CIFU.L Regulatory News (CIFU)

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Carador Income Fund plc (the "Company")

6 July 2017

Publication of Circular and Notice of AGM

The Company is pleased to announce that its annual general meeting ("AGM") will take place on 31 July 2017 at 3.00 pm. The Circular containing the formal notice convening the AGM and detailing the resolutions to be put to Shareholders will be sent to Shareholders today and will be posted on the Company's website shortly. The Circular will also be made available for inspection at: http://www.morningstar.co.uk/uk/NSM.

In addition to the ordinary business of the AGM, Shareholders will be asked to consider (a) the approval of a repurchase opportunity for Eligible Shareholders to realise all or part of their investment in the Company by having all or part of their Shares converted into Repurchase Pool Shares and a related change to the Articles; and (b) the approval of facilities to allow for the raising of additional capital.

Provided the Repurchase Opportunity is approved by Shareholders at the AGM, the Directors will send the appropriate Repurchase Opportunity Documents to Eligible Shareholders setting out the procedure for participation in the Repurchase Opportunity and any associated transaction charge. Subject to regulatory approval, it is anticipated that the Repurchase Opportunity Documents will be published by early September 2017.

Repurchase Opportunity and Placement Programme

Background

The Articles contain certain provisions regarding Share repurchase arrangements which may, in certain circumstances (including a discount trigger), be offered to Shareholders in 2017. As anticipated in the regulatory announcement issued by the Company on 2 May 2017, in light of the price at which the Shares have traded relative to the NAV per Share, the discount trigger mechanism set out in the Articles was not met at the end of April 2017. Notwithstanding this, the Directors are now using the discretion provided to them in the Articles to propose that the Shareholders approve by ordinary resolution a Repurchase Opportunity for any Eligible Shareholders who may wish to exit their holding in the Company (in whole or in part) by having their Shares converted into shares in the Repurchase Pool.

As mentioned in the regulatory announcement issued by the Company on 30 November 2016, the Directors have also determined that they will in future consider every two and a half years whether to put a similar resolution to Shareholders to approve, at the Directors' discretion, a repurchase opportunity for up to 100 per cent. of the Shares in issue in the Company, subject to any necessary changes to the Articles being approved at the appropriate time.

Investment Update and Outlook

The full investment update and outlook can be found in the Circular. The Investment Manager believes that the Company represents an attractive investment opportunity and that the Company's current portfolio is well positioned to benefit from varying credit cycles and environments, given its active approach and the duration of reinvestment period of its income notes. The Investment Manager feels the Company's existing portfolio is well placed to make further investments and drive long-term, sustainable returns. The Company has demonstrated the ability to maintain returns through credit cycles with annualised total returns since inception of 15.95 per cent.[1] stretching back over 8 years.

The Investment Manager believes the portfolio is well positioned to extract long-term future value, and sees potential opportunities to add value via pro-active management of the portfolio throughout a variety of credit environments.

Taking into account the full investment outlook for the Company described in the Circular, as well as the possibility of more frequent repurchase opportunities for Shareholders, the Directors have concluded that it is appropriate to propose, alongside the resolution to allow the Repurchase Opportunity, resolutions allowing for a 12-month Placement Programme and also, in addition or as an alternative, a more limited placement of Shares of no more than 10 per cent. of the Shares in issue as of the date of the AGM, to raise money to pursue investment opportunities as they arise, which will allow the Company to issue additional Shares.

Approval of the Repurchase Opportunity

If approved, the Directors will be authorised, subject to the requirements of the Central Bank and in accordance with applicable law, to offer to Eligible Shareholders the opportunity to convert their Shares into Repurchase Pool Shares which will participate only in the Repurchase Pool. The Repurchase Pool will be created by allocating to such pool a pro rata amount of the assets and liabilities of the Company attributable to the Shares being converted as at the Conversion Date. The assets attributable to the Repurchase Pool will be realised over time and the proceeds, net of fees, expenses and other liabilities, paid out to the Eligible Shareholders who participate in such Repurchase Pool by way of the compulsory repurchase, in tranches, of the Repurchase Pool Shares. Such compulsory repurchases will be made at the NAV per Repurchase Pool Share calculated as at the relevant date. The NAV per Repurchase Pool Share will be equal to the NAV attributable to the Repurchase Pool divided by the number of Repurchase Pool Shares in issue as at the relevant date. Once repurchased, the Repurchase Pool Shares will be cancelled. It is anticipated that in normal circumstances it should be possible to realise the assets comprised in the Repurchase Pool and distribute the proceeds within 6 to 9 months of the Conversion Date.

The Repurchase Pool Shares will be converted on a one-for-one basis with the existing Shares. A transaction charge to cover fees, expenses and other costs incurred in connection with the Repurchase Opportunity will be deducted from the Repurchase Pool and will be reflected in the NAV per Repurchase Pool Share upon or following the conversion. Such transaction charge may include, without limitation, the fees, expenses and costs associated with the listing of the Repurchase Pool Shares.

Repurchase Opportunity Restricted for Certain Overseas Shareholders

The Repurchase Opportunity will only be made to Eligible Shareholders. Overseas laws and regulations may restrict the offering of the Repurchase Opportunity to Shareholders in certain jurisdictions outside Ireland and the United Kingdom, including but not limited to the United States. The Repurchase Opportunity Documents will not be distributed, and an offer of Repurchase Pool Shares will not be made, in Canada, Australia, Japan or in any other jurisdiction where to do so would constitute a violation of the relevant laws and regulations in such other jurisdiction. It is the responsibility of each overseas Shareholder to satisfy himself that the Repurchase Opportunity offer, when made by the Company, may be made to him and that, if relevant, he may avail himself of such Repurchase Opportunity, and that in doing so he has complied with all relevant overseas filing, exchange control and other requirements and paid all taxes and fees which may be payable.

The Repurchase Pool Shares, if offered pursuant to the Repurchase Opportunity, will not be registered under the Securities Act, as amended or the securities laws of any state of the United States or other jurisdiction, and the Repurchase Pool Shares may not be offered, sold, pledged or otherwise transferred within the United States, or to or for the account or benefit of a U.S. Person except pursuant to an exemption from registration under the Securities Act. Each U.S. Shareholder who wishes to participate in the Repurchase Opportunity in due course must be an "accredited investor" as defined by Rule 501 of the Securities Act. Further, the Company is not, and does not intend to be, registered under the Investment Company Act. In order to maintain the Company's exemption from registration under the Investment Company Act, each U.S. Shareholder who wishes to participate in the Repurchase Opportunity in due course must also be a "qualified purchaser" as defined by Section 2(a)(51)(A) of the Investment Company Act. U.S. Shareholders who are both an AI and a QP and who wish to participate in the Repurchase Opportunity may at such time be required to execute a form of AI/QP certification before being deemed Eligible Shareholders with respect to the Repurchase Opportunity when offered. There will be no public offering of the Repurchase Pool Shares in the United States.

Further details will be contained in the Repurchase Opportunity Documents.

Approval of the Issue of New Shares

12-month Placement Programme

The Directors are seeking authorisation at the AGM to allot and issue up to 300,000,000 Shares (representing 55.22 per cent. of the issued share capital of the Company as of the date of this Circular) on a non pre-emptive basis. In light of the outlook for the Company the Directors consider that it is in the best interests of the Company and its Shareholders to provide for the flexibility to undertake the Share Placement Programme for a period of twelve months following the date of publication of the relevant prospectus, during which the Company may issue new Shares in response to investor demand, to increase the Company's capital base. It is intended that such Shares may be in the form of "C Shares" and/or ordinary Shares, at the discretion of the Directors.

This authority will expire 12 months from the date of the publication of the prospectus providing for the Placement Programme, unless previously renewed, varied or revoked by the Shareholders in general meeting.

"Tap" Issue

The Directors may determine, in addition or as an alternative to the Placement Programme, that a more limited issuance of Shares is more appropriate in the circumstances. Accordingly, the Directors are seeking authority to allot and issue up to 54,325,334 (or, if lower, such number of Shares as represent 10 per cent. of the Shares in issue at the date of the AGM) on a non pre-emptive basis. This authority will expire at the conclusion of the next annual general meeting of the Company, unless previously renewed, varied or revoked by the Shareholders in general meeting. 

Terms used and not defined in this announcement will have the meanings given to them in the Circular.

Company's website:

www.carador.co.uk

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