Digital 9 Infrastructure withdraws 2023 dividend target as balance sheet pressures mount

investmentweek.co.uk:

DGI9 has been grappling with funding problems in recent months, with growing concern among shareholders over the trust’s overstretched balance sheet.

In a stock exchange notice on Thursday (28 September), chair Phil Jordan said the high interest rate environment and the «critical importance» of prioritising liquidity and sustainable balance sheet management had compelled the board to make this decision. 

DGI9 has been grappling with funding problems in recent months, with growing concern among shareholders over the trust's overstretched balance sheet in light of a pipeline of considerable capital expenditure in coming years and the rising cost of debt. 

Options to resolve Digital 9 Infrastructure's 'material uncertainty' narrow as 'funding crisis' persists

The board said the higher interest rate environment had continued to impact the trust's liquidity and sustainable balance sheet management, despite the «strong» operating performance of its underlying businesses. 

«The investment manager believes a more conservative approach to capital allocation is required in order to enhance the company's medium-term liquidity and further accelerate the deleveraging of its balance sheet in the current high interest rate environment,» it said. 

At the end of June, DGI9 had £47m of unrestricted cash available and £18.8m remaining undrawn from its £375m revolving credit facility (RCF), excluding the accordion tranche of up to £125m. At 27 September, it had £30m of unrestricted cash available, with £11.3m remaining on the RCF.

The board and Triple Point, the investment manager, expected operating cash flow dividend cover to be «substantially achieved» by 31 December 2024. However, the trust's dividend policy may not be supported in the