NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

21 November 2024

Blackstone Loan Financing Limited

("BGLF" or the "Company")

Proposed Sale of Assets

The Board of BGLF is pleased to announce that the Company has entered into a conditional agreement for the sale of 100% of the Profit Participating Notes ("PPNs") issued by Blackstone Corporate Funding DAC ("BCF") and held by Blackstone / GSO Loan Financing (Luxembourg) S.à.r.l. ("LuxCo"), a wholly-owned subsidiary of the Company, to an acquisition vehicle (the "Purchaser") directly and/or indirectly owned by vehicles managed and/or advised by Blackstone Alternative Credit Advisors LP or an affiliate thereof ("Blackstone") (the "Proposed Transaction"), which, subject to shareholder approval and certain other conditions, would result in a significant acceleration and fulfilment of the Company's existing managed wind-down process.

Key highlights of the Proposed Transaction

·      Delivers on request for liquidity which was supported by over 99% of voting shareholders in September 2023.

·      Provides a significant acceleration of return of capital compared to the existing managed wind-down process. The existing modelling projects that, c.58% of remaining cashflows will not be returned until 2027 or later, and c.26% until 2029 or later.

·      Gross proceeds of €304 million from cash sale of 100% of the Company's PPNs to the Purchaser. The expected gross proceeds from the Proposed Transaction, inclusive of cash already received by BGLF shareholders since the managed wind-down was approved in September 2023, represents more than 130% of the last reported mark-to-market NAV and approximately 100% of the last reported mark-to-model NAV at the time the managed wind-down was approved¹.

·      Inclusive of the planned distribution of other net assets of BGLF (in part, via the dividend declared in October (to be paid on 6 December 2024) and the upcoming Second Redemption), the Proposed Transaction represents total value to shareholders of approximately €338 million (as illustrated in the table below). In total, at the current number of shares in issue, this represents:

o  €0.808 per share², as illustrated in the table below;

o  a premium of 15.8% to the three-month volume weighted average price of €0.6984 per share and a premium of 7.8% to the closing price of €0.7500 per share as at 20 November 2024 (being the latest practicable date prior to the publication of this announcement, the "Latest Practicable Date");

o  a premium of 30.4% to the volume-weighted average price since the Board's approval of the managed wind-down in September 2023; and

o  a discount of 9.9% to the Company's latest mark-to-model NAV of €0.8970 per share and a discount of 4.3% to the Company's latest mark-to-market NAV of €0.8451 per share¹.

·      The Proposed Transaction is conditional upon (among other matters) approval of shareholders by ordinary resolution at a general meeting of the Company. Whilst there is no legal or regulatory requirement that the Proposed Transaction be approved by shareholders, the Board has chosen to seek such approval as a matter of good corporate governance. Blackstone has agreed that its affiliated shareholders in BGLF will abstain from voting on the resolution to approve the Proposed Transaction.

·      The Board has consulted with certain of the Company's major shareholders on the Proposed Transaction. These shareholders (together with the Directors' own holdings), representing approximately 28 per cent. of voting rights in aggregate (and not including Blackstone-affiliated shareholders), have indicated their support for the Proposed Transaction.

·      Following the sale of the Company's PPNs to the Purchaser, the Company intends to distribute without delay a substantial portion of its remaining net assets in the form of a further compulsory redemption of shares. As soon as reasonably practicable thereafter, the Company will (subject to shareholder approval) be delisted from trading on the London Stock Exchange and any further residual net assets will be distributed and the Company will be dissolved.

In forming its commercial assessment of the Proposed Transaction, the Board has taken independent advice from a CLO valuation specialist and has been advised by Singer Capital Markets.

Steven Wilderspin, Chair of the Company, said:

"The proposed sale of all of the Company's PPNs accelerates and fulfils the current managed wind-down of BGLF, providing shareholders with an opportunity for immediate liquidity against an estimated timeline to 2030 for the redemption of the Company's underlying CLO investments held in BCF through the existing managed wind-down process, and a saving of associated ongoing running costs. It also provides an opportunity for shareholders to secure an attractive implied premium to current and historical share prices, and greater than 100% return of capital compared to the valuation at the time of the shareholder-mandated wind-down. We are also pleased with the level of indicative support from certain of our major shareholders, who were consulted prior to this announcement."

Notes:

1.     The Company's last reported mark-to-model NAV is €0.8970 per share as at 31 October 2024 and the last reported mark-to-market NAV is €0.8451 per share as at 30 September 2024

2.     Stated before transaction costs of €0.0064/share and costs associated with the dissolution of BGLF

Enquiries:

Principal Terms and Financial Effects of the Proposed Transaction

Under the terms of the Proposed Transaction, the total cash consideration to be paid for the acquisition of 100% of the Company's PPNs is calculated by reference to the PPN Purchase Value of €304 million, minus any cash distributions made from BCF to LuxCo ("PPN Distributions") between 30 September 2024 and the closing date for the Proposed Transaction. Such PPN Distributions will simultaneously (i) decrease the PPN Purchase Value by the euro-amount of PPN distributions, and (ii) increase the other net assets of BGLF by an equivalent offsetting amount. 

Accordingly, after accounting for other net assets of the Company and other planned shareholder distributions already announced, the total proceeds delivered to shareholders is expected to remain unchanged.

Notes:

1. Based on 417,959,768 shares in issue as at 31 October 2024.

2. Dividend declared 21 October 2024, with 31 October 2024 "ex" date and payment date of 6 December 2024.

3. Second Redemption announced 8 November 2024, with 2 December 2024 "ex" date and payment date on or around 19 December 2024.

4. Estimated other net assets of BGLF represents net assets that are outside of the PPNs, including undistributed cash, feeder-level cash, other receivables, and other payables at BGLF before transaction and BGLF dissolution costs.

5. Combined pro forma estimated value (per share) to BGLF shareholders from the dividend to be paid on 6 December 2024, the Second Redemption and the Proposed Transaction.

6. Stated before transaction costs of €0.0064/share and costs associated with the dissolution of BGLF.

As set out in the table above, the Company has received PPN Distributions of €42.7 million since 30 September 2024. In combination with existing cash at BGLF, this PPN Distribution will fund the €61.0 million Second Redemption that the Company announced on 8 November 2024 and expects to distribute to shareholders on or around 19 December 2024. The Company confirms that it intends to proceed with the Second Redemption irrespective of the announcement of the Proposed Transaction. The Company also confirms that it will pay a dividend for the third quarter of 2024 on 6 December 2024, as announced on 21 October 2024, from existing cash resources held by BGLF.

Following completion of the Proposed Transaction, the Company intends to distribute without delay a  substantial portion of its remaining net assets in the form of a further third compulsory redemption of shares, following which, as soon as reasonably practicable, the Company will (subject to shareholder approval) enter into a liquidation process under the Companies (Jersey) Law 1991, delist from trading on the London Stock Exchange, (subject to the approval of the Jersey Financial Services Commission) cease to be regulated as a collective investment fund under the Collective Investment Funds (Jersey) Law 1988 and distribute any further residual net assets withheld to complete the Company's liquidation process.

Background to and reasons for the Proposed Transaction

On 15 September 2023, BGLF shareholders approved the change in the Company's investment policy to implement a managed wind-down of the Company (the "Managed Wind-down"). The Managed Wind-down is being implemented by returning to shareholders in an orderly manner the net proceeds from the realisation of the Company's investment in BCF, through which the Company obtains its investment exposure. To date the Company has distributed €23 million and has announced that a further approximately €61 million will be distributed on or around 19 December 2024. Shareholders have in addition received dividend distributions since the Managed Wind-down of €50.9 million (inclusive of the dividend declared 21 October 2024, with 31 October 2024 "ex" date and payment date of 6 December 2024). As outlined in the latest Q3 2024 investor report (published on the Company's website), the BGLF indicative forward-looking CLO portfolio cashflow profile illustrates that BGLF's pro rata share of the underlying CLO portfolio held by BCF is not expected to be fully redeemed until 2030.

The Board acknowledges that shareholders voted for an orderly realisation of the Company's assets and considers the Proposed Transaction to be a significant acceleration and fulfilment of the Managed Wind-down process, which enables shareholders to receive cash at a substantially earlier stage, at a modest discount to the prevailing mark-to-market NAV.

In considering the structure of the Proposed Transaction, the Board considered the reasonableness of the price offered for accelerating cash distributions from the realisation process and concluded that the Proposed Transaction, with a combination of speed and certainty, delivers an attractive valuation to achieve shareholder objectives.

Furthermore, in assessing the merits of the Proposed Transaction the Board has reviewed the total ongoing costs of the existing Managed Wind-down to the Company over the anticipated period to 2030, which significantly exceeds the costs of implementing the Proposed Transaction.

After detailed negotiations and deliberation, the Board therefore believes that the Proposed Transaction is the most effective and valuable offer available to shareholders, which provides the certainty of execution and acceleration of value realisation for shareholders via a cash exit at a premium to the Company's historic share prices. In considering the proposed PPN Purchase Value, the Board took independent advice on the mark-to-market value of the Company's pro rata share of its underlying CLO portfolio.

The Board also consulted with certain of the Company's major shareholders on the Proposed Transaction. These shareholders (together with the Directors' own holdings), representing approximately 28 per cent. of voting rights in aggregate (and not including Blackstone-affiliated shareholders), have indicated their support for the Proposed Transaction.

Taking into consideration the reasons outlined above, among other points, the Board concluded that the Proposed Transaction represents the best means of maximising shareholder value on an expedited basis.

Information on the Purchaser

The Purchaser is a newly formed acquisition vehicle directly and/or indirectly owned by vehicles managed and/or advised by Blackstone Alternative Credit Advisors LP ("BACA") or an affiliate thereof.  BACA is an affiliate of Blackstone Inc. (NYSE: BX; www.blackstone.com), a global investment and advisory firm that was founded in 1985.  Through its different investment businesses, as of September 30, 2024, Blackstone has total assets under management of approximately U.S.$1.1 trillion, including approximately U.S.$345 billion in corporate private equity, approximately U.S.$325 billion in real estate funds, approximately U.S.$83 billion in multi-asset investing and approximately U.S.$355 billion in credit‐oriented and insurance strategies. Blackstone's asset management businesses include global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit & insurance, real assets, secondaries and hedge funds.

Shareholder approval

The disposal of the Company's PPNs falls within the scope of the Company's existing investment objective and policy as the Company's shareholders voted for the orderly realisation of the Company's assets on 15 September 2023.

Although the Proposed Transaction does not constitute a related party transaction for the purposes of the UK Listing Rules ("UKLRs") given that the Company is self-managed and does not have a investment manager (under the UKLR definition), the Board remains mindful that shareholders are likely to consider the Proposed Transaction as a related party transaction given the counterparty involved.  The Board's view is therefore that, in the interests of good governance, any proposal for the sale of the entirety of the Company's assets to Blackstone-affiliated entities should be subject to a shareholder vote on a voluntary basis (by a simple majority).  As is customary in such situations, Blackstone affiliated shareholders have also agreed to abstain from voting on the resolution to approve the Proposed Transaction.

For the avoidance of doubt, the Proposed Transaction does not contemplate an acquisition of or offer for the Company's shares, and so is not subject to the UK Takeover Code.

Expected timetable

The Company will publish a circular to set out full details of the Proposed Transaction and to convene general meetings to approve the Proposed Transaction and, subject to completion of the Proposed Transaction, the Company will be dissolved. It is anticipated that such shareholder documentation will be published by early December 2024, with the general meeting to approve the Proposed Transaction 14 days later and completion expected by the end of 2024. 

IMPORTANT NOTICES

This announcement contains inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014 (incorporated into UK law by virtue of the European Union (Withdrawal) Act 2018 as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310). Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain. The person responsible for arranging the release of this announcement on behalf of the Company is Jeremy Hamon of BNP Paribas S.A., Jersey Branch, Company Secretary.

This announcement is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction. Shareholders are advised to carefully read the circular setting out full details of the Proposed Transaction once it has been published.

The release, publication or distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities law of any such jurisdiction.

Blackstone Loan Financing Limited is a self-managed Jersey registered alternative investment fund, and is regulated by the Jersey Financial Services Commission as a 'listed fund' under the Collective Investment Funds (Jersey) Law 1988 (the "Funds Law") and the Jersey Listed Fund Guide published by the Jersey Financial Services Commission. The Jersey Financial Services Commission is protected by the Funds Law against liability arising from the discharge of its functions thereunder.  The Jersey Financial Services Commission has neither reviewed nor approved the issue of this announcement or the conditional sale and purchase agreement that is referred to herein.