Non-executive director on the board of Digital 9 Infrastructure, Gailina Liew, has stepped down just hours before an annual general meeting for the trust. The AGM is due to hold a vote on the re-election of its directors.
Andrew Zychowski has been hired as an independent non-executive director of the company, while chair of DG19 Eric Sanderson will take over Liew’s role as as chair of the nomination committee and chair of the management engagement committee on an interim basis.
Zychowski has over 30 years’ investment banking experience, having been the head of the investment companies corporate department at Canaccord Genuity Limited until June 2019. Prior to this, he was head of the investment companies corporate department at Dresdner Kleinwort.
Chair of DG19 Sanderson said: “We are pleased to welcome Andrew Zychowski to the board. I believe that the in-depth knowledge and experience developed from his extensive career in providing corporate finance advisory services to investment company boards will be invaluable to the company as it progresses through its managed wind-down process.
“I would also like to thank Gailina Liew for her significant time commitment to the Board since her appointment in July 2023.”
DG19 troubles
Liew’s resignation comes a month after the trust’s interim chair, Charlotte Valeur, stepped down last month. Eric Sanderson will also not be put forward for re-election, as his appointment took effect after notice of the company’s AGM.
Digital 9 Infrastructure has suffered a torrid time over the last two years, and is currently trading on a 71.5% discount to its net asset value, according to AIC data.
The trust’s debacle ramped up in September last year, after it scrapped its 6p a share dividend – despite insisting a few weeks previously that this payout was sustainable. Digital 9 had previously taken on a £375m revolving credit facility (RCF) – a loan which does not have a fixed number of payments – which had just £18.8m left available for the company’s use at the time of the announcement. However, the investment company said it had plans to raise capital, including the syndication of its investment in Verne Global, a UK-based data centre solutions provider.
By the end of September 2023, DG19 had removed its uncovered 6p dividend payout target, having had just £11.3m left on its RCF. It also hadn’t yet received an offer for its stake in Verne Global which it deemed to be sufficient.
Two weeks later, the trust’s board hired Goldman Sachs as lead adviser, in a bid to improve the performance of the ailing trust.
However, this proved controversial. Aqua Ventures Limited, which had a 3.5% shareholding in DG19, wrote an open letter to the trust’s board on 30 October 2023, having been given the support of some 20% of the trust’s shareholders to do so.
It stated concerns regarding Goldman Sachs’ appointment as adviser to the board, given the firm was also advising the trust’s investment manager, Triple Point, at that time. Other concerns raised included retaining Triple Point as the investment company’s manager, its “mishandling” of the trust’s “crown jewel” asset Verne Global, and its purchase of telecoms company Arqiva, which had become a “drag” on cashflow due to accretion payments despite being bought to bolster the trust’s yield.
By November last year, Digital 9 was forced to sell its holding in Verne for £456m to Ardian and launched a strategic review. The trust’s chair Phil Jordan and senior independent director Lisa Harrington stepped down in December, making way for Brett Miller and Richard Boleat to join the board as non-executive directors.
A wind-down of DG19 was announced at the end of January this year, less than three years after launch, while Triple Point was served a 12-month notice period as the trust’s investment manager.
Miller and Boleat left the trust’s board, after just three months of joining. Portfolio Adviser understands that a group of shareholders, led by CG Asset Management – which has a 2% stake in DG19 – has previously written to the board calling for the resignation of the legacy directors.
