Jz Capital Regulatory News (JZCP)

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

This announcement is an advertisement and not a prospectus. Investors should not subscribe for securities referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by JZ Capital Partners Limited (the "Company") in connection with the issues of up to £77,722,280 in aggregate nominal amount of 6.00 per cent. convertible unsecured subordinated loan stock due 2021 ("CULS") and the admission of the CULS to trading on the London Stock Exchange plc's Specialist Fund Market ("Admission"). This announcement does not constitute or form part of any offer or invitation to sell, allot or issue, or any solicitation of or inducement to enter into any offer to purchase or subscribe for, any securities referred to in this announcement (including CULS or any ordinary shares (the "Ordinary Shares") arising on any conversion of the CULS) or any other securities, in the United States or in any other jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with any contract therefor.

JZ CAPITAL PARTNERS LIMITED (the "Company" or "JZCP")

(a closed-ended investment company incorporated with limited liability under the laws of Guernsey with registered number 48761)

Issue of up to £77,722,280 in aggregate nominal amount of 6.00 per cent. convertible unsecured subordinated loan stock due 2021

21 July 2014

The Board of the Company today announces a proposal to raise up to £77,722,280 through the issue of 6.00 per cent. convertible unsecured subordinated loan stock due 2021.

The Board proposes to structure the offer by way of:

1. an initial tranche of £38,861,140 in aggregate nominal amount of 6.00 per cent. convertible unsecured subordinated loan stock due 2021 of the Company (the "Initial CULS") to be issued (the "Initial Issue") at an issue price (the "Initial Issue Price") of £10 per £10 in nominal amount; and

2. if the Company decides, in its absolute discretion (but subject to the approval of shareholders), during the period from the date of the Prospectus to (and including) the date 12 months after the date of the Prospectus, a further tranche (the "Further Issue" and, together with the Initial Issue, the "Issues") of up to £38,861,140 in aggregate nominal amount of 6.00 per cent. convertible unsecured subordinated loan stock due 2021 of the Company (the "Further CULS") to be consolidated and form a single series with the Initial CULS (the Initial CULS, together with the Further CULS, the "CULS").

On conversion, the CULS convert into ordinary shares of the Company ("Ordinary Shares") which will be admitted to trading on the London Stock Exchange plc's Specialist Fund Market.

The Initial Issue of Initial CULS is being made pursuant to the 10 per cent. pre-emption right disapplication authority obtained at the Company's annual general meeting held on 19 June 2014. The Further Issue of Further CULS is conditional on a further separate pre-emption right disapplication authority.

Benefits of the Issues

It is believed that any Issue of CULS will have the following advantages:

1. The CULS will give the Company:

· additional capital to pursue opportunities in the US micro cap market where it is considered there are a number of opportunities to deploy capital at present as a result of a paucity of capital in that market and low valuations being placed on businesses by sellers;

· the ability to manage its liquid resources up to the redemption of its ZDP Shares on the date of their repayment (being 22 June 2016), in conjunction with shorter term facilities that the Company may arrange; and

· long-term structural gearing at a fixed cost that is competitive with the cost of other forms of gearing that the Company might have employed and which has the potential to be converted into the permanent capital base of the Company.

2. The CULS will provide holders of the CULS with:

· a yield of 6.00 per cent. per annum, which is significantly above the Company's current dividend policy, which is to distribute in each financial year in the form of dividends an amount equal to approximately 3 per cent. of the Company's net assets;

· capital protection through repayment at par, with that repayment being well covered as of today by the assets of the Company (more than 9.86 times covered based on an Initial Issue of £38,861,140 in nominal amount of Initial CULS and the Company's unaudited net assets of £383 million as at 30 June 2014); and

· the potential to participate in further growth in the net asset value per Ordinary Share through the ability to convert the CULS into new Ordinary Shares.

3. Relative to other forms of gearing, the interests of holders of the CULS should be more closely aligned with those of ordinary shareholders through the CULS being convertible into Ordinary Shares in the future and relatively long-term in nature.

4. Following any conversion of CULS:

· the Company would have an increased number of Ordinary Shares in issue, which should, in due course, potentially enhance the liquidity in the market for the Ordinary Shares; and

· the capital base of the Company would increase, allowing the Company's fixed operating costs to be spread across a larger number of Ordinary Shares, which should cause the Company's total expense ratio to fall.

Further details of the Issues of CULS including the risks specific to the Company and the CULS are described in the Prospectus.

Overview of the CULS

The terms and conditions of the Initial CULS and, if issued, the Further CULS, will be identical (save as to issue date and issue price). Accordingly, the Initial CULS and, if issued, the Further CULS will form a single series of securities.

The Initial CULS will bear interest on their nominal amount for the time being outstanding from (and including) the date of issue of such Initial CULS (being, 30 July 2014) (the "Initial Issue Date") at the rate of 6.00 per cent. per annum and will be payable semi-annually in equal instalments in arrear on 31 March and 30 September (each, an "Interest Payment Date") in each year to (but excluding) the date of final redemption of the CULS (being, 30 July 2021). The Further CULS, if issued, will bear interest on their nominal amount for the time being outstanding from (and including) the issue date of such Further CULS at the rate of 6.00 per cent. per annum and will be payable semi-annually in equal instalments in arrear on each Interest Payment Date to (but excluding) the date of final redemption of the CULS.

Holders of the CULS shall have the right (a "Conversion Right" and together, the "Conversion Rights") to convert the whole or part (being an integral multiple of £10 in nominal amount) of their CULS into Ordinary Shares. Conversion Rights shall be exercisable at any time during the period from (and including) the forty-first business day in London and Guernsey after the Initial Issue Date to (and including) the tenth business day in London and Guernsey prior to the date of final redemption of the CULS. The initial conversion price is £6.0373 per Ordinary Share, which shall be subject to adjustment, including in respect of: (i) consolidation and sub-division of the Ordinary Shares; (ii) dividend payments made by the Company; (iii) issues of shares, rights, share-related securities and other securities by the Company; (iv) in the event of a demergers; and (v) in the event of a change of control of the Company (the "Conversion Price"). The initial Conversion Price of £6.0373 is set at a premium of 2.5 per cent. to the published unaudited net asset value per Ordinary Share as at 30 June 2014, which is US$10.07 per Ordinary Share converted into Pounds Sterling using an exchange rate of GBP/USD 1.70985, the spot rate published by WM/Reuters as at 30 June 2014 (being the date of the calculation of the net asset value per Ordinary Share).

Unless previously redeemed, purchased or converted and, in each case, cancelled, the CULS will be redeemed on 30 July 2021 (the "Maturity Date") at their nominal amount, together with any accrued interest up to (but excluding) the Maturity Date.

The Company may redeem all (but not some only) of the CULS, at its option at their nominal amount, together with accrued but unpaid interest, at any time: (i) on or after 30 July 2017, if on each of not less than 20 dealing days during the period of 30 consecutive dealing days the volume weighted average price of the Ordinary Shares exceeds 130 per cent. of the Conversion Price; or (ii) Conversion Rights shall have been exercised and/or purchases (and corresponding cancellations) and/or redemptions effected in respect of 85 per cent. or more in nominal amount of the CULS.

Following the occurrence of a change of control of the Company, a holder of the CULS will have the right, at such holder's option, to require the Company to convert their CULS into Ordinary Shares at an enhanced change of control Conversion Price or redeem its CULS at its nominal amount, together with accrued and unpaid interest to the date of redemption.

Events of default under the CULS include: (i) non-payment, except as provided by the subordination agreement (the "Subordination Agreement", as further described under the heading "Subordination of the CULS" below), of principal or interest for 14 days; (ii) winding-up or dissolution of the Company; (iii) certain events relating to insolvency of or insolvency proceedings or creditors' process involving the Company or its assets; (iv) breach of the obligations of the Company under the CULS or the trust deed (the "Trust Deed") (which breach is not remedied within 30 days); or (v) in respect of an alteration, attachment, creation or issue of a new class of shares by the Company.

The CULS will contain restrictions such that, as long as the CULS are outstanding: (a) the Company shall not incur or have outstanding (and shall procure that no subsidiary incurs or has outstanding) any financial indebtedness, if, at the time of such incurrence, the aggregate amount of financial indebtedness of the Company and its subsidiaries then outstanding (taking into account the financial indebtedness to be incurred as if it had been incurred) exceeds 50 per cent. of the net asset value of the Company calculated by the Company in accordance with its normal accounting policies and stated in the latest monthly management accounts; and (b) the aggregate amount of financial indebtedness of the Company and its subsidiaries (excluding indebtedness with an original maturity of less than 270-days for the purpose of meeting investment commitments pending the realisation of the Company's assets) shall not, at any time, exceed 75 per cent. of the net asset value of the Company calculated by the Company in accordance with its normal accounting policies and stated in the latest monthly management accounts. The incurrence borrowing restriction described in (a) above will not prohibit the incurrence of any financial indebtedness in existence on the Initial Issue Date, the issue of the Initial CULS on the Initial Issue Date or indebtedness of a short-term nature incurred to enable the Company to meet investment commitments pending the realisation of assets.

The CULS will be issued in registered form in integral multiples of £10, and may be held in certificated or uncertificated form.

Further details of the CULS are set out in Part 3 of the Prospectus.

Subordination of the CULS

The terms and conditions of the CULS are subject in their entirety to the terms of the Subordination Agreement to be entered into by, inter alios, the Company and the trustee.

Any failure to pay any amount under or in respect of the CULS to the trustee or any holder of the CULS as a result of the provisions of the Subordination Agreement shall not give rise to an event of default under or a breach of the CULS or the Trust Deed. Any amount which is not so paid due to the provisions of the Subordination Agreement shall remain a debt owing to the trustee or the relevant holder of the CULS, as the case may be, by the Company until it is paid and shall be payable as specified in the terms and conditions of the CULS.

So long as certain of the Company's senior indebtedness designated as "Senior Debt" remains outstanding, the Subordination Agreement provides, inter alia, for the priority of such Senior Debt over all amounts payable by the Company under the Trust Deed and the CULS (other than certain fees, costs and expenses payable to the trustee under the Trust Deed).

The Subordination Agreement allows the Company to refinance, replace, renew or increase any existing Senior Debt and to borrow or incur any new liabilities which are to constitute new Senior Debt.

A copy of the Subordination Agreement (excluding the notice provisions, signature page and schedules) is set out in Part 3 of the Prospectus.

The Issues

£38,861,140 in aggregate nominal amount of Initial CULS is available under the Initial Issue at an Initial Issue Price of £10 per £10 in nominal amount. If the Company decides, in its absolute discretion (but subject to the approval of shareholders), during the period from the date of the Prospectus to (and including) the date 12 months after the date of the Prospectus, to issue the Further CULS, the nominal amount and Further Issue Price of such Further CULS will be set forth in a supplementary prospectus and a pricing announcement in respect of the Further Issue.

The Initial CULS and, if issued, the Further CULS will be made available to institutional investors and private client stockbrokers, including certain existing Shareholders. CULS will not however be offered or sold within the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) ("US Person"), and nor will the CULS be offered to or sold within Canada, Australia, Japan, New Zealand and the Republic of South Africa (together with the United States, the "Excluded Jurisdictions") or to any national, resident or citizen of the Excluded Jurisdictions. In addition, no invitation or solicitation will be made to the public in the Cayman Islands to subscribe for the CULS. In the event that either of the Issues are oversubscribed, it will be necessary to scale back applications. In so doing, it is the Company's intention that (insofar as practicable), any investors who are existing Shareholders will be allocated such percentage of CULS as is as close as possible to their percentage holdings of Ordinary Shares. Such Shareholders will not, however, be entitled to any minimum allocation of CULS and there will be no guarantee that those Shareholders wishing to participate in either of the Issues will receive all or some of the CULS for which they have applied. Furthermore, J.P. Morgan Securities plc as Placing Agent will have absolute discretion to determine the proportion of CULS allocated to each person wishing to participate in either of the Issues.

The Initial Issue is conditional, inter alia, upon:

· the Company having made an application for Admission of the Initial CULS to trading on the Specialist Fund Market as of 8.00 a.m. on 30 July 2014; and

· the Placing Agreement having become unconditional in all respects (save as for Admission) and not having been terminated in accordance with its terms prior to such Admission.

J.P. Morgan Securities plc is acting as Broker and Placing Agent to the Company.

The Prospectus in connection with the Issues will be published in due course and will be available from the registered office of the Company and at www.jzcp.com, and for viewing at: www.morningstar.co.uk/uk/nsm.

Initial CULS expected timetable(1)

All references to times in this announcement are to London time.

Notes:

1. All times and dates in the Initial CULS expected timetable above are indicative only and may be adjusted by the Company (with the agreement of J.P. Morgan Securities plc). Any changes to the timetable will be notified by publication of a notice through a Regulatory Information Service.

Enquiries:

Company website: www.jzcp.com

William Simmonds

J.P. Morgan Cazenove

Tel: +44 (0)20 7742 4000

Andrew Maiden

Northern Trust International Fund Administration Services (Guernsey) Limited

Tel: +44 (0) 1481 745368

Disclaimer

This announcement has been issued by and is the sole responsibility of the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material set forth herein is for information purposes only and is not intended, and should not be construed, as an offer of securities for sale in the United States or in any other jurisdiction.

This announcement is an advertisement and not a prospectus and investors should not subscribe for CULS or any Ordinary Shares arising on any conversion of the CULS except on the basis of information in the Prospectus.

This announcement is intended for distribution in the United Kingdom only to persons who are qualified investors (within the meaning of the Prospectus Directive 2003/71/EC) and (i) who have professional experience in matters relating to investments falling within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); and/or (ii) who are high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2)(a) to (d) of the FPO or to those persons to whom it may otherwise be lawfully communicated (in each case, referred to as "Relevant Persons") and persons who do not have professional experience in matters relating investments should not rely on it. Any investment or investment activity to which this announcement relates is available in the United Kingdom only to Relevant Persons and will be engaged in only with such persons.

This announcement is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into the Excluded Jurisdictions or any other jurisdiction in which the same would be unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement or any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for CULS or any Ordinary Shares arising on any conversion of the CULS in the United States or in any other jurisdiction where such offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company or J.P. Morgan Securities plc.

The Company has not been and will not be registered under the United States Investment Company Act of 1940 (as amended) and the recipients of the Prospectus will not be entitled to the benefits of that Act. The Prospectus should not be distributed into the United States or to US Persons. In addition, neither the CULS nor the Ordinary Shares arising on any conversion of the CULS have been, or will be, registered under the United States Securities Act of 1933 (as amended) or with any securities regulatory authority of any state or other jurisdiction of the United States, and they may not be offered or sold within the United States or to, or for the account or benefit of, US Persons. The offer and sale of CULS or any Ordinary Shares arising on any conversion of the CULS has not been and will not be registered under the applicable securities laws of the Excluded Jurisdictions. Subject to certain exceptions, the CULS or any Ordinary Shares arising on any conversion of the CULS may not be offered to or sold within the Excluded Jurisdictions or to any national, resident or citizen of the Excluded Jurisdictions.

Each of the Company, J.P. Morgan Securities plc and their respective affiliates expressly disclaim any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Any subscription for CULS or any Ordinary Shares arising on any conversion of the CULS should be made solely on the basis of the information contained in the final Prospectus. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment when the Prospectus is published.

The Initial CULS expected timetable including the date of Admission may be influenced by a range of circumstances such as market conditions. There is no guarantee that the Issues and the Admission will occur and you should not base your financial decisions on the Company's intentions in relation to the Issues and Admission at this stage. Subscribing for CULS or any Ordinary Shares arising on any conversion of the CULS to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Issues. The value of CULS and Ordinary Shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Issues for the person concerned. Past performance or information in this announcement or any of the documents relating to the Issues cannot be relied upon as a guide to future performance.

J.P. Morgan Securities plc, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting solely for the Company and for no one else in connection with the Issues and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of J.P. Morgan Securities plc or for affording advice in relation to the Issues, Admission, the contents of this announcement or any other matter referred to in this announcement or the Prospectus. This does not exclude or limit any responsibility which J.P. Morgan Securities plc may have under Financial Services and Markets Act 2000 (as amended) ("FSMA") or the regulatory regime established thereunder. Apart from the liabilities and responsibilities (if any) which may be imposed on J.P. Morgan Securities plc by the FSMA or the regulatory regime established thereunder, J.P. Morgan Securities plc make no representations, express or implied, nor accept any responsibility whatsoever for the contents of this announcement or the Prospectus nor for any other statement made or purported to be made by any of them or on their behalf in connection with the Company, the Company's investment adviser, the CULS or the Issues. J.P. Morgan Securities plc and its affiliates accordingly disclaim all and any liability (save for any statutory liability) whether arising in tort or contract or otherwise which they might otherwise have in respect of this announcement or the Prospectus or any such statement.

In connection with the Issues, J.P. Morgan Securities plc and its affiliates acting as an investor for its or their own account(s), may acquire CULS and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such securities of the Company, any other securities of the Company or other related investments in connection with the Issues and the Admission or otherwise. Accordingly, references in the Prospectus to the CULS being issued, offered, acquired, subscribed or otherwise dealt with, should be read as including any issue or offer to, acquisition of, or subscription or dealing by J.P. Morgan Securities plc and any of its affiliates acting as an investor for its or their own account(s). Neither J.P. Morgan Securities plc nor any of its affiliates intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

None of the Company, J.P. Morgan Securities plc and any of their respective affiliates accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from this announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. None of the information contained in this announcement has been independently verified or approved by J.P. Morgan Securities plc or it respective affiliates.

The Company, J.P. Morgan Securities plc, and their respective affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's board of directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, the results of operations, financial condition prospects, growth and dividend policy of the Company and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company.

These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Forward looking statements speak only as of the date of this announcement.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per share for the current or future financial years would necessarily match or exceed the historical published earnings per share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Certain figures contained in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.