LONDON (Alliance News) - BlackRock Emerging Europe PLC on Tuesday said it intends to commence liquidation proceedings in the near future, having fallen behind its benchmark in its most recent interim period.
For the six months to July 31, BlackRock Emerging Europe posted a 16.4% drop in net asset value on a total returns basis, while in US dollar terms its MSCI Emerging Markets Europe 10-40 Index benchmark fell only 13.4%.
As at July 31, the investor's net asset value per share had dropped 19% to 465.88 US cents from 574.75 cents on January 31.
The company made a pretax loss of USD32.9 million on ordinary activities, swinging from a USD14.0 million profit the year before. This was due to a USD37.4 million loss on investments, reversing its USD9.4 million gain the year before.
In May, the investor made a 100% cash exit offer to its shareholders, and received elections to exit from 60% of its shares, which would result in the company having assets of less than GBP50 million, below its minimum threshold for sustainability.
BlackRock Emerging Europe chose, therefore, not to proceed with the offer instead proposed a voluntary liquidation. The proposals for which, while they have not yet been published, are to allow shareholders to roll all or part of their holding into new C shares in BlackRock Frontiers Investment Trust PLC. A vote is to be held at a general meeting on or near November 15.
Chairman Neil England said that the market volatility of the most recent few months, while challenging, has provided "an excellent investment opportunity".
"Whilst the board regrets that the company will no longer be able to take advantage of these opportunities, it is delighted with the company's very strong performance record since BlackRock took over management in 2009 and the excellent returns delivered to shareholders," England said.
"Shareholders should note that the portfolio managers will continue to invest in accordance with the company's investment mandate until the reconstruction proposals are approved by shareholders. These proposals will be put to a shareholder vote at a General Meeting (expected to be held on or around 15 November 2018)," said Chairman Neil England.
Shares in BlackRock Emerging Europe were broadly flat at 327.99 pence per share.