Keybridge Capital Limited

Media Releases

Quarterly Update
6 January 2012

  • Keybridge achieves investment realisations during the quarter of USD63.2 million
  • Corporate debt reduced from USD107 million to USD43.9 million
  • Forecast cash income expected to meet operating expenses and interest costs to June 2012
  • Discussions under way with Company's banks to refinance its remaining debt facility
  • Shipping asset class remains challenged

Investments Portfolio

Keybridge Capital currently is not undertaking new investment activity. The Company continues to manage its existing portfolio with the aim of bringing forward repayments, so as to reduce the Company's level of debt. Where this is not practical, the Company is seeking to protect the value of its investments as much as possible.

During the past 3 months to 31 December 2011, Keybridge has achieved significant realisations resulting in investment repayments totalling USD63.2 million, spread as follows:

  • USD47.3 million from the Company's aviation investments;
  • USD15.2 million from investments in the lending portfolio; and
  • USD0.7 million from shipping investments.

This means that since last balance date, the Company has achieved realisations and investment repayments which has reduced its corporate debt exposure from over USD107 million to USD43.9 million. These repayments, in aggregate, have been at levels at or above the Company's carrying values at 30 June 2011, with the material lending realisation achieving an outcome of USD14.7 million, a gain over book value of USD2.2 million. It is noted however that there remains a residual purchaser warranty liability on that realisation of up to USD1.6 million, which matures prior to financial year end.

As a result of these repayments and movements in foreign exchange rates (herein assumed at AUD1.00 = USD1.02 and EUR0.78), but before considering any possible changes in carrying values, the composition by asset class of Keybridge's remaining investment portfolio as at 31 December 2011 is approximately as follows:

% of Total

This asset portfolio supports the Company's remaining corporate debt exposure of USD43.9 million and for the first time since June 2009, the Company's forecast cash income from its investment portfolio is sufficient to meet its operating costs and interest obligations for the balance of this financial year.

The updated carrying value of all investments will be considered in finalising the Company's half year accounts to 31 December 2011. Most investments are performing as anticipated at the last balance date of 30 June 2011, the major exception being the shipping asset class which continues to underperform.

The demand for vessels in certain sectors, particularly tankers, is failing to keep pace with the number of new ships being built. Most shipping markets have seen a steady decline of charter rates and asset values during the course of 2011. The cash flow situation for many ship owners has started to become severely stressed, and the number of foreclosures by banks and bankruptcy filings by shipping companies has started to increase materially over the past few months. Coupled with the deteriorating liquidity position for many industry banks (most of whom are European based), 2012 looks like being an extremely challenging year for the global shipping industry.

Given these continuing downward pressures, it is likely that the Company's carrying values for these investments will be negatively affected.

Debt Facility

Following the material repayments achieved in the past 3 months, the outstanding principal amount under Keybridge's corporate debt facility is now USD43.9 million (AUD43.2 million). Under the terms of the debt facility, all interim repayment obligations have been satisfied. The debt facility matures on 2 June 2012, however the Company has already initiated discussions with its banks regarding the refinancing of the facility and is seeking to agree terms well ahead of this date.

Personnel / Board Directors

Since the last quarterly update, following the resignation of Mark Phillips in October 2011 as Managing Director, Mark Worrall, an Executive Director of the Company since May 2010 and a board member since September 2010, was appointed to the role of Managing Director. In addition, at the end of December 2011, Mr Nicholas Bolton was appointed to the Board as nominee of the Company's largest shareholder, Australian Style Group Pty Limited. The Board looks forward to working with Mr Bolton in continuing with its stated strategy, and to actively exploring all options for the future of the Company. This appointment is also part of the Board's recently advised renewal strategy.


As detailed above, since mid 2009, Keybridge has had a shortfall (albeit an ever decreasing one) between its operating income and its fixed commitments of bank interest and operating costs, resulting in operating losses being incurred. This shortfall has been more than accommodated to date from the cash proceeds raised from the realisation of investments.

For the remainder of this financial year, following the material reduction in outstanding debt over the past 6 months, and the further reductions in operating expenses achieved, the Company expects to achieve a break even operating cashflow position. That is, the Company's fixed commitments of interest and operating costs are expected to be met from operating income received (subject to the underlying obligors underpinning the income generated continuing to meet their contractual commitments). This is predominantly due to the fact that assets realised over the past 6 months have, in the main, not been delivering cash income, whereas the remaining portfolio is forecast to provide sufficient cash flow that will underpin the Company's operations.

The Company continues to only recognise cash income received and does not presently accrue any additional earnings on its investment portfolio.

Currency Exposure

The approximate currency breakdown of the Company's remaining assets and liabilities, prior to considering any changes in the carrying value of investments, is as follows:

US Dollars
Australian Dollars

This net foreign currency asset position means that the Company incurs translation losses when the Australian Dollar appreciates in value against the US Dollar and Euro. However, for the financial year to date to 31 December 2011, the Australian Dollar depreciated against the US Dollar, resulting in a small foreign exchange gain in this period.

Half Year Results

Keybridge expects to release its detailed financial results for the six months to 31 December 2011 on Tuesday, 14 February 2012.

Keybridge Capital is a financial services company that has invested in, or lent to, transactions which predominantly are in the core asset classes of property, aviation, shipping, finance receivables and infrastructure.


For further information, please contact:

Mark Worrall
Managing Director
Tel: +61 2 9321 9000