Fair Oaks Income Ltd Regulatory News (FA14)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any shares in Fair Oaks Income Limited or securities in any other entity, in any jurisdiction, including the United States, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.

Fair Oaks Income Limited

14 March 2018

FAIR OAKS INCOME LIMITED (the "Company")

(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)

POTENTIAL SHARE ISSUE AND NOTICE OF EGM

Potential Share Issue

Fair Oaks Income Limited (the "Company") announces, in light of the current pipeline of investment opportunities and an investor commitment received for 22.5 million 2017 Shares, that new 2017 Shares ("New Shares") are being made available, conditional on the result of an EGM of the Company convened for 29 March 2018.

The proceeds of this placing are intended to be used as funding for a newly originated opportunity to make a primary investment of approximately $35m in a CLO equity security. The potential total return for this investment is estimated by the general partner of Master Fund II (the "GP") to be in a similar range as previously announced portfolio acquisitions(1).

In the event that aggregate demand permits, any additional proceeds are intended to be used as funding for a second newly originated opportunity of a similar value and estimated return profile.

The issue price per New Share will be determined following announcement of the NAV per 2017 Share as at 28 February 2018. It is expected that the issue price will represent a premium of approximately 1.5% to that published NAV (less the monthly interim dividend of 0.7 US cents declared on 27 February 2018 which will not be payable on the New Shares).

The issue is available to Qualified Investors, who are invited to apply for New Shares through the Company's corporate broker, Numis, on the contact details below. The issue is expected to close at 12:30 on 28 March 2018, with admission of the New Shares scheduled on 4 April 2018. 

The closing date and the size of the issue, and the decision to allot New Shares to any Qualified Investor, will be determined at the absolute discretion of the Company and Numis. Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on the Specialist Fund Segment of the Main Market.

Notice of EGM

1. Introduction

An extraordinary general meeting of the Company was held on 14 November 2017, at which an extraordinary resolution proposed to Shareholders was passed, which empowered the Directors to issue up to a maximum number of 36 million 2017 Shares under the Placing Programme, and a subsequent extraordinary resolution proposed to Shareholders was passed, which empowered the Directors to issue up to a maximum number of a further 36 million 2017 Shares under the Placing Programme.

As announced on 16 November 2017, pursuant to a Subsequent Placing under the Placing Programme, the Company issued 57,350,000 2017 Shares on 17 November 2017 at an issue price of US$1.0075.

As a result the Company's ability to issue additional 2017 Shares is constrained and the Board is now writing to Shareholders to seek approval to renew the authority for the Directors to issue further 2017 Shares on a non-pre-emptive basis (the "Renewed Authority").

Resolutions in connection with the above will be proposed at the Extraordinary General Meeting to be held on Thursday 29 March 2018 at 10.00am. The Board's recommendation is that Shareholders vote in favour of the Resolutions and all Shareholders are requested to take the actions with regards to voting set out in paragraph 5 of this Part 1.

The Placing Programme expired on 8 March 2018. The Company intends in due course to publish a prospectus for a new placing programme, but in the meantime the Company would be permitted to issue the new 2017 Shares covered by the proposed Renewed Authority by relying on the exemption to the FCA's prospectus rules which allows a company to issue up to the equivalent of 20% of issued share capital without a prospectus having been published.

2. Proposal

The Investment Adviser believes that there are ongoing opportunities to generate attractive risk-adjusted returns through investing in accordance with the Company's investment policy.

In order to facilitate further equity raises to fund such investment opportunities, the Board seeks authority:

(a) (pursuant to Resolution 1 to be proposed at the Extraordinary General Meeting) for the Company to issue for cash up to 40 million 2017 Shares on a non-pre-emptive basis, representing approximately 9.5% of the 2017 Shares currently in issue; and

(b) (pursuant to Resolution 2 to be proposed at the Extraordinary General Meeting in addition to Resolution 1, but Resolution 2 is only to be proposed conditional upon Resolution 1 being passed) for the Company to issue for cash up to a further 40 million 2017 Shares on a non-pre-emptive basis (in addition to the authority sought pursuant to Resolution 1), representing approximately 9.5% of the 2017 Shares currently in issue.

If both Resolution 1 and Resolution 2 are passed, Shareholders will be approving the disapplication of pre-emption rights in respect of a total of up to approximately 19% of the existing 2017 Shares in issue. The Board recognises that this percentage authority is beyond the standard 10% pre-emption waiver sought by investment companies, but believes that the passing of both Resolution 1 and Resolution 2 is in Shareholders' interests given that:

· the authority is intended to be used to fund specific investment opportunities sourced by the Investment Adviser, thereby mitigating the potential dilution of investment returns for existing Shareholders; and

· 2017 Shares will be issued only at prices greater than the aggregate of the relevant prevailing Net Asset Value per share and a premium to cover the commissions and expenses of the issue and should therefore not be dilutive to the Net Asset Value per existing share.

If Resolution 1 is passed but Resolution 2 is not passed, Shareholders will be approving the disapplication of pre-emption rights in respect of only up to approximately 9.5% of the existing 2017 Shares in issue.

The authority if granted shall expire on the earlier of the conclusion of the next annual general meeting of the Company or on the expiry of 15 months from the passing of the resolution except that the Company may before such expiry make offers or agreements which would or might require 2017 Shares or rights to subscribe for such shares in the Company to be issued after such expiry and notwithstanding such expiry the Directors may issue 2017 Shares or rights to subscribe for such shares in the Company in pursuance of such offers or agreements as if the power conferred by the resolution had not expired.

3. Extraordinary General Meeting

In connection with the above, the Extraordinary General Meeting has been convened for 10.00am on Thursday 29 March 2018 at which the Resolutions will be put to Shareholders.

Resolution 1 will be proposed as an extraordinary resolution.  

Resolution 2 will be proposed as an extraordinary resolution. Resolution 2 will only be proposed conditional upon Resolution 1 being passed.

Extraordinary resolutions require a majority of at least 75% of the votes cast by members entitled to vote and present in person or by proxy to be cast in favour in order for it to be passed.

All Shareholders are entitled to attend and vote at the Extraordinary General Meeting. In accordance with the Articles, all Shareholders that are present in person or by proxy and are entitled to vote at the Extraordinary General Meeting shall upon a show of hands have one vote and upon a poll shall have one vote in respect of each Share held.

The quorum requirement for an extraordinary general meeting is two or more Shareholders present in person or by proxy.

Enquiries:

Fair Oaks Income Limited

Email: contact@fairoaksincome.com

Web: www.fairoaksincome.com

Fair Oaks Capital Limited

Investor Relations

DDI: +44 (0) 20 3034 0400

Email: ir@fairoakscap.com

Praxis Fund Services Limited

Ben Le Prevost

DDI: +44 (0) 1481 755524

Email: Ben.LePrevost@praxisifm.com

Numis Securities Limited

Nathan Brown, Corporate Broking

DDI: +44 (0) 20 7260 1426

Email: n.brown@numis.com 

Fair Oaks Income Limited

Fair Oaks Income Limited is a registered closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange (now the Specialist Fund Segment of the Main Market of the London Stock Exchange) on 12 June 2014.

The investment policy of the Company is to invest (either directly and/or indirectly through the Master Fund and/or Master Fund II) in US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing. The Company will implement its investment policy by remaining invested in the Master Fund and making new investments in Master Fund II.

Important Information

(1) The GP's estimate of the potential total return for this investment is calculated across certain scenarios and subject to certain assumptions. This and any other references herein to potential future returns or distributions are targets and not forecasts and there can be no guarantee or assurance that they will be achieved.

This document is for information purposes only and is not an offer to invest. All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decisions.

This announcement has been prepared by, and is the sole responsibility of, Fair Oaks Income Limited.

Numis Securities Limited ("Numis") is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Numis or advice to any other person in relation to the matters contained herein.