Last checked at 24 Sep 2010 12:52
| Date: | 24 September 2010 |
| On behalf of: | Infrastructure India plc |
| For immediate release |
Infrastructure India plc
Proposed Cancellation of Listing on Official List
Admission to Trading on AIM
Notice of Extraordinary General Meeting
Introduction
The Board of Infrastructure India plc ("Infrastructure India" or the "Company"), the investment company focussed on Indian infrastructure assets, announces its intention to delist its ordinary shares of 1p each ("Ordinary Shares") from the Official List and from trading on London Stock Exchange's main market for listed securities ("Delisting") and to move to the AIM market of the London Stock Exchange ("AIM") ("Admission"). As a consequence of the Delisting, the listing of the Warrants on the Official List will also be cancelled and the Warrants will be admitted to trading on AIM instead. Pursuant to the Listing Rules, the Delisting is subject to approval being obtained from not less than 75 per cent. of the Shareholders (entitled to vote) who vote at an extraordinary general meeting ("EGM"), in person or by proxy. The Company is also proposing an amendment to its Investment Strategy, and to seek the requisite approval from Shareholders at the EGM.
Background to and reasons for Delisting and Admission
In August 2010, the Company raised approximately £1.36 million, before expenses, through a placing of Ordinary Shares ("Placing"). The purpose of the Placing was to address a shortfall in working capital following the further contribution made by the Group, in June 2010, to its investment in Western MP Infrastructure & Toll Roads Private Limited, the Group's toll road investment in Central India. The purpose of this further investment was to preserve the Group's level of interest in the project, in accordance with the wishes of Shareholders.
In the course of their discussions regarding the Placing, the Directors consulted certain Shareholders, who were participating in the Placing, regarding the future prospects of the Company. The Group has two investments which the Directors believe have the potential to provide Shareholders with substantial value, particularly as the projects progress towards completion. However, the Directors are also mindful that, currently, the Group's portfolio comprises only two assets and the overall market capitalisation is modest. Therefore, the Directors have concluded that AIM is a more appropriate market for the Company, providing it with greater flexibility in relation to future corporate activity as well as anticipated associated cost savings until such time as the Company has achieved a size and diversity of portfolio more suited to a listing on the Official List. The Directors believed that it was necessary to undertake a wider consultation with Shareholders prior to formally proposing the Delisting and Admission, which would not have been possible prior to the release of the Company's financial statements for the year ended 31 March 2010. Therefore, the Company is now convening an EGM to allow Shareholders to consider and approve the move to AIM.
Following Admission, the administrative requirements associated with being a public company will be simplified as the AIM Rules are less demanding and stringent than the Listing Rules. For example, in many cases, companies admitted to trading on AIM are not required to produce documentation:
·; when effecting acquisitions and disposals; or
·; in connection with the admission of new securities to trading on AIM,
which are two potential types of transaction which may be of direct relevance to the Company and its Shareholders.
In any event, such documentation, if required to be produced, is not typically vetted by the London Stock Exchange or the UKLA.
Additionally, there is no requirement, under the AIM Rules, for AIM quoted companies to obtain Shareholder approval when effecting certain types of transactions (i.e. other than reverse takeovers and disposals that result in a fundamental change of business). For instance, the Placing referred to above would not have required the approval of Shareholders had the Company been AIM quoted. As a result, the Directors believe that the Company can expect to benefit from significant time and cost savings in such circumstances.
Information regarding the Warrants
As a result of the Delisting, the Company will be required to apply for the cancellation of the listing on the Official List of the warrants to subscribe for Ordinary Shares ("Warrants"), pursuant to Listing Rule 5.2.7. Warrantholder approval is not required but Warrantholders will be notified of the intended cancellation of the listing of the Warrants on the Official List and of trading on the Main Market, via an announcement through a Regulatory Information Service at least 20 business days prior to the intended date of cancellation. Further to Admission, the Warrants will be admitted to trading on AIM.
Further, as a result of the Delisting and Admission, the Ordinary Shares to be issued in the future on the exercise of Warrants will be admitted to trading on AIM, for so long as the Ordinary Shares are admitted to trading on AIM.
Implications of Admission
Subject to Resolution 1 being passed, following Delisting and Admission, the Ordinary Shares and Warrants will be traded on AIM rather than listed on the Official List. By virtue of AIM being less regulated than the Official List, an investment in securities traded on AIM carries a higher risk than those listed on the Official List. AIM is a market for emerging or smaller, growing companies and may not provide the liquidity normally associated with the Official List or other exchanges. Further it may be more difficult for an investor to realise its investment in an AIM-traded company than a company whose securities are listed on the Official List.
The future success of AIM and liquidity in the market for the Ordinary Shares and Warrants cannot be guaranteed. In particular, the market for the Ordinary Shares or Warrants may be, or may become, relatively illiquid and therefore the Ordinary Shares or Warrants may be or may become more difficult to sell. Potential investors, Shareholders and Warrantholders should be aware that the value of Ordinary Shares and the value of Warrants, and the income from the Ordinary Shares, can go down as well as up and that investment in securities which are traded on AIM might be less realisable and might carry a higher risk than a security quoted on the Official List.
Liquidity on AIM is currently provided by market makers who are member firms of the London Stock Exchange and are obliged to quote a share price for each company for which they make a market between 8:00 a.m. and 4:30 p.m. on business days.
Admission will not affect the way in which Shareholders or Warrantholders buy or sell Ordinary Shares or Warrants and, following Admission, existing share certificates in issue in respect of Ordinary Shares and existing warrant certificates in respect of the Warrants will remain valid.
The AIM Rules for Companies ("AIM Rules") require that AIM companies retain a nominated adviser and broker at all times. Smith & Williamson Corporate Finance Limited has agreed to act as nominated adviser and broker to the Company, conditionally on Admission being effected. The Directors do not envisage that there will be any alteration in the standards of reporting and governance which the Company currently maintains.
While for the most part the obligations of a company whose shares are traded on AIM are similar to those of companies whose shares are listed on the Official List, there are certain exceptions, including those referred to below:
·; Under the AIM Rules, prior shareholder approval is required only for (i) reverse takeovers (being an acquisition or acquisitions in a twelve month period which either (a) exceed 100 per cent. on various class tests; or (b) result in a fundamental change in the Company's business, board or voting control) and (ii) disposals that result in a fundamental change of business (being disposals that exceed 75 per cent. of various class tests). Under the Listing Rules, a more extensive range of transactions are conditional on shareholder approval.
·; There is no requirement under the AIM Rules for a prospectus or an admission document to be published for further issues of securities to institutional investors, except when seeking admission for a new class of securities or as otherwise required by law.
·; Unlike the Listing Rules, the AIM Rules do not specify any required structures or discount limits in relation to further issues of securities.
·; The UK Corporate Governance Code ("Combined Code") does not apply directly to companies who are admitted to trading on AIM. The Directors recognise, however, the importance of high standards of corporate governance and intend that the Company should observe the requirements of the QCA Guidelines for Smaller Quoted Companies and the Combined Code to the extent the Directors consider appropriate having regard to the size, nature and resources of the Company.
·; The ABI Guidelines, which give guidance on issues such as executive compensation and share based remuneration, corporate governance, share capital management and the issue and allotment of shares on a pre-emptive or non pre-emptive basis, do not apply directly to companies whose shares are traded on AIM. The Directors recognise, however, the importance of high standards of corporate governance and intend that the Company should observe the requirements of the ABI Guidelines to the extent the Directors consider appropriate having regard to the size, nature and resources of the Company.
Strategy of the Company post Admission
In addition to seeking to benefit from completion of the Company's existing two investments, the overall objective and investment strategy of the Company will remain to seek out suitably attractive mid-sized infrastructure projects which are focussed on the Energy and Transport sectors. The Company anticipates, following the recent progress made in respect of the toll road project, there will be a greater focus on the Transport sector and, in particular, on investments in roads. The Company also anticipates an increased focus on assets involved in the provision of energy from both conventional means and in particular from renewable sources, within the broader Energy sector.
In terms of maximum exposures, when the Company raises further capital for investment, allowing the size and the composition of the Group's current portfolio of investments to be expanded and the overall market capitalisation and scale of the Group to be more significant, it expects that single investments will typically represent no more than 30 per cent. of the Group's NAV (as measured at the time of investment). Should the maximum exposure be reached, the Group will seek to ensure that the remainder of the Group's investments are spread across separate assets (within the definition of the Group's overall focus) to ensure risk diversification. Subject to this, there will be no minimum or maximum stakes that the Company can have in projects although its target size of equity investment in any one single entity project is likely to be between £10 million and £30 million.
The Board continues to believe that the Company can, over time, develop a significant and meaningful presence in the infrastructure market in India, to create a valuable portfolio of relevant mid-size assets that would be regarded as highly attractive by existing and new potential participants in the infrastructure market in India. Further, by relying on the Company's internal resources, comprising the collective expertise and experience of the Directors, as well as on the continued services of its Asset Adviser, Akur Partners LLP, the Board believes it can aggregate such assets in a cost-effective manner, achieving significant economies of scale, which should again be attractive to other participants in the market.
Details of the Delisting and Admission
If Resolution 1 is approved, without material amendment, by Shareholders, application will be made for:
(a) the Company's listing of Ordinary Shares and Warrants on the Official List to be cancelled. It is expected that the last day of dealings in the Ordinary Shares and Warrants on the Official List will be on 15 November 2010 and that Delisting will become effective on 16 November 2010; and
(b) the Ordinary Shares and Warrants to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the Ordinary Shares and Warrants will commence at 8.00 a.m. on 16 November 2010.
Explanation of the Resolutions
An explanation of the resolutions to be voted on by Shareholders at the EGM (the "Resolutions") is set out below. Please note that this section does not contain the full text of the Resolutions and you should read this section in conjunction with the Resolutions contained in the Notice of EGM.
Shareholders should note that the Delisting and Admission is conditional, inter alia, on Resolution 1 being passed at the EGM without any material amendment.
Resolution 1 is a special resolution approving the cancellation of the Company's listing on the Official List and trading on the Main Market of the London Stock Exchange. In order for the Company to request the Delisting, Resolution 1 is required to be approved by not less than 75 per cent. of Shareholders as (being entitled to do so) vote in person or by proxy, pursuant to Listing Rule 5.2.5.
If Resolution 1 is not passed at the Extraordinary General Meeting, the Ordinary Shares and Warrants will continue to be listed on the Official List. However, the Directors would need to consider the strategic options available to the Company in order to ensure long-term compliance with Listing Rule 15 specifically the need to compile a suitably diversified portfolio. In practice, this would require the Company to undertake a significant fundraising in the short term which could prove challenging in the current market conditions and, in any event, given the concentrated nature of the current portfolio, the regulatory requirements for such a fundraising may prove to be prohibitive.
Resolution 2, which is conditional on the passing of Resolution 1, is an ordinary resolution approving a change to the Company's Investment Strategy with effect from Delisting. As noted in paragraph 2 above, the Group's portfolio of investments comprises only two assets. Whilst the Directors believe that these assets have the potential to provide Shareholders with substantial value, the composition of the portfolio does not reflect the current parameters in relation to maximum investment exposure in the Investment Strategy, as set out in the Company's original prospectus dated June 2008 (as amended by Shareholder resolution in September 2008). Therefore, Resolution 2 is proposed in order to ensure that the Investment Strategy reflects the current size and composition of the portfolio.
As referred to above, the Directors will continue to evaluate the prospects of the Group's current investments and any substantial further funding requirements for these projects as well as other prospective growth opportunities and, if appropriate, the Company may undertake one or more substantial fundraisings in the future. At such time, the Directors would seek to ensure that the Group's portfolio diversification was more in line with the exposure limits originally anticipated and, therefore, these parameters will remain in place for when the Company has further capital available for investment.
EGM
A circular setting out further details of the Delisting, Admission and the change in Investment Strategy and containing a notice convening the EGM for 10:00am on 18 October 2010 at the Company's registered office, together with a copy of this announcement, will be posted to shareholders today.
The circular will be available on the Company's website at www.iiplc.com. A copy of the above document has been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do.
The Board considers that the Delisting, Admission and change in Investment Strategy and the associated resolutions put to shareholders at the EGM are in the best interests of the Company and unanimously recommends that shareholders vote in favour of the resolution as the Directors intend to do in respect of their own beneficial holdings amounting in aggregate to 171,364 Ordinary Shares representing 0.43 per cent. of the issued ordinary share capital as at 23 September 2010, being the last practical date prior to the release of this announcement.
-ENDS-
Enquiries:
| Infrastructure India plc | www.iiplc.com |
| Rupert Cottrell | Via Redleaf Communications |
|
|
|
| Akur Partners LLP | 020 7203 8374 |
| Andrew Dawber / Anthony Richardson / Tom Frost |
|
|
|
|
| Smith & Williamson | 020 7131 4000 |
| Azhic Basirov / Siobhan Sergeant |
|
|
|
|
| Singer Capital Markets Limited | 020 3205 7500 |
| James Maxwell / Nick Donovan |
|
|
|
|
| Redleaf Communications | 020 7566 6727 |
| Emma Kane / Henry Columbine | iif@redleafpr.com |