Infra.india Regulatory News (IIP)

Infrastructure India plc

Posting of Circular to Shareholders

Summary

Infrastructure India plc ("Infrastructure India" or the "Company") announces the following:

·; A circular convening an extraordinary general meeting for 6 April 2010 has been posted to shareholders today following the requisition on behalf of Advance UK Trust plc ("Advance UK").

·; Infrastructure India has received irrevocable undertakings to vote against the resolutions to be proposed at the extraordinary general meeting from certain shareholders representing, in aggregate, approximately 25 per cent. of the issued share capital of the Company.

·; Advance UK believes it is "inevitable" that it will be wound up voluntarily, after its general meeting to be held on 15 March 2010.

·; The Board of Infrastructure India recommends that it is in the best interests of shareholders to vote against the resolutions, in particular because it would:

o deprive the Company's shareholders of the benefit of the revenues that are beginning to be generated at the investee company level;

o leave the Company without the wealth of experience of the three relevant directors of the Company; and

o put at risk the detailed plans and strategy that the directors have been working on to further develop and expand the Company to enhance shareholder value.

·; Advance UK has not amplified any strategy for the future development of the Company nor has Advance UK publicly indicated that it has any relevant relationships from which the Company will be able to benefit.

Introduction

The Board of Infrastructure India plc, the investment company focussing on Indian infrastructure assets, would like to advise shareholders that, further to the announcements of 5 February 2010 and 17 February 2010, a circular convening an extraordinary general meeting of the Company (the "EGM") has been posted to shareholders today (the "Circular"), following the requisition received on behalf of Advance UK.

The Requisition

To remind shareholders, the Company received a requisition (the "Requisition") from Nortrust Nominees Limited, acting on behalf of Advance UK, to convene an extraordinary general meeting of the Company, at which Advance UK is proposing to remove three of the four directors of the Company, namely Prodaman Sarwal and Timothy Walker, as well as Rupert Cottrell, the Chairman, to be replaced with two individuals namely, Geoffrey Richard Miller and John Charles Bourbon.

Irrevocable Undertakings

The Company has received irrevocable undertakings to vote against the resolutions to be proposed at the EGM from certain of the Company's shareholders (including those directors of the Company that are also shareholders) representing, in aggregate, approximately 25 per cent. of the issued share capital of the Company as at 5 March 2010, being the latest practicable date prior to the posting of the Circular.

Advance UK

Shareholders may recall the announcement made by Advance UK on 16 December 2009 about its own activities which confirmed that a resolution proposed at its annual general meeting, for Advance UK to continue as an investment trust for a further three years, had been rejected by its shareholders, specifically by certain of its large institutional shareholders. This meant that the directors of Advance UK had three months to convene a general meeting at which a special resolution would be put to shareholders to wind up Advance UK voluntarily. As previously announced on 15 January 2010, the Board of Infrastructure India wrote to Nortrust Nominees Limited in December 2009 and to Progressive European Markets Ltd, the manager of Advance UK, in January 2010 in relation to the above as the Company's directors believed that it was pertinent to the Company and its shareholders that Advance UK might be wound up and cease to exist as an investment fund.

Advance UK has convened a general meeting for 15 March 2010, at which a special resolution that Advance UK be wound up voluntarily is to be proposed. In addition, the circular sent to Advance UK shareholders ("the Advance UK Circular") stated that the directors of Advance UK, themselves, intend to vote in favour of the voluntary winding up, and accordingly the Advance UK Circular stated that it was "inevitable" that Advance UK would be wound up voluntarily at its forthcoming general meeting.

Given these recent developments, the Board of Infrastructure India believes that Advance UK will need to sell some or all of its shareholding in the Company, possibly in the near term, as part of the proposed liquidation of its own portfolio. Consequently, the Board of IIP believes that Advance UK would have no further interest in the long term strategy and development of the Company and, therefore, the Board believes that it would make little sense at this time to remove three of the directors of the Company and instead appoint the two individuals proposed by Advance UK.

The priority of the Board of Infrastructure India remains to consider the benefit and needs of all of the Company's shareholders, not just those of Advance UK.

Reasons to vote against the resolutions to be proposed at the EGM

The Board of Infrastructure India believes it would be detrimental to the Company's shareholders to vote in favour of the resolutions to be proposed at the EGM as:

·; this would deprive the Company's shareholders of the benefit of the revenues that are beginning to be generated for the Company and which will increase as the Company's investments near full completion, given the suggestion that Advance UK appears to be making in its Requisition to sell the Company before the assets become fully operational;

·; the promotion of Bloomsbury Asset Management Advisors, the Company's investment adviser ("BAMA"), by Advance UK means the Company's overheads are unlikely to be able to be reduced in the manner Advance UK suggests in the Requisition, given that BAMA has been paid over £820,000 since the IPO of the Company, which in turn represents the largest advisory expense to the Company since the IPO of the Company; and

·; this would deprive the Company of: (i) the wealth of experience that the three relevant directors of the Company hold between them in respect of both infrastructure and India; (ii) the relevant relationships and contacts they have built up and developed between them; and (iii) the detailed plans and strategy that they have been working on to further develop and expand the Company to enhance shareholder value, the removal of all of which would, in turn, negatively impact upon the progress and future development of the Company.

The Board, as a whole, believes the three directors of the Company whom Advance UK wishes to remove from office add critical value to Infrastructure India, bringing with them the necessary industry and sectoral experience to foster the success of the Company and to ensure shareholder value is enhanced.

In addition, based on the information provided by Advance UK in the Requisition, the Board notes that the two directors proposed by Advance UK appear to have no infrastructure investment experience at all, with only a limited background in the Indian market. Further, the Board notes that Advance UK has not amplified any strategy for the future development of the Company in the Requisition, nor has Advance UK publicly indicated that it has any relevant relationships from which the Company will be able to benefit. Given the Advance UK Circular stated that it was now "inevitable" that Advance UK would be wound up voluntarily, the Board feels Advance UK will now have no long-term strategy for the Company.

Given all of the above, the Board, therefore, recommends that the shareholders of the Company vote against the Resolutions and support the Board as currently constituted.

A copy of the Circular has been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

Commenting on the requisition, Rupert Cottrell, Chairman of Infrastructure India said:

"The Directors respect the right of Advance UK as a shareholder to have requisitioned a general meeting and take their responsibilities in this regard, as well as their responsibility to all shareholders, very seriously. However, the Directors believe that, given the uncertainties regarding the status of Advance UK that have been apparent since December 2009, as confirmed by the Advance UK Circular that it seems inevitable that Advance UK is to be wound up voluntarily at its forthcoming general meeting, the requisition served on the Company on behalf of Advance UK has represented a significant and unnecessary cost to the Company as well as a major distraction at a time when it is focussing on evolving its strategy with regard to a potential future fundraising and the overall development of corporate relationships.

"The Board is pleased with the shareholder support it has received to date, representing a significant percentage of the Company's issued share capital.

"We want your Company to move forward in carefully measured steps given the difficult times in which we currently operate and we believe that your current Board is best placed to deliver increasing returns for the Company's shareholders, adopting a clear strategy to deliver value to, and maintain high returns for, the Company and its shareholders."

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