Last checked at 
21 Oct 2010 07:00
21 October 2010
HSBC Infrastructure Company Limited
("HICL" or the "Company")
C Share Issue and Notice of EGM
Introduction
The Company is pleased to announce its intention to proceed with an issue of C Shares by way of a Placing, Open Offer and Offer for Subscription (the "Issue"). A circular is being sent today to shareholders giving notice of an Extraordinary General Meeting of the Company at which approval will be sought from shareholders for (i) a disapplication of pre-emption rights in light of the Issue and (ii) a change of name for the Company.
Graham Picken, Chairman of HICL, said:
"The Company has established its position as a leading London-listed infrastructure fund since its launch in March 2006, is a constituent of the FTSE 250 Index with a market capitalisation that has grown to over £550 million and, in the view of the Board, continues to constitute a highly attractive investment opportunity. The Company has a strong track record of over four years of consistent delivery on its investment policies with solid NAV performance, progressive growth in its annual distribution and continued delivery on a pipeline of opportunities for further investments across a range of sectors and geographies. This strong performance has been reflected in the Company's shares trading at a premium rating for more than eighteen months."
C Share Issue and Disapplication of Pre-emption Rights
At the time of its most recent investor update published on 23 September, the Company indicated that the Investment Adviser was continuing to see a strong pipeline of investment opportunities and that the Group was in exclusive negotiations on a number of projects. Furthermore, it was noted that, if the pipeline of new investments proceeded as expected, the Board would seek to raise new monies before the end of 2010. In line with previous C Share issues, the Company would seek to raise funds to pay down the debt incurred in making new investments, in order to maintain the flexibility to grow its portfolio investments as and when suitable opportunities arise.
Since June the Company has announced a number of significant acquisitions for a total consideration of £140.7m. These include interests in the Queen Alexandra Hospital, Sussex Custodial Centre, two UK PFI and in two Canadian P3 projects from subsidiaries of Bilfinger Berger, and, as announced today, the Oxford John Radcliffe Hospital. In light of these acquisitions, the Board has today confirmed that it intends to proceed with a further fundraising by way of a Placing, Open Offer and Offer for Subscription of C Shares. The inclusion of an Open Offer as part of the Issue ensures that a portion of the new share capital will be exclusively available in the first instance to existing shareholders in the Company. It is intended that the net proceeds of the Issue will be no greater than the aggregate of any amounts outstanding under the Group's debt facility and any outstanding commitments or allocations made by the Company prior to the close of the Issue.
Further details of the Issue will be announced by the Company in due course. It is anticipated that a prospectus relating to the Issue will be published by the Company in mid-November, with C Shares commencing trading in mid-December.
At the Company's Annual General Meeting in July, shareholders approved a resolution proposing the deletion of the Company's existing Articles and the adoption of revised Articles in their place. One of the changes introduced by the new Articles involved the creation of pre-emption rights in respect of the Company's share capital. This change was made in response to recent alterations to the Listing Rules of the UK Listing Authority, under which the Company is required to have pre-emption rights in place in order to maintain its position on the Official List; and, in addition, the Company's shares must benefit from pre-emption rights in order to be considered for inclusion in the FTSE All-Share Index.
The Board believes that it would be advantageous to seek a disapplication of pre-emption rights at this stage, so that the Company may proceed with the Issue as quickly and efficiently as possible. Shareholders are therefore now being asked to approve a disapplication of pre-emption rights in respect of up to 150 million C Shares. C Shares have been one of the Company's preferred methods of raising additional monies in the past, as they ensure that the full costs of the relevant issue are paid by C Share subscribers, as well as ensuring that those new subscribers gain exposure to the Company's existing portfolio by reference to its net asset value at a predetermined date. Under the terms of the Articles, any C Shares issued by the Company convert into Ordinary Shares on a NAV for NAV basis at the time of conversion. In this way, existing Ordinary Shareholders will suffer no dilution in net asset value terms as a result of any issue of C Shares or their conversion into Ordinary Shares.
The authority which the Board is seeking, namely to issue up to 150 million C shares, which will be issued at 100p per share, without the need to observe pre-emption rights, will expire on 31 March 2011 regardless of whether any C Shares have been issued before that time.
Change of Name
It was announced in June of this year that the management team of HSBC Specialist Investments Limited ("HSIL"), the infrastructure and real estate arm of the HSBC Group ("HSBC") and owner of the Company's Investment Adviser, HSBC Specialist Fund Management Limited, had agreed outline terms with HSBC for a change of ownership which would lead to the HSIL management team and a number of infrastructure and property fund management businesses currently undertaken by subsidiaries of HSIL (the "HSIL Businesses") becoming independent. The process of obtaining the requisite consents and regulatory approvals is proceeding as planned, and it is envisaged that the transaction will be formally completed in early 2011.
As the Company's Investment Adviser, which forms part of the HSIL Businesses being acquired by the management team, will not be a subsidiary of the HSBC Group going forward, the trademark licence will be terminated and the Company will no longer have the right to use the HSBC name and the HSBC brand. The Board is therefore proposing that the name of the Company should be changed to "HICL Infrastructure Company Limited". The Board believes that this new name will, while dispensing with the HSBC brand, preserve the Company's identity and maintain recognition amongst investors and the wider marketplace.
On the basis that the resolution is passed, it is expected that the Company will change its name in early 2011. The Company will update the market as soon as it has further information on the timing of the proposed name change.
Extraordinary General Meeting
The Extraordinary General Meeting at which approval will be sought for the proposals set out in this announcement has been convened for 1.30 p.m. on 10 November 2010. Each of the resolutions will be proposed as a special resolution which, to be passed, requires at least 75 per cent. of the votes cast to be cast in favour of it.
Document viewing
A copy of the circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.Hemscott.com/nsm.do. The circular will also shortly be available for viewing on the Company's website, www.hicl.hsbc.com.
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Enquiries:
| HSBC Specialist Fund Management Limited | 020 7991 8888 |
| Tony Roper | |
| Keith Pickard | |
| David Foot | |
| Erwan Fournis | |
| | |
| Collins Stewart Europe Limited | 020 7523 8000 |
| Robbie Robertson | |
| David Yovichic | |
| Lucy Lewis | |
| Dominic Waters | |
| | |
| Oriel Securities Limited | 020 7710 7600 |
| Tom Durie | |
| Emma Griffin | |
| Gareth Price | |
| Neil Winward | |
| | |
| M:Communications | 020 7920 2330 |
| Ed Orlebar Andrew Benbow | |