LONDON (Alliance News) - Terra Capital PLC Monday revealed a deal with its largest shareholders to make a number of changes to its constitution and investment management arrangements, including a reduction in fees paid to its investment manager and a stronger focus on investing in frontier markets.
In a statement, Terra Capital said its investing policy will be amended to "more clearly focus" on investing in frontier markets, which are countries whose stock markets are less established than those in emerging markets.
The deal, reached in principle following discussions with the company's largest shareholders and investment manager Terra Partners Asset Management Ltd, will reduce management fees to 1.25% of the company's net asset value from 2.0%, while the level of performance fee that may become payable will be reduced to 12% of any increase in net asset value from 20%.
The change regarding the performance fees has been agreed provided that "any performance fee shall be payable only to the extent that the net asset value of the share exceeds the net asset value immediately following the net asset value per share when a performance fee was last paid".
The fee changes will take effect from January 2015.
The proposals also include amendments to the company's discount control policy, as well as changes under which shareholders will be offered an opportunity to exit their investment by way of tender offer or other restructurings instead of the current policy of convening an extraordinary general meeting of the company in 2017 to consider whether to allow the company to continue in its current form.
"If, in total, more than a to-be-determined percentage of the ordinary share capital elect for this option, the exit opportunity will not proceed and instead the company will be placed into liquidation," Terra Capital said in a statement.
The opportunity to exit will be offered in June 2018.
The proposals are subject to shareholder approval at an extraordinary general meeting. If any one proposal is rejected, then none of them will be implemented, it said.
Terra Capital shares were down 0.6% at USD0.870 on Monday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.