Alternative Liq Regulatory News (ALF)

ALTERNATIVE LIQUIDITY FUND LIMITED

Registered in Guernsey - Number 60552

LEI NUMBER 213800R5CHD76J3LU713

Registered Office:

Sarnia House, Le Truchot,

St Peter Port, Guernsey, GY1 1GR

23 September 2022

PUBLICATION OF CIRCULAR

The Board of Alternative Liquidity Fund Limited (the "Company") announces that it has today published a circular (the "Circular") in respect of the proposed amendments to the Articles of Incorporation and Renewal of Share Buyback Authority. 

The Circular contains a notice convening an extraordinary general meeting of the Company to be held on Wednesday 19 October 2022 at 9.00 a.m. at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR.

The text of the Chairmans's letter, extracted from the Circular , is set out below.

A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website: https://alternativeliquidityfund.com/. We anticipate that a hard copy will be posted to all shareholders next week.

Terms used and not defined in this announcement bear the meaning given to them in the Circular published today.

1 Introduction

In April 2022, the Company announced that Waverton Investment Management Limited had decided not to proceed with the launch of a new share class. The Company also announced that it would continue its existing investment policy and realisation strategy and continue to be advised by Hindsight Solutions Limited (the "Investment Adviser") in the execution of that strategy. At the same time, the Board reported that it would examine the options available to the Company to accelerate the continuing managed wind-down of the current portfolio within a specified time frame and propose to and discuss with Shareholders adopting a designated realisation date with a view to the eventual formal winding-up of the Company.

The Board and the Investment Adviser have undertaken a detailed analysis of the Company's remaining portfolio, including the current and anticipated liquidity profile of the underlying investments and the likely timeline of that liquidity. As at 23 September 2022, approximately 87 per cent. of the portfolio's NAV is represented by three investments in Brazil, all controlled by Vision Brazil Investments. The Board currently expects that these investments will become liquid within the next 18 months.

As Shareholders are aware, the majority of the balance of the investment portfolio (in terms of line items) is held at or close to zero value. The Board believes that there is no material advantage to be gained in retaining these assets within the portfolio any longer. The transfer of such nil or de minimis value assets can take months if not longer to conclude, during which time the Company continues to incur costs. The Directors therefore propose to proceed with the sale of this part of the portfolio which has realistically little or no value and to complete that process prior to the Company entering formal voluntary liquidation. A small number of investments with modest value (for example, the Company's positions with Autonomy, Galileo, ABAX) may be included in this portfolio disposal in order to generate a wider number of third-party bids. To date, the Company has approached several secondary market potential buyers and has received indications of interest.

Accordingly, the Directors currently expect that most of the remaining portfolio will have been sold and the resultant cash distributed to Shareholders prior to the Company's anticipated formal orderly winding up. The appointment of a liquidator will therefore be to deal with any remaining assets, effect any final payments and to formally close the Company. Further detail on the appointment of a liquidator and to propose the requisite resolution to Shareholders for the winding-up of the Company will follow in due course.

Given the illiquid nature of the Company's remaining investments, it is difficult to provide certainty over the timeframe for realisation. However, the Board is aware that Shareholders will expect some guidance on the expected timeline, and it is the Directors' current estimate, based on its analysis of the current and anticipated liquidity profile of the underlying investments, that the Company will be able to target a solvent voluntary liquidation date prior to 31 December 2023.

To enable the Company to reduce administrative burdens and, therefore, to enable the Company to make cost savings during the realisation process prior to the commencement of its eventual formal winding-up, the Board is proposing that certain amendments be made to the Articles to assist the Company in its management of future communications with Shareholders and in its dealings with untraced Shareholders and unclaimed dividends and other distributions.

There are several certificated Shareholders on the Register whom the Company has been unable to trace or contact. The Investment Adviser and the Registrar have spent considerable time over the past six years to trace and speak with Shareholders to update their contact details, to help them dematerialise their Shares, and to assist them to collect and bank un-cashed dividend cheques. Unfortunately, despite considerable endeavours, there remain approximately twenty certificated Shareholders that the Company has been unable to contact or trace. Although the Investment Adviser and Registrar will continue to try and resolve these issues and reach out to such Shareholders, for the Company to be able to achieve the intended date for the voluntary liquidation, the Board is proposing certain changes be made to the Articles to reduce the time periods following which unclaimed dividends and other distributions may be treated as forfeited and to give the Company increased flexibility to sell or purchase Shares held by an untraced Shareholder. A summary of all the changes proposed to the Articles is set out in paragraph 2 below.

The Board has always been conscious of the Company's running costs and as the portfolio becomes smaller and the work involved in the final stages of the Company's life starts to decrease, the Board will seek to reduce fees and service provider costs. The Board and Investment Adviser have examined the possibility of de-listing the Company immediately. However, the additional anti-money laundering and KYC-related costs involved substantially outweigh the exchange-related and regulatory listing fees and offer no significant costs savings.

The purpose of this document is to provide Shareholders with details of the Proposals, including the proposed amendments to the Articles. The notice convening the Extraordinary General Meeting at which resolutions will be proposed to adopt the amended articles as the new articles of incorporation of the Company and to renew the Company's authority to make purchase of its own shares is set out at the end of this document. This document also explains the reasons why the Board believes that the Resolutions are in the best interests of Shareholders as a whole.

2 Amendments to the Articles and renewal of share buyback authority

If Resolution 1 is passed at the EGM, the Articles will be amended to:

(i) reduce the time after which unclaimed dividends and other distributions shall be forfeited, and shall revert to the Company, from seven years after the date of payment, to six months;

(ii) reduce the time after which the Company may start to take steps to sell the Shares of an untraceable Shareholder, and record such Shareholder as a creditor of the Company in respect of such sale proceeds, from 12 years to six months and to provide that the proceeds of such sale shall be forfeited and will belong to the Company if no valid claim for such proceeds is received within six months of the date of sale;

(iii) provide the Company with an alternative process to deal with the Shares of an untraceable Shareholder, by providing that the Company is permitted, having taken certain steps prescribed by the Articles, to purchase those Shares at a price equal to the market bid price of the Shares at the time of purchase, and to provide that the aggregate purchase price payable for such Shares shall be forfeited and will belong to the Company if no valid claim for the same is received within six months of the date of purchase;

(iv) permit all future communications from the Company to Shareholders to be made by electronic means, unless notified otherwise by a Shareholder in writing.

(v) reflect the admission to trading of the Shares on the Specialist Fund Segment; and

(vi) update for changes in legislation.

A copy of the Articles (containing the full terms of the amendments proposed to be made) will be available at the venue for the EGM for at least 15 minutes prior to and during the meeting and are available during normal business hours (Saturdays, Sundays and public holidays excepted) at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH until the close of the EGM.

At the Company's annual general meeting held on 8 December 2021, Shareholders voted in favour of a resolution to authorise the Directors to make market purchases of Shares. That authority will expire at this year's annual general meeting. As explained above, one of the amendments proposed to be made to the Articles to deal with untraceable Shareholders is to provide a process for the Company to be able to buy-back those Shares. The Directors are proposing to renew the Company's share buyback authority at the EGM, with the authority to expire on 31 December 2023, to support the amendments being made to the Articles to deal with untraceable Shareholders in the period through to the eventual liquidation of the Company. Any Shares bought back pursuant to this authority may be cancelled or held in treasury.

3 Benefits associated with the Proposals

The Board believes that the Proposals offer the following benefits to Shareholders:

· Continuing a managed realisation of assets, including a sale of a substantial part of the portfolio, rather than placing the Company in liquidation immediately, is expected to enable the Company to reduce the eventual costs associated with a liquidation.

· The on-going costs and fees of the Company are expected to reduce during the realisation process as a result of the proposed changes to the Articles.

· Addressing Shareholder issues now should aid the liquidation process in both time and cost.

4 Risks associated with the Proposals

Although Shareholders are only being asked to vote on the proposed amendments to the Articles and to renew the Company's share buyback authority and not on the Proposals as a whole, Shareholders should still have regard to the following:

· There can be no guarantee that the Board will be able to realise a substantial part of the remaining portfolio within the indicated timeline or at all.

· At the point the Company enters voluntary liquidation, it is likely to be uncertain how long it will take until full realisation is achieved. On entering voluntary liquidation, it is expected that the Company will cease to maintain its admission to the Specialist Fund Segment, and Shareholders should thereafter no longer expect to be able to buy and sell Shares through the London Stock Exchange.

5 Recommendation

The Board considers that the Resolutions are in the best interests of Shareholders taken as a whole and accordingly unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting. The Directors who hold Shares intend to vote in favour of the Resolutions in respect of their own beneficial holdings amounting, in aggregate, to 100,000 Shares (representing approximately 0.07 per cent. of the Company's issued share capital as at the date of this document).

For further information, please contact:

Enquiries

Tim Gardner, Hindsight Solutions Limited

Tel. +44 7917 630 460

Email: timgardner@hindsightsolutions.co.uk

Website:   https://alternativeliquidityfund.com/

Sanne Fund Services (Guernsey) Limited

Telephone: (44) 1481 737600