AVA.L Regulatory News (AVA)

9 Oct 2006 17:28

Avanti Capital PLC09 October 2006 Avanti Capital plc Update Avanti Capital plc, ("the Company") the private equity company, is informing themarket today about its future management structure. Since the beginning of June 2006, the directors have been carrying out a reviewof the options open to the Company in relation to its future structure. Thecatalyst for this exercise was the making of a further loan of £2.5m to BarvestLimited prior to the restructuring exercise successfully implemented at the endof June 2006. As a result, the Company's cash resources now stand at £1.7m. Theboard had hoped that the PoNaNa business (as restructured) would be sold in therelative short-term, however, although the business is trading ahead offorecast, an offer at an acceptable level has not been forthcoming. The board considered amongst other options whether shareholders best interestswould be served by re-investing the proceeds from future realisations or whetherfurther funds for new investments should be raised by the Company by the issueof new shares. The review has now been completed with options open to theCompany having been considered and the board has concluded that the Companyshould now be regarded in the same way as a fund that has fully invested itscapital. Accordingly, the board has decided that the Company will not presently be makingany new investments, but will instead concentrate on maximising the value of theinvestments currently held. The Company will however provide financial supportto the existing portfolio. When realisations are made, the board currently intends to use the proceeds toreturn monies to shareholders in the most efficient manner available, initiallythrough purchases in the market by the Company of its own shares. Theimplementation of this policy will be subject to the Company having sufficientdistributable reserves to make such market purchases, the board having therequisite authority to make such purchases and the prevailing price of ordinaryshares available in the market at the relevant time. Once this route has beenexhausted, alternative methods will be considered and if in the best interestsof shareholders, pursued. In addition, it has been agreed that the structure under which the Company is tobe managed will be modified. This will result in a substantial reduction of theannual outgoings of the Company. In order to bring about this restructuring, it has been agreed that the serviceagreements of Richard Kleiner and Julian Fellerman will be terminated, severancepaid in respect of their respective contractual notice periods and that RichardKleiner and Julian Fellerman will surrender for nil consideration 833,332options over ordinary shares of the Company. These represent 9.8% of the issuedcapital of the Company. Richard Kleiner and Julian Fellerman will continue toserve as non-executive directors of the Company (for a nominal fee) withresponsibility for the day to day administrative affairs of the Company. At the same time the entire issued share capital of Avanti Partners Limited ("APL") (which will change its name) is being transferred to Richard Kleiner andJulian Fellerman for £50,000 in cash. This amount represents the net asset valueof APL at the date of the transfer. APL has no other assets. Futhermore, the Company has entered into a management agreement with APL underwhich APL will provide the Company with all of the functions currently carriedout by the management team in respect of the Company's portfolio. APL holds FSApermission to give regulated corporate finance advice. The executive directors,Richard Kleiner and Julian Fellerman are "approved persons" of APL. During theyear to 30 June 2006 (unaudited) APL made a loss of £8,600. The principal terms of the management agreement are that APL will provide all ofthe functions currently carried out by the management team in respect of theCompany's portfolio. APL will bear all of its internal overheads and be paid anannual management fee equal to 3% of the net asset value of the Company. Inaddition, APL has a carried interest by reference to the realisations achievedin relation to the assets. The threshold, after which the carried interestbecomes payable, is based on realisations of not less than £12.7m or 150 penceper share (based on the current issued share capital of the Company). There is ahurdle of 6% per annum, which is to protect the Company from the effect of timein relation to the realisation of the portfolio. Once realisations are achievedin excess of £12.7m, provided that the return to the Company would be at leastthat amount together with the hurdle, then in relation to any excess, APL willbe entitled to 25% of such excess up to £15.2m of realisations or 179 pence pershare. APL's share will be increased by 5% for each £2.5m in excess of £15.2m upto a maximum of 40% for realisations over £20.2m or 239 pence per share. In thisway APL is highly motivated to maximise realisations from the Company'sportfolio. Contact: Avanti Capital plc 020 7070 7070 Julian Fellerman, Joint CEO Richard Kleiner, Joint CEO This information is provided by RNS The company news service from the London Stock Exchange