Crystal Amber Regulatory News (CRS)

25 October 2023

Crystal Amber Fund Limited

("Crystal Amber Fund" or the "Fund")

Amendments to the Investment Management Agreement

Crystal Amber Fund announces that it has reached agreement to amend the investment management agreement ("IMA") with Crystal Amber Asset Management (Guernsey) Limited (the "Investment Manager"). The amendment will provide for the continuation of management fees to the Investment Manager beyond 31 December 2023.

Background to the revised IMA

The current IMA does not provide for a management fee for the Investment Manager after 31 December 2023. As the services of the Investment Manager are expected to be required beyond 31 December 2023, the Fund has agreed an amendment to the IMA to provide for monthly fees from 1 January 2024, subject to regular review. 

Following a change in strategy, the current IMA fee arrangement was agreed in March 2022 and on the assumption that by the end of 2023, the Fund's portfolio would be predominantly realised (with the probable exception of Morphic Medical) and therefore there would be little management of the portfolio required. 

Since that time, the Investment Manager has achieved several successful exits, all at premiums to carrying values at March 2022. Most notably, the strategic holdings in Hurricane Energy plc and Equals Group plc have been monetised. In the case of Hurricane Energy plc, as well as receiving proceeds of £36.5 million, the Fund continues to own Deferred Consideration Units. In view of the intensive activism required for the Fund's shareholding in De La Rue plc and the ongoing requirement to maximise shareholder returns in an orderly manner, the Board believes that it remains in the best interests of the Fund to retain the services of the Investment Manager until the Fund's portfolio is realised.

The Fund has today published its annual report and accounts which provides current details of the Fund's portfolio. The Board of the Fund remains focused on realising the portfolio as efficiently as possible in order to achieve optimum returns for shareholders.

As stipulated by the Company's Investment Policy, should any of the Company's investments remain unrealised at 31 December 2023, the Board is required to consider consulting shareholders and/or make arrangements to seek shareholder approval on the future strategy of the Company, including any steps that might be necessary to maximise the opportunity to realise value from the remaining assets of the Company. 

Current fee structure

Under the current IMA, the Investment Manager receives a management fee totaling £690,000 in 2023, to be paid on a monthly basis as set out below:

- 1 January 2023 to 30 June 2023: £70,000 per month;

- 1 July 2023 to 30 September 2023: £50,000 per month; and

- 1 October 2023 to 31 December 2023: £40,000 per month.

In addition, the Investment Manager is currently entitled to receive a performance fee of 20% of the aggregate return of cash paid to Shareholders after 1 January 2022 over a hurdle of £216 million. This performance fee will remain in place.

Revised fee structure

Due to the requirement of the Fund to have active portfolio management going into 2024, the Board has agreed for the Fund to continue paying a monthly management fee to the Investment Manager on the basis of the fees paid in 2023. Accordingly, the IMA will be amended such that from 1 January 2024, the monthly fee due to the Investment Manager will be £57,500 (£690,000 annually, as per 2023). On an annual basis, this fee equates to approximately 0.83% of the current NAV.

The monthly management fee will be subject to review by the Fund on one month's notice and will be formally reviewed by the Board with the half year financial results of the Fund in March 2024 and at regular intervals thereafter. Therefore, this will provide flexibility for the Fund, depending on the status of the portfolio in the future and progress with realisations.

The Board believes that continuing the monthly management fee on this basis is appropriate in the circumstances.

Pursuant to the AIM Rules for Companies, the Investment Manager is deemed to be a related party of the Company and the agreement to amend the IMA is therefore deemed to be a related party transaction. The Directors consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, that the agreement is fair and reasonable insofar as Shareholders are concerned.

Contacts:

Crystal Amber Fund Limited

Chris Waldron (Chairman)

Tel: 01481 742 742

www.crystalamber.com

Allenby Capital Limited - Nominated Adviser

Jeremy Porter/ Dan Dearden-Williams

Tel: 020 3328 5656

Winterflood Investment Trusts - Broker

Joe Winkley/Neil Langford

Tel: 020 3100 0160

Crystal Amber Advisers (UK) LLP - Investment Adviser

Richard Bernstein

Tel: 020 7478 9080