25 Nov 2016 13:05
Better Capital PCC Limited (the "Company")
Notice of Extraordinary General Meetings and
Publication of Circular
The Company announces today that its Directors propose to (i) convert the Company's 2009 Shares to redeemable shares to facilitate future returns of capital to 2009 Shareholders; (ii) purchase certain 2012 Shares from Fund II by means of an off market purchase contract; and (iii) update the Company's memorandum and articles of incorporation and are convening extraordinary general meetings for the 2009 Shareholders, the 2012 Shareholders and Shareholders as a whole to consider and, if thought fit, approve such proposals.
Redemption Share Proposal
The proposal to convert the Company's 2009 Shares to redeemable shares is being made in order to increase the Board's flexibility in relation to future returns of capital to the 2009 Shareholders. Under the proposal the Board anticipates that any return of capital to 2009 Shareholders made under these new provisions, if they are approved, will be made, subject to cash being available for distribution, at or close to the last reported net asset value per share of the relevant class on the relevant redemption date less any costs of effecting the redemption. The Board will monitor the tax and regulatory landscape further before determining whether to recommend a similar conversion in respect of the 2012 Shares.
In accordance with the requirements of the Company's articles of incorporation, the Board will implement the conversion conditional upon (i) the passing of the ordinary resolution set out in Resolution 1 and the special resolution set out in Resolution 2 of the notice of the Extraordinary General Meeting of 2009 Shareholders and (ii) the passing of the ordinary resolution set out in Resolution 1 and the special resolution set out in Resolution 4 of the notice of the Extraordinary General Meeting of all Shareholders.
Buyback proposal
The Company has previously notified Shareholders that the Fund II GP has utilised excess liquidity in Fund II to purchase 2012 Shares in the market at an attractive discount to NAV. The notifications were made by market announcements on 22 April 2015, 2 December 2015, 24 June 2016, 29 June 2016 and 15 July 2016. As at the date of this announcement, Fund II holds 57,096,555 of the 2012 Shares from a total number of 346,600,520 of the 2012 Shares in issue as at the date of this notice. To date, the Fund II GP has reserved the right to sell the 2012 Shares held by Fund II into the market in the event that it determines that further cash is required to be invested into the Fund II portfolio.
The Company has now agreed with the Fund II GP that the Company shall, subject to approval of the 2012 Shareholders and the Shareholders, enter into an agreement to acquire from Fund II 50 per cent. of the 2012 Shares currently held by Fund II and the Company shall have an option to acquire the balance of 2012 Shares currently held by Fund II on one or more subsequent dates.
The repurchase of 2012 Shares by the Company from Fund II is proposed to be implemented in order to crystallise value for 2012 Shareholders (such value currently being expressed by Fund II carrying the 2012 Shares at their market price which is a significant discount to their NAV) and to reduce Fund II's holding of shares in the Company. The Company intends to repurchase and then immediately cancel all the 2012 Shares it acquires from Fund II. The financial effect of such cancellation will be an uplift to the NAV per remaining 2012 Shares, which is estimated to be approximately 2.52p per 2012 Share (based on the 2012 Cell's NAV per share on 31 March 2016 adjusted for a current expectation of a decline in the region of 14 per cent. as described in the announcement made by the Company on 8 November 2016) for the first tranche of the repurchase as described below, which will take place at a date to be determined by the Board following the Extraordinary General Meetings and the publication of the Company's Interim Financial Report for 2016 and such date is expected to be no later than 31 December 2016. The Buyback Proposal will not result in any return of capital to the 2012 Shareholders.
The 2012 Shares shall be purchased at the volume weighted average price ("VWAP") of the 2012 Shares on the immediately preceding business day. provided that (in accordance with the Listing Rules) such price shall not exceed and shall be limited to a price per 2012 Share being not more than the higher of (i) 5% above the average market value of the 2012 Shares for the five business days prior to the day the purchase is made and (ii) the value of a 2012 Share calculated on the basis of the higher of the price quoted for (a) the last independent trade of and (b) the highest current Independent bid for, any number of the 2012 Shares occurring before the relevant completion date.
The Buyback Proposal is a related party transaction under the Listing Rules because the Fund II GP, which is entering into the proposed Buyback Contract on behalf of Fund II, is a related party of the Company by virtue of an investment manager being deemed a related party of a closed-ended investment fund under the Listing Rules. The Buyback Proposal therefore requires the prior approval of the Shareholders. Under the Buyback Proposal, the proposed acquisition of 50 per cent. of the 2012 Shares held by Fund II amounts, in its own right, to a related party transaction under the Listing Rules and therefore requires approval of the Shareholders. In the event that the Company exercises its option on one or more occasions for the subsequent purchase or purchases of the balance of 2012 Shares held by Fund II and this purchase amounts to a further related party transaction under the Listing Rules, then the approval of the Company's Shareholders will be sought at that time.
The Fund II GP will not, in accordance with the Listing Rules, vote its 2012 Shares in connection with the resolutions to approve the Buyback Proposal and will also take all reasonable steps to ensure that its associates will also not vote on the resolutions to approve the Buyback Proposal . The Fund II GP's associates include Fund II and Jon Moulton (who is a director of the Fund II GP and the Company).
The notices in respect of the Extraordinary General Meetings of the 2012 Shareholders and of all Shareholders include resolutions seeking shareholder consent to the proposed share buyback on the terms set out in the Buyback Contract. Consent of all of the Shareholders shall be granted by at least three quarters of the votes cast being in favour of the special resolution set out in Resolution 2 of the notice of the Extraordinary General Meeting of all of the Company's Shareholders. Consent of the 2012 Shareholders shall be granted by a majority of the votes cast being in favour of the ordinary resolution set out in Resolution 1 of the notice of the Extraordinary General Meeting of the 2012 Shareholders. Under the Listing Rules, the Fund II GP and its associates are precluded from voting in relation to the Buyback Proposal and the Buyback Contract. If the Buyback Proposal is not approved at the Extraordinary General Meetings of the 2012 Shareholders and of all Shareholders then the Company will not enter into the Buyback Contract and the Buyback Proposal will be capable of being implemented.
Changes to articles of incorporation
In addition to the changes to the Company's articles of incorporation to convert the 2009 Shares to redeemable shares, shareholders will also be invited to approve a number of other amendments to the memorandum of incorporation and the articles of incorporation of the Company, primarily to ensure consistency with the Companies (Guernsey) Law 2008 (as amended), which has been recently amended. The Board considers it prudent to implement the changes to the memorandum of incorporation and the articles of incorporation of the Company to ensure their consistency with the new legislation and so that the Company can benefit from having a modernised constitution. The principal changes being proposed are in relation to the introduction of the Uncertificated Securities (Guernsey) Regulations, 2009, which replace the CREST rules, and which are mostly technical in nature and certain other amendments to introduce additional flexibility and consistency with the new legislation. Other changes are minor and relate to technical or clarifying matters.
In accordance with the requirements of the Company's articles of incorporation, the adoption of the revised articles of association is conditional upon (i) the passing of the ordinary resolution set out in Resolution 1 and the special resolution set out in Resolution 2 of the notice of the Extraordinary General Meeting of 2009 Shareholders and (ii) the passing of the ordinary resolution set out in Resolution 1, the special resolution set out in Resolution 3 and the special resolution set out in Resolution 4 of the notice of the Extraordinary General Meeting of all Shareholders.
Circular
The Company will post a circular to all Shareholders today (the "Circular") containing further details of the proposals and notices convening extraordinary general meetings of (i) the holders of the ordinary shares in the capital of the 2009 Cell of the Company to be held at 3.00 p.m. and (i) the holders of the ordinary shares in the capital of the 2012 Cell of the Company to be held at 3.15 p.m. (or if later immediately following the conclusion of the Extraordinary General Meeting of the 2009 Shareholders) and (ii) together in one meeting, the holders of ordinary shares in the capital of the 2009 Cell of the Company and the holders of the ordinary shares in the capital of the 2012 Cell of the Company to be held at 3.30 p.m. (or if later immediately following the conclusion of the Extraordinary General Meeting of the 2012 Shareholders) to be held on 7 December 2016 at Lefebvre Place, Lefebvre Street, St Peter Port, Guernsey.
Copies of the Circular will shortly be available for inspection at the National Storage Mechanism at www.Hemscott.com/nsm.do. In addition, the Circular will shortly be available to view on the Company's website (www.bettercapital.gg) and will be available for inspection at the office of DLA Piper UK LLP, 3 Noble Street, London, EC2V 7EE.
Defined terms used in this announcement shall (unless the context otherwise requires) have the same meanings set out in the Circular dated 25 November 2016.http://www.rns-pdf.londonstockexchange.com/rns/2077Q_-2016-11-25.pdf
Enquiries
Better Capital PCC Limited +44 (0)14 8171 6000
Laurence McNairn (Administrator and Company Secretary)
Better Capital LLP +44 (0)20 7440 0840
Bonnie Kraus (Director of Finance and Investor Relations)
Numis Securities Limited +44 (0)20 7260 1000
Broker and Financial Adviser
Nathan Brown