A write-down on WPCT's largest asset Industrial Heat has left the trust in breach of its own borrowing limit, sending shares spiraling 7.6% during Monday's trading.
Woodford Investment Management’s spinout-focused Woodford Patient Capital Trust (WPCT) has breached its borrowing limit after it slashed the valuation of its largest investment, the Financial Times reported yesterday.
WPCT was forced to cut its controversial valuation of cold fusion energy technology company Industrial Heat on Monday to reflect delayed operational progress, bringing the total write-down on the business to 83% since September 2018, according to JPMorgan Cazenove estimates.
Industrial Heat’s valuation was increased by 357% to $918m during 2018 to reflect what it described as increased progress for its technology. Its losses had also narrowed that year to $5.6m from $15.7m in 2017, the FT said.
Shares in WPCT fell by 7.6% to £0.35 ($0.45) with the move during Monday’s trading, leaving the trust in breach of a commitment to keep the gearing ratio below 20% of its net asset value.
The setback comes as WPCT tries to survive the cataclysm that has done for Woodford Investment Management despite facing its own share of financial difficulties.
WPCT’s $143m overdraft loan facility with banking firm Northern Trust – exhausted to invest in stocks – has been reworked to include a higher interest rate and is due to expire in January 2020, although negotiations on an extension are underway.
The trust escaped the fate of Woodford Investment Management in October 2019 by sealing a rescue agreement with asset management firm Schroders, which will operate the fund as Schroder UK Public Private Trust from later this year.
