited number of counterparties and as a consequence the Company is subject to counterparty credit risk related to the potential inability of counterparties to these derivative transactions to perform their obligations to the Company. The Company's exposure to counterparty credit risk associated with counterparty non-performance is generally limited to the fair value (derivative assets and liabilities) of OTC derivatives reported as net assets, net of collateral received or paid, pursuant to agreements with each counterparty. The Investment Manager attempts to reduce the counterparty credit risk of the Company by establishing certain credit terms in its International Swaps and Derivatives Association (ISDA) Master Agreements (with netting terms) with counterparties, and through credit policies and monitoring procedures. Under ISDA Master Agreements in certain circumstances (e.g. when a credit event such as a default occurs) all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is due or payable in settlement of all transactions. The Company receives and gives collateral in the form of cash and marketable securities and it is subject to the ISDA Master Agreement Credit Support Annex. This means that securities received/given as collateral can be pledged or sold during the term of the transaction. The terms also give each party the right to terminate the related transactions on the other party's failure to post collateral. Exchange-traded derivatives generally involve less counterparty exposure because of the margin requirements of the individual exchanges.
Generally, these contracts can be closed out at the discretion of the Investment Manager and are governed by the futures and options clearing agreements signed with the future commission merchants ("FCMs"). FCMs have capital requirements intended to assure that they have sufficient capital to protect their customers in the event of any inadequacy in customer funds arising from the default of one or more customers, adverse market conditions, or for any other reason. The credit risk relating to derivatives is detailed further in Note 3.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as and when these fall due.
Liquidity risk is managed by the Investment Manager so as to ensure that the Company maintains sufficient working capital in cash or near cash form so as to be able to meet the Company's ongoing requirements as these are budgeted for.
Other Risks
Legal, tax and regulatory changes could occur during the term of the Company that may adversely affect the Company. The regulatory environment for alternative investment vehicles is evolving, and changes in the regulation of alternative investment vehicles may adversely affect the value of investments held by the Company or the ability of the Company to pursue its trading strategies.
The impact of these risks can have a substantial impact on the valuation and ultimately the realisation of assets.
Market disruptions associated with current geopolitical events have had a global impact, and uncertainty exists as to their implications. Such disruptions can potentially adversely affect the assets, and thus the performance, of the Company. The Board continues to monitor this situation.
NOTE 5 - SHARE CAPITAL
The Company's authorised share capital consists of:
10,000 Class A Shares authorised, of par value $1 each (which carry no voting rights); and, an unlimited number of shares of no par value which may, upon issue, be designated as Ordinary Shares, Extended Life Shares or New Global Shares and Subscription Shares (each of which carry voting rights) or Capital Distribution Shares.
The issued share capital of the Company consists of Ordinary Shares, Class A Shares and Extended Life Shares, all denominated in US dollars, and New Global Shares denominated in Pounds Sterling. Shareholders of Ordinary Shares, Extended Life Shares and New Global Shares have the right to attend and vote at any general meeting of the Company. Class A shareholders do not have the right to attend and vote at a general meeting of the Company save where there are no other shares of the Company in issue.
The Class A Shares are held by Suntera Trustees (Guernsey) Limited (formerly named Carey Trustees Limited) (the "Trustee"), pursuant to a Purpose Trust established under Guernsey law. Under the terms of the NBDDIF Purpose Trust Deed, the Trustee holds the Class A Shares for the purpose of exercising the right to receive notice of general meetings of the Company but the Trustee shall only have the right to attend and vote at general meetings of the Company when there are no other shares of the Company in issue.
The original investment period expired on 10 June 2013 and a proposal was made to Ordinary Shareholders to extend the investment period by 21 months to 31 March 2015. A vote was held at a class meeting of shareholders on 8 April 2013 where the majority of shareholders voted in favour of the proposed extension.
Following this meeting and with the Ordinary Shareholders approval of the extension, a new class, the Extended Life Shares, was created and the Extended Life Shares were issued to 72% of initial Investors who elected to convert their Ordinary Shares to Extended Life Shares. The rest of investors remain invested on the basis of the existing investment period.
The New Global Share Class was created in March 2014 and its investment period ended on 31 March 2017.
As at 30 June 2025, the Company had the following number of shares in issue:
Issued and fully paid up | 30 JUNE 2025 (UNAUDITED) | 31 December 2024 (AUDITED) |
Class A Shares | 2 | 2 |
Ordinary Share Class of no par value (Nil in treasury; 2024: Nil) | 15,382,770 | 15,382,770 |
Extended Life Share Class of no par value (Nil in treasury; 2024: Nil) | 38,731,819 | 38,731,819 |
New Global Share Class of no par value (Nil in treasury; 2024: Nil) | 22,750,376 | 25,123,440 |
Reconciliation of the number of shares in issue in each class (excluding Class A) as at 30 June 2025:
Ordinary Shares | Extended Life Shares | New Global Shares | Total | |
Balance as at 31 December 2024 | 15,382,770 | 38,731,819 | 25,123,440 | 79,238,029 |
Shares redeemed during the period | - |
| (2,373,064) | (2,373,064) |
Buybacks (Shares repurchased) | - | - | - | - |
Balance as at 30 June 20251 | 15,382,770 | 38,731,819 | 22,750,376 | 76,864,965 |
1 Balance of issued shares used to calculate NAV
Reconciliation of the number of shares in issue in each class (excluding Class A) as at 31 December 2024:
Ordinary Shares | Extended Life Shares | New Global Shares | Total | |
Balance as at 31 December 2023 | 15,382,770 | 44,234,790 | 27,821,698 | 87,439,258 |
Shares redeemed during the year | - | (5,502,971) | (2,698,258) | (8,201,229) |
Buybacks (Shares repurchased) | - | - | - | - |
Balance as at 31 December 20241 | 15,382,770 | 38,731,819 | 25,123,440 | 79,238,029 |
1 Balance of issued shares used to calculate NAV
Redemption Activity
Set out below are details of the capital returns by way of compulsory partial redemptions approved during the period/year ended 30 June 2025 and 31 December 2024.
30 JUNE 2025 (UNAUDITED) |
Ordinary Share Class |
Extended Life Share Class |
New Global Share Class | ||||||
REDEMPTION Amount | Number of Shares | Per Share Amount | REDEMPTION Amount | Number of Shares | Per Share Amount | REDEMPTION Amount | Number of Shares | Per Share Amount | |
25 March 2025 | - | - | - | - | - | - | £1,212,873 | 2,373,064 | £0.5111 |
- | - | - | - | - | - | £1,212,873 | 2,373,064 | £0.5111 | |
31 DECEMBER 2024 (AUDITED) |
Ordinary Share Class |
Extended Life Share Class |
New Global Share Class | ||||||
REDEMPTION Amount | Number of Shares | Per Share Amount | REDEMPTION Amount | Number of Shares | Per Share Amount | REDEMPTION Amount | Number of Shares | Per Share Amount | |
26 November 2024 | - | - | - | $5,491,965 | 5,502,971 | $0.9980 | £1,493,486 | 2,698,258 | £0.5535 |
| - | - | - | $5,491,965 | 5,502,971 | $0.9980 | £1,493,486 | 2,698,258 | £0.5535 |
Distributions
Set out below are details of the distributions by way of dividend approved during the period/year ended 30 June 2025 and 31 December 2024.
| Ordinary Share Class | Extended Life Share Class | New Global Share Class | |||||||
Date | Distribution Amount | Number of Shares | Per Share Amount | Distribution Amount | Number of Shares | Per Share Amount | Distribution Amount | Number of Shares | Per Share Amount | |
20 March 2025 | - | - | - | - | - | - | £796,413 | 25,123,440 | £0.0317 | |
- | - | - | - | - | - | £796,413 | 25,123,440 | £0.0317 | ||
| Ordinary Share Class | Extended Life Share Class | New Global Share Class | |||||||
Date | Distribution Amount | Number of Shares | Per Share Amount | Distribution Amount | Number of Shares | Per Share Amount | Distribution Amount | Number of Shares | Per Share Amount | |
21 November 2024 | - | - | - | $654,675 | 44,234,786 | $0.0148 | £612,077 | 27,821,694 | £0.0220 | |
- | - | - | $654,675 | 44,234,786 | $0.0148 | £612,077 | 27,821,694 | £0.0220 | ||
Buybacks
No shares were repurchased by the Company during either the period/year ended 30 June 2025 and 31 December 2024.
NOTE 6 - MATERIAL AGREEMENTS AND RELATED PARTY TRANSACTIONS
Investment Management Agreement ("IMA")
The Board is responsible for managing the business affairs of the Company but delegates certain functions to the Investment Manager under an IMA dated 9 June 2010 (as amended).
On 17 July 2014, the Company, the Manager and the AIFM made certain classificatory amendments to their contractual arrangements for the purposes of the AIFM Directive. The Sub-Investment Management Agreement was terminated on 17 July 2014 and Neuberger Berman Investment Advisers LLC (formerly Neuberger Berman Fixed Income LLC), which was the Sub-Investment Manager, was appointed as the AIFM per the amended and restated IMA dated 17 July 2014. Under this agreement, the AIFM is responsible for risk management and day-to-day discretionary management of the Company's Portfolios (including uninvested cash). The risk management and discretionary portfolio management functions are performed independently of each other within the AIFM structure. The AIFM is not required to, and generally will not, submit individual investment decisions for approval by the Board. The Manager, Neuberger Berman Europe Limited, was appointed under the same IMA to provide, amongst other things, certain administrative services to the Company. On 31 December 2017 the Company entered into an Amendment Agreement amending the IMA. On the 30 January 2023 the Company entered into an Amendment Agreement amending the IMA for data protection purposes to note the obligation on the recipient UK investment manager to comply with the new SCCs in transferring personal data to the US AIFM.
Per the IMA and in relation to the Ordinary Shares and Extended Life Shares, the Manager was entitled to a management fee, which shall be accrued daily, and was payable monthly in arrears, at a rate of 0.125% per month of the respective NAVs of the Ordinary Share and Extended Life Share classes. Soft commissions were not used.
Per the IMA and in relation to the New Global Shares, the Manager was entitled to a management fee, which accrued daily, and was payable monthly in arrears, at a rate of 0.125% per month of the NAV of the New Global Share Class (excluding, until such time as the New Global Share Class had become 85% invested, any cash balances (or cash equivalents)). The 85% threshold was crossed on 16 June 2015 and from such date the Company was charged 0.125% per month on the NAV of the New Global Share Class.
Effective 18 March 2021, the Investment Manager had waived its entitlement to all fees from the Company. Accordingly, there was no management fees expensed in the period or the preceding financial year nor were any fees outstanding at either 30 June 2025 or 31 December 2024.
Administration, Company Secretarial and Custody Agreements
Effective 1 March 2015, the Company entered into an Administration and Sub-Administration Agreement with U.S. Bank Global Fund Services (Guernsey) Limited and U.S. Bank Global Fund Services (Ireland) Limited, a wholly-owned subsidiary of U.S. Bancorp (the "Administration Agreement"). Under the terms of the Administration Agreement, Sub-Administration services are delegated to U.S. Bank Global Fund Services (Ireland) Limited (the "Sub-Administrator"). The Sub-Administration Service Level Agreement was amended and approved on 21 February 2018.
The Sub-Administrator is responsible for the day-to-day administration of the Company (including but not limited to the calculation and publication of the estimated daily NAV).
Under the terms of the Administration Agreement, the Sub-Administrator is entitled to a fee of 0.09% for the first $500m of net asset value, 0.08% for the next $500m and 0.07% for any remaining balance, accrued daily and paid monthly in arrears and subject to an annual minimum of $100,000.
Effective 28 February 2015, the Company entered into a Custody Agreement with U.S. Bank National Association (the "Custodian") to provide loan administration and custody services to the Company. Under the terms of the Custody Agreement the Custodian is entitled to an annual fee of 0.025% of net asset value with a minimum annual fee of $25,000.
Effective 20 June 2017, Suntera (Guernsey) Limited (formerly named Carey Commercial Limited) was appointed the Company Secretary. The Company Secretary is entitled to an annual fee of £76,850 plus fees for ad-hoc board meetings and additional services.
For the period ended 30 June 2025, the administration fee expense was $42,423 (30 June 2024: $42,918), the secretarial fee was $70,314 of which $Nil1 was in relation to the administration of the ongoing buyback programme, (30 June 2024: $58,6711) and the loan administration and custody fee expense was $9,9521 (30 June 2024: $14,9101). At 30 June 2025, the administration fee payable is $6,6681 (31 December 2024: $6,9831), the secretarial fee payable is $29,8541 (31 December 2024: $29,4411) and the loan administration and custody fee payable is $6,5481 (31 December 2024: $9,5001).
1 Amounts are included under Accrued expenses and other liabilities in the Unaudited Consolidated Statement of Assets and Liabilities and Unaudited Consolidated Statement of Operations
Directors' Remuneration and Other Interests
The Directors are related parties and are remunerated for their services at a fee of $45,000 plus £10,000 each per annum ($60,000 plus £10,000 for the Chairman, $50,000 plus £10,000 for the Chairman of the Audit Committee). For the period ended 30 June 2025, the Directors' fees and travel expenses amounted to $98,984 (30 June 2024: $97,550). Michael J. Holmberg, the non-independent Director, has waived the fees for his services as a Director. There were no other related interests for the period ended 30 June 2025.
The Company has not set any requirements or guidelines for Directors to own shares in the Company. The beneficial interests of the Directors and their connected persons in the Company's shares as at 30 June 2025 are shown in the table below:
Director | No. of Ordinary Shares | No. of Extended Life Shares | No. of New Global Shares | Total No. of Shares |
John Hallam | 35,468 | 27,362 | 62,830 | |
Michael Holmberg | 15,661 | 28,607 | 44,268 | |
Christopher Legge | ||||
Stephen Vakil | 14,927 | 14,927 |
NOTE 7 - FINANCIAL HIGHLIGHTS
Ordinary Shares | Extended Life Shares | New Global Shares | Ordinary Shares | Extended Life Shares | New Global Shares | |
($) | ($) | (£) | ($) | ($) | (£) | |
Per share operating performance | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) |
Net asset value per share at beginning of the period/year | 0.7557 | 0.9271 | 0.5073 | 0.8071 | 1.0312 | 0.6239 |
Impact of capital distribution | - | - | (0.0031) | - | - | - |
Impact of dividend distribution | - | - | (0.0334) | - | - | - |
Income from investment operations 1 | ||||||
Net investment income | 0.0001 | 0.0007 | 0.0059 | 0.0004 | 0.0090 | 0.0122 |
Net realised and unrealised (loss)/gain from investments and foreign exchange | (0.0173) | (0.0282) | 0.0090 | (0.0332) | (0.0262) | (0.0313) |
(loss)/gain from investment operations | (0.0172) | (0.0275) | 0.0149 | (0.0328) | (0.0172) | (0.0191) |
Net asset value per share at end of the period/year2 | 0.7385 | 0.8996 | 0.4857 | 0.7743 | 1.0140 | 0.6048 |
1Weighted average number of shares outstanding was used for calculation.
2Each share classes net assets includes the underlying assets and liabilities directly attributable to the respective share class.
Ordinary Shares | Extended Life Shares | New Global Shares | Ordinary Shares | Extended Life Shares | New Global Shares | |
| ($) | ($) | (£) | ($) | ($) | (£) |
NAV Total return 2, 3 | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) | Period ended 30 june 2024 (UNAUDITED) |
NAV Total Return | (2.28%) | (2.97%) | (4.26%) | (4.06%) | (1.67%) | (3.06%) |
2 NAV Total Return is calculated for the Ordinary Shares, Extended Life Shares and New Global Shares only and is calculated based on movement in the NAV and does not reflect any movement in the market value of the shares. A shareholder's return may vary from these returns based on participation in new issues, the timing of capital transactions etc. It assumes that all income distributions of the Company, paid by way of dividend, were reinvested, without transaction costs. Class A shares are not presented as they are not profit participating shares.
3 An individual shareholder's return may vary from these returns based on the timing of the shareholder's subscriptions.
Ordinary Shares | Extended Life Shares | New Global Shares | Ordinary Shares | Extended Life Shares | New Global Shares | |||||||
($) | ($) | (£) | ($) | ($) | (£) | |||||||
Ratio to average net assets | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD Ended 30 JUNE 2025 (UNAUDITED) | PERIOD ENDED 30 June 2024 (Unaudited | PERIOD ENDED 30 June 2024 (Unaudited | PERIOD ENDED 30 June 2024 (Unaudited | ||||||
Net investment income | 0.03% | 0.16% | 2.41% | 0.11% | 1.76% | 4.00% | ||||||
Total expenses | (1.79%) | (1.97%) | (2.93%) | (1.28%) | (1.39%) | (2.90%) | ||||||
NOTE 8 - RECONCILIATION OF NET ASSET VALUE TO PUBLISHED NAV
In preparing the Financial Statements, there were adjustments relating to investment valuations. The impact of these adjustments on the NAV per Ordinary Share, Extended Life Share and New Global Share is detailed below:
Ordinary Share Class Net Assets ($) | Ordinary Share Class NAV per Share ($) | Extended Life Share Class Net Assets ($) | Extended Life Share Class NAV per Share ($) | New Global Share Class Net Assets (£) | New Global Share Class NAV per Share (£) | |
Published net assets as at 30 June 2025 | 10,937,660 | 0.711 | 33,638,548 | 0.8685 | 10,944,281 | 0.4811 |
Valuation adjustments | 421,946 | 0.0275 | 1,204,173 | 0.0311 | 105,455 | 0.0046 |
Net assets per Unaudited Consolidated Financial Statements | 11,359,606 | 0.7385 | 34,842,721 | 0.8996 | 11,049,736 | 0.4857 |
Ordinary Share Class Net Assets ($) | Ordinary Share Class NAV per Share ($) | Extended Life Share Class Net Assets ($) | Extended Life Share Class NAV per Share ($) | New Global Share Class Net Assets (£) | New Global Share Class NAV per Share (£) | |
Published net assets as at 31 December 2024 | 12,237,190 | 0.7955 | 38,372,870 | 0.9907 | 13,478,756 | 0.5365 |
Valuation adjustments | (613,076) | (0.0398) | (2,465,260) | (0.0636) | (732,397) | (0.0292) |
Net assets per Consolidated Financial Statements | 11,624,114 | 0.7557 | 35,907,610 | 0.9271 | 12,746,359 | 0.5073 |
NOTE 9 - SUBSEQUENT EVENTS
The Directors have evaluated subsequent events up to 21 August 2025, which is the date that the financial statements were available to be issued.
There are no further items that require disclosure or adjustment to Financial Statements.
ADDITIONAL INFORMATION | Contact Details |
Contact Details
Directors
John Hallam (Chairman)
Michael Holmberg
Christopher Legge
Stephen Vakil
All c/o the Company's registered office.
Registered Office
1st & 2nd Floors, Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey
GY1 1EW
Company Secretary
Suntera (Guernsey) Limited (formerly named Carey Commercial Limited)
Alternative Investment Fund Manager
Neuberger Berman Investment Advisers LLC
Manager
Neuberger Berman Europe Limited
Custodian and Principal Bankers
US Bank National Association
Designated Administrator
U.S. Bank Global Fund Services (Guernsey) Limited
Independent Auditor
KPMG Channel Islands Limited
Sub-Administrator
U.S. Bank Global Fund Services (Ireland) Limited
Financial Adviser and Corporate Broker
Jefferies International Limited
Solicitors to the Company (as to English law and U.S. securities law)
Herbert Smith Freehills Kramer
Advocates to the Company (as to Guernsey law)
Carey Olsen
Registrar
Link Market Services (Guernsey) Limited
UK Transfer Agent
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
United Kingdom
Shareholders holding shares directly and not through a broker, saving scheme or ISA and have queries in relation to their shareholdings should contact the Registrar on +44 (0)371 664 0445. (Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9 a.m. to 5:30 p.m. (excluding bank holidays)). Shareholders can also access their details via the Registrar's website:
www.signalshares.com.
Full contact details of the Company's advisers and Manager can be found on the Company's website.
Related Shares:
Nb DistressedNb Distres RedNb Distressed X