18 July 2023

DIGITAL 9 INFRASTRUCTURE PLC

("D9", the "Company" or, together with its subsidiaries, the "Group")

Company Update

The Board of Digital 9 Infrastructure plc (ticker: DGI9), a leading investor in the infrastructure of the internet, and the Company's Investment Manager, Triple Point Investment Management LLP ("Triple Point"), today provide an update on the Company's recent and ongoing activities.

Key Highlights

·    Considerable investor interest in equity syndication

·    Continued evaluation of additional complementary sources of growth capital

·    The Board notes the recent volatility in the Company's share price and maintains confidence in the Group's diversified portfolio which continues to perform well and in line with management expectations

·    Reaffirmed target aggregate dividend of 6.0 pence per Ordinary Share for the year ending 31 December 2023[1]

·    Operating cash flow dividend cover to be substantially achieved by 31 December 2024

·    Announcement of an upcoming investor presentation relating to its recent activities on 19 July 2023

1.         Equity Syndication Update

As announced previously on 5 June 2023, there is an ongoing competitive process to syndicate a stake in the Verne Global group of companies, including its operating sites in Iceland, Finland, and the United Kingdom to strategic capital partners (the "Syndication"). The Syndication has received considerable investor interest and the Investment Manager is targeting terms of the Syndication to be announced in Q3 2023. The Board remains focused on an outcome that will best enhance value for shareholders.

Further to the Syndication, the Board and the Investment Manager continue to evaluate other complementary sources of growth capital to reduce the Group's leverage position and support the significant growth capital expenditure pipeline of the Investee Companies. An update on these processes will follow their completion. The Board will consider the most suitable use of any additional capital at the time, taking account of efficient management of its costs (including reducing the revolving credit facility ("RCF") interest payments through the repayment of the RCF) as well as the financing of accretive portfolio growth opportunities.

2.         Discount Management

The Board notes the recent volatility in the Company's share price; however, maintains confidence in the Group's diversified portfolio which continues to perform well, in line with management expectations. The Board and the Investment Manager confirm that they are not aware of any portfolio specific factors that have led to the recent decline in the share price. 

The Board remains focused on narrowing the discount to NAV through a plan of comprehensive actions aimed at enhancing shareholder value which it believes will, in turn, support a sustainable recovery of the share price over the medium-term. There continues to be strong growth potential for the underlying investment portfolio, with the demand for infrastructure that underpins the digital economy continuing to increase.

The Board and Investment Manager routinely assess the ways to preserve and enhance shareholder value. Share buybacks will only be undertaken to reduce the discount to NAV where the Company has uncommitted cash, or cash in excess of scheduled dividend payments, taking into account the Company's working capital position and other relevant economic factors. Currently, the priority for cash is reinvestment into the Investee Companies to fulfil customer demand and create long-term opportunities for sustainable income and capital growth for the portfolio. The Board has therefore not undertaken share buybacks to date but will keep this situation under review.

As announced on 4 April 2023, the Investment Manager (including senior members of the Digital Infrastructure team) and the Directors of the Company purchased further shares in the Company, increasing their total holdings to 2,336,495 shares and 333,381 shares respectively. Given the ongoing Syndication, the Investment Manager and the Directors are currently subject to a closed period that prohibits further trading in the Company's shares at this time. The Board believes that the current share price does not reflect the inherent value and capital appreciation potential of the portfolio.

3.         Balance Sheet and Liquidity Position

In line with the Investment Manager's active asset management plan, several key initiatives to optimise the capital structure and balance sheet of the Group have been undertaken including:

·     As announced on 5 June 2023, signing a new $100 million (£80 million) green term loan debt facility with an uncommitted $50 million (£40 million) accordion provision for Verne Global Iceland. The facility will be used to help fund Verne Global's growth capital expenditure pipeline, partly repay outstanding shareholder loans owed by Verne Global to the Group and refinance Verne Global's existing bridge loan facility.

·    As announced on 21 June 2023, Arqiva entering into an inflation collar on inflation-linked swaps which applies to 100% of the RPI exposure of the swaps and caps the impact of RPI from 2024 at c.6.0% until the swaps' expiry in 2027, thereby significantly limiting the downside risk for Arqiva. The Company expects inflation to fall significantly by March 2024, and therefore expects the Arqiva Group operating cash flow for the period to June 2024 to materially increase. The collar has no impact on Arqiva's uncapped inflation-linked revenues.

·     As announced on 5 July 2023, the successful refinancing by the Arqiva Group of £262 million of its senior debt. The refinancing consisted of £345 million of oversubscribed new issuances, the proceeds of which will be used for repayment of existing facilities for £262 million and provide Arqiva with an additional £83 million for general corporate purposes.

·     The ongoing Syndication, which the Company expects will generate significant cash proceeds, will be used to partly pay down the RCF and fund growth capital expenditure in Investee Companies.

The Board reaffirms it is targeting an aggregate dividend of 6.0 pence per Ordinary Share for the year ending 31 December 2023[2]. The initiatives above are believed to be accretive to dividend cover, however for the avoidance of doubt, and as stated before, further capital being invested into the Investee Companies is not forecast to be required to achieve a future period dividend covered by the operating cash flow of the Investee Companies. This is expected to be substantially achieved by 31 December 2024 as a result of the continued maturity of the high-growth platforms (particularly data centres and subsea fibre), the reduction and ultimate expiry of the accretion payments made by Arqiva (in relation to its inflation linked swaps) and the future forecast IRU sales from the Company's investment in EMIC-1.

The Board has considered reducing the above target of 6.0 pence per Ordinary Share for the year ending 31 December 2023 and understands some shareholders would support such a reduction. However, on balance, the Board considers it appropriate to maintain the target given: the route to a covered dividend outlined above; the income requirements of many shareholders; and the relatively limited absolute sum that would be saved by reducing the 6.0 pence target.

At 30 June 2023, the Group had c.£78.3 million of cash available and also has £18.8 million remaining undrawn of the £375 million RCF, excluding the accordion tranche of up to £125 million.

4.         Geological Developments in the Reykjanes Peninsula

The Board notes the volcanic activity in Iceland on Monday 10 July 2023, whereby a new fissure vent was formed in the vicinity of the Keilir and Litli Hrútur mountains on the southern side of the Reykjanes peninsula.

Icelandic geologists expect that this event will be similar to the 2022 eruption, which resulted in a low-velocity flow, with no threat to infrastructure, buildings or people. As such, it is expected to pose little or no risk to Verne Iceland's facilities and operations, which continue to operate as normal. All roads, airports and methods of transport remain open and unaffected. In any case, Verne Iceland has in place local Natural Catastrophe insurance arranged with NTI, a mandatory insurance in Iceland.

5.         Investor Presentation - 19 July 2023 2:00 pm

The Company will be hosting a live webcast presentation relating to its recent activities at 2.00pm on 19 July 2023. The presentation will be provided by Ben Beaton and Arnaud Jaguin of the Investment Manager and is open to all existing and potential shareholders only. Questions can be submitted pre-event up until 9am on the day of the meeting or at any time during the live presentation. No material new information will be provided during the presentation.

Investors can sign up via: https://secure.emincote.com/client/digital9/companyupdate2023.

ENDS.

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

LEI: 213800OQLX64UNS38U92

About Digital 9 Infrastructure plc:

Digital 9 Infrastructure plc (DGI9) is an investment trust listed on the London Stock Exchange and a constitutent of the FTSE 250, with ticker DGI9. The Company invests in the infrastructure of the internet that underpins the world's digital economy: digital infrastructure.

The Investment Manager is Triple Point Investment Management LLP ("Triple Point") which is authorised and regulated by the Financial Conduct Authority, with extensive experience in infrastructure, real estate and private credit, while keeping ESG principles central to its business mission. Triple Point's Digital Infrastructure team has over $300 billion in digital infrastructure transaction experience and in-depth relationships across global tech and global telecoms companies.

The number 9 in Digital 9 Infrastructure comes from the UN Sustainable Development Goal 9, which focuses the fund on investments that increase connectivity globally and improve the sustainability of digital infrastructure. The assets DGI9 invests in typically comprise scalable platforms and technologies including (but not limited to) subsea fibre, data centres, terrestrial fibre and wireless networks.

From its IPO in March 2021 and subsequent capital raises, DGI9 has raised total equity of £905 million and a revolving credit facility of £375 million, invested into the following data centres, subsea fibre, terrestrial fibre and wireless networks:

·    Aqua Comms, a leading owner and operator of 20,000km of the most modern subsea fibre systems - the backbone of the internet - with a customer base comprising global tech and global telecommunications carriers (April 2021);

·    Verne Global Iceland, the leading Icelandic data centre platform, with 40MW of high intensity computing solutions in operation or development, powered by 100% baseload renewable power (September 2021);

·     EMIC-1, a partnership with Meta on a 10,000km fibre system from Europe to India (July 2021);

·    SeaEdge UK1, a data centre and landing station for the North Sea Connect subsea cable, part of the North Atlantic Loop subsea network, improving connectivity between the UK, Ireland, Scandinavia and North America (December 2021);

·    Elio Networks (previously Host Ireland) a leading enterprise broadband provider that owns and operates Fixed Wireless Access networks (April 2022);

·    Verne Global London (previously Volta), a premier data centre based in central London, providing 6MW retail co-location services (April 2022);

·    Verne Global Finland (previously Ficolo), a leading Finnish data centre and cloud infrastructure platform, with c.23MW of data centre capacity, powered by 100% renewable power and distributing surplus heat to district heating networks (July 2022).

·   Giggle, a revolutionary Fibre to the Home network providing affordable broadband to social housing in Glasgow (July 2022); and

·    Arqiva, the only UK national terrestrial television and radio broadcasting network in the United Kingdom - providing data, network and communications services, as well as a national IoT connectivity platform (October 2022).

The Company's Ordinary Shares were admitted to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange on 31 March 2021. It was admitted to the premium listing segment of the Official List of the Financial Conduct Authority and migrated to trading on the premium segment of the Main Market on 30 August 2022.

For more information on the Investment Manager please visit www.triplepoint.co.uk. For more information, please visit www.d9infrastructure.com.