Last checked at 26 Oct 2009 07:00
| 26 October 2009 |
THE OFF-PLAN FUND LIMITED
(the "Company" or "Fund")
Notice of Compulsory Partial Redemption of Participating Shares
The Company hereby announces that it has today posted a circular to Members of the Company detailing proposals to redeem, on a pro rata basis, up to 5,576,549 Participating Shares, equivalent to 50 per cent. of the 11,153,098 Participating Shares in issue, for cancellation in accordance with the relevant provisions of the Companies (Jersey) Law 1991. The Participating Shares will be redeemed on 30 October 2009 (the "Redemption Date") pursuant to Article 36.00 of the Fund's Articles (the "Redemption") to those Members that are registered holders on the Redemption Date at a price of £0.70 per Participating Share.
The Redemption will take place on a pro rata basis such that each Member of the Fund will have redeemed one Participating Share for each two Participating Shares held at £0.70 per share, so that each Member has the same proportion of their holding of Participating Shares redeemed (save that the number of Participating Shares to be redeemed held by any Member may be rounded down to the nearest whole Participating Share to avoid any Member holding a fraction of a Participating Share as a result of the Redemption).
Background to the Redemption
As announced on 22 September 2009, following the rescission of its purchase agreements with Henry Homes (Wallington) Limited ("HHW"), the Fund has received the sum of £3 million previously held in escrow by AIB Bank (CI) Limited ("AIB") for a completion guarantee provided by AIB to Bank of Scotland Plc in respect of the Fund's former obligations under the agreements in respect of the 118 residential units which were to comprise part of the proposed Canon House development in Wallington. The return of these monies, taken together with other cash held on deposits by the Fund, has resulted in the Fund holding a level of cash that is surplus to its current working capital and solvency requirements.
In recent weeks the Board and the Manager have consulted with a number of significant shareholders of the Fund who have each expressed an interest in the Fund distributing some of its available cash. Consequently, following careful consideration the Directors have unanimously resolved to return, on a pro rata basis, approximately £3.9 million of the Fund's cash to its Members. In determining the level of the redemption the Directors have considered the ongoing running costs of the Fund for the next 12 months, together with a suitable contingency, to allow them to conduct an orderly winding down of the activities of the Fund. As a winding down of the Fund's activities constitutes a change in the Fund's investment strategy, it can only be implemented with approval from its Members, further details of which are set out below.
Mechanics of the Redemption
The Directors have sought legal and other professional advice in respect of the potential ways in which the £3.9 million could be returned to Members. The Directors have selected the Redemption as their preferred method as: (i) the Redemption is capable of being effected faster and at less expense than other potential options identified to the Directors; and (ii) for Members subject to tax in the United Kingdom, the payment they receive on completion of the Redemption should be treated as a part disposal of their Participating Shares for the purposes of the UK capital gains tax regime.
Accordingly, the Directors are exercising their powers pursuant to Article 36.00 of the Fund's Articles to redeem, on a pro rata basis, up to 5,576,549 Participating Shares in the Fund held by those Members on the register on 30 October 2009 at a price of £0.70 per share.
Members do not need to take any further action in order to receive payment for their Participating Shares which are to be redeemed.
Certificated holdings:
If Members hold their Participating Shares in certificated form, the Fund's Registrars will arrange for those Members to receive new certificates within 7 business days setting out their resultant holdings following the Redemption. The effect of the Redemption will be that existing share certificates will cease to be valid at 6pm on 30 October 2009. Your payment will be made by way of cheque sent via registered post to your address stated on the register of members on the Redemption Date. It is anticipated that cheques will be posted on or around 4 November 2009.
Members that hold their Participating Shares in certificated form, who are concerned that the register of members may contain incorrect details concerning, amongst other things, their address, should contact Capita Registrars, the Fund's registrars, using the following number 0871 664 0330 from the UK or + 44 208 639 3399 from overseas..
Uncertificated holdings:
If Members hold their Participating Shares in CREST please note that the Participating Shares will be disabled and the existing ISIN number GB0032774365 will expire on the Redemption Date, with a new ISIN number JE00B58T0Q96 available for transactions on the next business day. The balance of Participating Shares will be received by CREST members on the next business day following the Redemption Date. The Redemption proceeds will be received by CREST members within 4 business days of the Redemption Date.
Following completion of the Redemption the total number of Participating Shares outstanding is expected to be 5,576,549, although this may increase by a small number as a result of the rounding down of fractions.
The effect of the Redemption
The result of the Redemption will be to reduce the net asset value ("NAV") of the Fund by approximately £3.9 million. Assuming that the Redemption had taken place on 31 March 2009, being the date of the latest available published financial information, the notional effect of the Redemption on the unaudited NAV of the Fund as at 31 March 2009 is set out below:
| £ | |
| Unaudited NAV of the Fund as at 31 March 2009 | 9,100,000 |
| Less Redemption | (3,900,000) |
| Notional resultant unaudited proforma NAV as at 31 March 2009 | 5,200,000 |
| No. | |
| Number of Participating Shares in issue as at 31 March 2009 | 11,153,098 |
| Number of Participating Shares expected to be redeemed as part of the redemption | (5,576,549) |
| Adjusted number of Participating Shares in issue as at 31 March 2009 | *5,576,549 |
| * - assuming that no rounding down of fractions is required in connection with Redemption |
The above table has been prepared for illustrative purpose only, it addresses a hypothetical situation and therefore does not represent the actual NAV position of the Fund before or after the Redemption. In particular, it does not reflect any changes, which includes, amongst other things, the income arising from the properties and investments held and the running costs of the Fund, to the NAV of the Fund that have occurred since 31 March 2009.
Current trading and prospects of the Fund
As announced on 22 September 2009, as part of the rescission of its purchase agreements with HHW, the Fund is also entitled to have the deposits it paid under the terms of the agreements, amounting to £1.1 million in aggregate (the "Deposits"), repaid by HHW or in the event that HHW is wound-up, repaid, to the extent that any amount of the Deposits remain outstanding, by Zurich Insurance Company (trading as Zurich Municipal) which has guaranteed the return of the Deposits to the Fund in the event of such a winding-up.
The process to recover the Deposits continues and a further announcement will be made once it is possible to determine more accurately the likely timetable for the conclusion of this process.
An update on the other properties is set out below:
The Heart, Walton-on-Thames: The Fund currently holds 9 units 8 of which have been let at an average yield of 6.1 per cent. The Fund has accepted an offer of £197,000 on the unit that is not currently let and the Directors are hopeful that the sale of this unit will be completed in November 2009, although this cannot be guaranteed.
Wimbledon House, Leicester: The Fund currently holds 6 units which are let at an average yield of 3.5 per cent.
In light of the recent discussions with a number of significant shareholders the Directors have been considering the future of the Fund and as a result, have resolved, subject to approval of its Members, to commence an orderly winding down of the activities of the Fund.
The decision by the Directors to propose to commence an orderly winding down of the activities of the Fund constitutes a change in the investment strategy of the Fund under the AIM Rules. Consequently, the Fund is required to seek approval from its Members to this change. A General Meeting to consider this proposal will be convened in due course, notice of which will be sent to Members shortly.
The Directors of the Fund are of the view that a disposal of the remaining properties in anything other than an orderly manner will significantly reduce the level of potential returns of cash to its Members. The Directors will actively consider all offers for the remaining units on an individual or group basis, in relation to their prevailing Red Book Valuations, in order to seek to maximise the potential return of cash to its Members.
The Directors of the Fund will consider whether it is appropriate to make further redemptions or other forms of distribution to its Members at the time of the announcement of its annual results for the year ended 30 September 2009.
Words and expressions used in this announcement shall have the same meaning as given in the Articles of Association of the Fund (the "Articles") unless the context requires otherwise.