Woodford Patient Capital plans to cut debt, considers share buybacks

Woodford Patient Capital said on Friday that it plans to cut debt, as it announced some board changes following talks with shareholders.

Chair Susan Searle said: "The dialogue we have had with shareholders has been thoughtful and constructive. The main areas of discussion for shareholders are consistent with the board's immediate priorities, notably: gearing levels, the share price discount to net asset value, valuations, board composition and the ongoing developments at the portfolio manager.

"As a result, the board is building on some of the immediate measures taken following the gating of the Woodford Equity Income Fund on 3 June 2019 and as the situation remains fluid, will use the additional controls in place while continuing to monitor and assess the situation as it evolves, to ensure the long-term interests of shareholders are protected. We will continue to update shareholders as appropriate."

The company, whose shares have been under pressure since the suspension of Neil Woodford's flagship Equity Income Fund, said it plans to cut gearing to below 10% from 16.8% within six months, and to be "generally operating ungeared" within 12 months.

"The intention thereafter is for gearing to be utilised at lower levels primarily for capital flexibility (including investments) with the intention for any such gearing to be reduced by realisations shortly thereafter," it said. Any draw down on the facility where the gearing exceeds 10% will require board approval.

Woodford also said that if its shares continue to trade at a "sustained and material" discount to net asset value, it will undertake share buybacks to mitigate the discount to NAV. Any share repurchase will be subject to the company's working capital requirements, the group having sufficient distributable reserves at that time and the amount of cash available to fund such purchases.

It also announced the appointment of Stephen Cohen - who led both investments teams and business units at Mercury Asset Management - as an independent non-executive director with immediate effect. He will become chair of the audit, risk and valuation committee.

Meanwhile, Carla Dobson will step down from the board after three years. Woodford said it was "actively engaging" in identifying a replacement for her, and looking to appoint a further independent non-executive director.

Searle said: "I am pleased to welcome Stephen to the board of WPCT. Stephen has deep asset management and investment trust experience and will be an important voice on the board at a critical time for WPCT."