Jz Capital Regulatory News (JZCP)

JZ Capital Partners Limited Announces its Proposed Admission to Trading on the London Stock Exchange's Specialist Fund Market and other Strategic Initiatives

18 May 2012

JZ Capital Partners Limited ("JZCP" or "the Company") today announces the proposed admission ("Admission") to trading on the London Stock Exchange's Specialist Fund Market ("SFM") and consequent cancellation of listing on the premium segment of the Official List and trading on the London Stock Exchange's main market for listed securities. The Company also announces the proposed admission to listing on the CISX, proposed amendments to the Current Articles, a proposed investment in an Asset Management Business and a proposed amendment to the Company's investment policy.

SummaryProposed Admission

·; The proposed Admission will enable the Company to have a single class of ordinary shares in place of the current capital structure that consists of Ordinary and Limited Voting Ordinary (''LVO'') shares. This simplified structure will be more appropriate to the mix of investors who own the Company and will remove a structural inadequacy that has restricted the Company's ability to accommodate US investors.

·; There are potentially onerous and costly US regulatory consequences if voting control of JZCP is owned by US shareholders and in light of this, US ownership trends, and JZCP's significant connection with the United States, the Board feels that it is in the interest of all shareholders to devise a capital structure that resolves this issue on a permanent basis.

·; The new capital structure will provide the following benefits to shareholders:

- Better reflect the Company's market capitalization

- Promote a free flow of Ordinary shares giving improved access for US investors

- Provide a resolution of existing US securities laws regulatory risk

- All ordinary shareholders will hold a single class of listed Ordinary shares

- No forced conversion or sell downs as required under the current situation when the percentage of US shareholders exceeds 50%

·; The Company will voluntarily continue to act as if the regulatory framework which currently applies to the Company (as a result of being listed on the premium segment of the Official List) will continue to apply in all material respects.

New Dividend Policy

·; The Board continues to be mindful of the significant discount to NAV at which the Company is trading and continually explores options that are aimed at providing a long-term solution to narrow the discount.

·; Accordingly, the Board is proposing to make dividend distributions that are regular and predictable. For the current financial year and thereafter it will be the Directors' policy that the dividend will be calculated as 3 per cent. of Net Asset Value ("NAV) per year (1.5 per cent. at each of the interim and final stages) implying a yield at the discount (as at 16 May 2012) of approximately 4 per cent.

Other Strategic Initiatives

·; The Company's Investment Adviser, JZAI, is of the view that there continue to be investment opportunities outside of the United States which it wishes the Company to pursue. The Board therefore proposes to increase the limit in the Company's investment strategy on investments in businesses outside the United States from 20 per cent. to 30 per cent. of the Company's gross assets.

·; JZAI intends to establish a new asset management business (the "Asset Management Business"), which the Company will co-invest in. The objective of the Asset Management Business will be to provide superior investment returns through diversified, multi-asset-class portfolios for its clients. The Asset Management Business will be a portfolio company of JZCP.

·; The Company is making an investment, together with Jay Jordan and David Zalaznick, in Red Sky JZ Bedford, LLC, which has recently acquired real estate in Brooklyn, New York, consisting of retail units and apartments for approximately $64 million. JZAI - the Investment Adviser of the Company - is considering the possibility of the Company making further investments of this kind.

David Macfarlane, Chairman, commented: "The proposals announced today will lead to a simplified capital structure that will be more suited to our mix of shareholders and support the Company's continued commitment to provide shareholders with future profitable growth."

"Narrowing the discount to NAV remains a priority for the Board and the proposed dividend policy change is designed to provide a long-term solution to this issue. Ordinary shareholders will benefit from dividend distributions that are regular and more predictable while other proposals will further diversify the portfolio by geography and industry, building on the Company's strong track record in the US and European micro cap sector."

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Below is the letter from the Chairman of JZ Capital Partners to shareholders, which forms part of the circular the Company is posting to shareholders in connection with the transactions detailed in this announcement ("Circular"), copies of which are available for viewing, free of charge during normal business hours, at the National Storage Mechanism (which has replaced the UK Listing Authority's Document Viewing Facility) (www.hemscott.com/nsm.do) and at the Company's registered office at 2nd Floor, Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3NQ, Channel Islands.

Notices convening the Limited Voting Ordinary Shares Class Meeting, the First General Meeting and the Second General Meeting are also available within the Circular and on the Company's website at www.jzcp.com

Unless otherwise stated, defined terms used in this announcement have the same meaning as is given to them in the Circular.

1. Introduction and Purpose of this Document

The principal purpose of this letter is to set out and explain a proposal for restructuring JZCP's ordinary share capital. The proposal will enable the Company to have a single class of ordinary shares in place of the current capital structure, which is divided into listed Ordinary Shares and unlisted Limited Voting Ordinary Shares. This simplified structure will be more appropriate to the mix of investors who own the Company and will remove a structural inadequacy that hitherto has restricted the Company's ability to accommodate US investors. Having a single class of ordinary shares should also help remove the impression that the market capitalisation of the Company in respect of the ordinary share capital is only represented by the current listed Ordinary Shares when actually it is $233m (as at 16 May 2012, being the latest practicable date prior to the publication of the Circular). Most fundamentally however, the proposal seeks to address the potentially serious US regulatory consequences caused by the extent of ownership of JZCP by US residents. Taking JZCP's ordinary and limited voting ordinary share capital together, approximately 70 per cent. of JZCP's equity is in US ownership. The trend in recent times has been for this to increase.

Given the significant connection JZCP has with the United States, the issue that the Company faces is that if US residents come to own more than 50 per cent. of JZCP's voting shares, which means for this purpose the right to vote with regard to the appointment and removal of directors, the Company would be considered a ''domestic issuer'' for the purposes of the US securities laws. This could have materially adverse consequences. For example, if any class of the Company's shares were to become more widely held than currently - and given that the shares are freely traded on the main market of the London Stock Exchange this is not something the Company can control - the Company could be required to register with the SEC. Once registered, the Company would be subject to onerous and costly reporting requirements, with which the Company is not and could not be, without incurring substantial and disproportionate expense, structured to comply. In addition, were JZCP to consider issuing further listed equity in the future (including the issue of additional ZDP Shares), such an issue would be subject to requirements under the US securities laws which functionally the Company could not comply with given its current structure. The Company would therefore be faced with the choice of not proceeding with the issue or having to restructure itself at a point where timing constraints or other circumstances could be more restrictive or difficult than is currently the case. However, in the light of the current discount the Board has no present intention to issue further Ordinary Shares. As at 9 May 2012 (being the latest practicable date prior to publication of the Circular), US residents hold approximately 47 per cent. of the Ordinary Shares in issue and 100 per cent. of the Limited Voting Ordinary Shares in issue. Disregarding the ZDP Shares, this amounts to approximately 70 per cent. of the issued share capital of the Company.

The Board therefore feels that it is in the interest of Ordinary Shareholders and Limited Voting Ordinary Shareholders to devise a capital structure that resolves this issue on a permanent basis. The current structure of JZCP's ordinary share capital, designed to alleviate the problem by being divided into

Limited Voting Ordinary Shares, which are owned by our major US investors and which have limited voting rights, inter alia, as regards the appointment and removal of directors, and Ordinary Shares, which have full voting rights, including as regards the appointment and removal of directors, has been found to be inadequate.

The fact that the Ordinary Shares are freely traded means it is possible that US residents can acquire in the market more than 50 per cent. of the relevant voting rights. This happened last year. In that circumstance the Company has the right under its Current Articles in respect of the excess number of shares to force either a sell down through the market or a conversion into Limited Voting Ordinary Shares by all US investors in proportion to their respective holdings of Ordinary Shares. The Board believes that both courses of action are inimical to good investor relations, off-putting for potential new investors and controversial and difficult to implement. In the event, the Company negotiated with its major US shareholders a voluntary conversion of part of their holdings of Ordinary Shares into Limited Voting Ordinary Shares as announced by the Company on 25 August 2011.

The Limited Voting Ordinary Shares are not eligible for listing on the Official List. Another minor but nevertheless unhelpful consequence is that many of the suppliers of market data measure market capitalisation by reference only to the Ordinary Shares, giving the market the impression that JZCP's equity is much less than what in reality it is. The current structure was designed in order to preserve a premium listing for the Ordinary Shares and at a time when it was believed that the trend of ownership would be from the US to Europe. However, the trend of ownership has been the reverse and the Company has in fact experienced higher levels of interest and trading activity from US investors.

The proposals being put forward in the Circular include converting the Limited Voting Ordinary Shares into Ordinary Shares, all such Ordinary Shares having the same rights and being subject to the same restrictions.

For the purposes of the US securities law issues outlined above, the rights of the Ordinary Shares would provide that upon any vote which relates to the appointment or removal of a director, each holder of Ordinary Shares will be required to certify that it is not a US resident. The aggregate number of votes of Ordinary Shares held by shareholders who do not so certify would be limited to 49 per cent. of the votes that can be cast on such a resolution. On that basis, it would not matter, subject only to the US tax issue detailed in Part III of the Circular, how many Ordinary Shares were owned by US investors. Not only would the Company no longer live under the threat of significantly adverse consequences of delinquency under US securities law, it would be able to accommodate investors from a market where there appears to be an appetite for its investment product.

Implementation of the proposed structure would mean that JZCP's Ordinary Shares would not be eligible for listing on the premium segment of the Official List. Accordingly, the Board has announced its intention to seek a transfer of the Company's Ordinary Shares from trading on the London Stock Exchange's main market for listed securities to admission to trading on the London Stock Exchange's Specialist Fund Market. As a result of that transfer, the Company will be required to cancel admission of the Ordinary Shares and ZDP Shares to the premium and standard segments (respectively) of the Official List and to cancel trading of such Shares on the London Stock Exchange's main market for listed securities. The Board intends to seek admission of the ZDP Shares to the SFM. The Board has also announced its intention to seek admission to listing on the Official List of the CISX, the principal purpose of which is to ensure that Ordinary Shares and ZDP Shares continue to be eligible for inclusion within the stocks and shares component of an ISA and within a PEP. In connection with the transfer to the SFM and listing on the CISX of the Ordinary Shares and the ZDP Shares, the Board also proposes to amend the Current Articles.

JZCP's Ordinary Shares will cease to be eligible for inclusion in the relevant FTSE index. It is recognized that this will not suit certain of JZCP's institutional UK shareholders and this is regretted, but the Board is of the opinion that, faced with the threat of the US securities law problems outlined in the Circular, it has no alternative way to resolve the problem that is in the best interests of the Company, its Limited Voting Ordinary Shareholders as a whole and its Ordinary Shareholders as a whole.

The Ordinary Shares and the ZDP Shares would continue to settle through CREST.

By having its shares admitted to trading on the SFM, JZCP will no longer be subject to the Listing Rules, including the requirements therein relating to changes to the Company's investment policy and those governing related party transactions. It should be noted that in light of this and as discussed in more detail below and in Part III of the Circular, the Board proposes, following admission of the Ordinary Shares to trading on the SFM, to continue to act as if the regulatory framework which currently applies to the Company (as a result of being listed on the premium segment of the Official List) will continue to apply in all material respects. Following admission to listing on the CISX, the Company will also be required to comply with the CISX Listing Rules. Ordinary Shareholders should note that, following admission of the Ordinary Shares to trading on the SFM, the FSA will no longer act as the arbiter of the Company's compliance with the Listing Rules. Further details of the main differences between regulatory regimes of the premium segment of the Official List and the SFM are set out in paragraph 7 of Part III of the Circular.

Shareholders should note that there are certain tax implications of the proposed transfer to the SFM and admission to listing on the CISX, details of which are set out in Part IV of the Circular.

Separately to the above proposals, the Board is also proposing that the Company, together with DavidZalaznick and Jay Jordan, jointly invest in a new asset management business. The Board is also proposing that the investment policy of the Company is amended in order to take advantage of further investment opportunities outside of the United States. Further details are set out below.

The conversion of the Limited Voting Ordinary Shares into Ordinary Shares and the proposed amendments to the Current Articles require the prior approval of Limited Voting Ordinary Shareholders and Ordinary Shareholders. The cancellation of admission of the Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities, the investment in the Asset Management Business (as defined below) and the proposed amendment to the Company's investment policy also require the prior approval of Ordinary Shareholders.

The purpose of the Circular is therefore to:

(a) provide Limited Voting Ordinary Shareholders with notice of the Limited Voting Ordinary Shares Class Meeting and with notice of the General Meetings;

(b) provide Ordinary Shareholders with notice of the General Meetings;

(c) explain the background to and reasons for the Restructuring and why the Board considers the

Restructuring and the Restructuring Resolutions to be in the best interests of the Company

and Ordinary Shareholders as a whole;

(d) explain the background to, reasons for and principal terms of the Related Party Transaction and why the Board considers the Related Party Transaction to be fair and reasonable so far as the Ordinary Shareholders are concerned;

(e) explain the background to and reasons for the proposed amendment to the Company's investment policy and why the Board considers this to be in the best interests of the Company and Ordinary Shareholders as a whole;

(f) provide the holders of the ZDP Shares with details of the Restructuring, the Related Party Transaction and the proposed amendment to the Company's investment policy, although the holders of ZDP Shares only are not entitled to attend the Limited Voting Ordinary Shares Class Meeting or either of the General Meetings or vote on any of the resolutions proposed at such meetings

(g) explain why the Board unanimously recommends that Limited Voting Ordinary Shareholders vote in favour of the Class Resolution and the General Meeting Resolutions; and

(h) explain why the Board unanimously recommends that Ordinary Shareholders vote in favour of the General Meeting Resolutions, as they intend to do in respect of their own beneficialholdings.

2. Proposed Amendments to the Current Articles

Second General Meeting Resolution 2 is proposed to adopt the New Articles in place of the Company's Current Articles. The primary purpose of the proposed amendments is to incorporate provisions required to implement the revised capital structure of the Company in order to resolve the US securities law issues described in more detail above.

The principal changes introduced in the New Articles are summarised in paragraphs 2 and 6 of Part III of the Circular. Other changes, which are of a minor, technical or clarifying nature have not been noted in Part III of the Circular. A copy of the proposed New Articles and a copy of the Current Articles marked to show the changes proposed by Second General Meeting Resolution 2 are available for inspection at the Company's registered office and at the offices of Ashurst LLP at Broadwalk House, 5 Appold Street, London EC2A 2HA during normal business hours from the date of the Circular until the close of the Second General Meeting (Saturdays, Sundays and public holidays in the UK excepted) and will be available for inspection at the place of the Second General Meeting for at least 15 minutes prior to, and during, the meeting.

3. Investment in Asset Management Business

JZAI intends to establish a new asset management business (the ''Asset Management Business''). The objective of the Asset Management Business will be to provide investment returns through diversified, multi-asset-class portfolios for its clients. The Board is proposing that the Company invests in the Asset Management Business with David Zalaznick and Jay Jordan (or their affiliates) on the same 50:50 basis economically, with certain structural features intended to afford each side appropriate US tax protections. The Asset Management Business will be a portfolio company of JZCP and advised by JZAI. The Board regards JZCP's investment in the Asset Management Business as being within the terms of the Company's investment policy.

JZAI is the duly appointed investment adviser of the Company (pursuant to the Advisory Agreement) and is therefore a related party of the Company under the Listing Rules. As founders and owners of JZAI, David Zalaznick and Jay Jordan are also related parties. JZCP's investment alongside David Zalaznick and Jay Jordan in the Asset Management Business is therefore a related party transaction under the Listing Rules (the ''Related Party Transaction''), which requires the prior approval of Ordinary Shareholders. Further details of the principal terms of the transaction are set out in paragraph l of Part III of the Circular.

The Company has already incurred some costs in relation to the set-up of the Asset Management Business. David Zalaznick and Jay Jordan have agreed to reimburse the Company 50 per cent. of these costs following the establishment of the Asset Management Business or all of such costs if Ordinary Shareholders fail to approve the Related Party Resolution. Such amounts will bear interest until they are repaid by JZAI.

4. Proposed Amendment to Investment Policy

At the Annual General Meeting of the Company in 2010, Ordinary Shareholders approved the adoption of a new corporate objective for the Company and the inclusion of an additional restriction in the Company's investment strategy, such that the Company may invest up to 20 per cent. of the Company's gross assets in businesses outside the United States. The Company has recently made investments in Spain and Brazil, the result of which is that as at 16 May 2012 (being the latest practicable date prior to the publication of the Circular) approximately 15 per cent. of the Company's gross assets were invested in non-US assets. The Investment Adviser is of the view that there continue to be investment opportunities outside of the United States which it wishes the Company to pursue. The Board therefore proposes to increase the limit in the Company's investment strategy on investments in businesses outside the United States from 20 per cent. to 30 per cent. of the Company's gross assets. Under the Listing Rules, the approval of Ordinary Shareholders is required to approve a material change to the Company's investment policy. Further details of this, together with the fully amended and restated investment policy are set out in paragraph l of Part III of the Circular.

5. Establishment of Fund B

Following the Company's move to the SFM, JZAI intends to launch a new limited partnership (''Fund B'') as a successor vehicle to the limited partnership launched by JZAI, which had its first closing in January 2012 (''Fund A''). The intention is for Fund B to have the same characteristics and structure as Fund A, with which the Company has an existing co-investment arrangement. Fund B will only undertake investments once the funds raised by Fund A have been committed. The focus of investments will be US Micro-Cap Buyouts.

It is expected that the terms of the co-investments between the Company and Fund B will restrict Fund B from investing more than 25 per cent. of the amount invested by the Company. Furthermore, the terms of the co-investments will ensure that in each investment, the terms and circumstances of the investment by the Company will be no less favourable than those applying to the investment by Fund B.

Since the establishment of Fund B is expected to happen after the Company's move to the SFM, after which the Company will voluntarily comply with the requirements of the Listing Rules set out in paragraph l of Part III of the Circular, the Board, in place of the FSA, will determine whether the co-investments fall within the above terms. Any co-investment which does fall within the above terms will be classified by the Board as being exempt from the related party transaction rules, although Ordinary Shareholders should note that the Board does not intend to seek a written confirmation from an independent adviser in relation to the ''no less favourable'' requirement mentioned above. In any event, following admission of the Ordinary Shares and ZDP Shares to listing on the CISX, the Company will be required to comply with the CISX Listing Rules in respect of connected transactions.

6. Investment in Real Estate Opportunities

For information, the Company is making an investment, together with Jay Jordan and David Zalaznick, in RedSky JZ Bedford, LLC, which has recently acquired real estate in Brooklyn, New York, consisting of retail units and apartments for approximately $64 million. The structure of such co-investment arrangements is such that they fall within the joint investment exemption and consequently do not require the prior approval of Ordinary Shareholders.

JZAI is considering the possibility of the Company making further investments of this kind. JZAI's intention is that any such further investment which is made jointly with Jay Jordan and David Zalaznick would be made either by jointly investing directly in the relevant real estate opportunities or alternatively by jointly investing in a fund which itself makes the real estate investment(s). JZAI intends that the structure of any such future co-investment arrangements would be such that Jay Jordan and David Zalaznick would not invest more than 25 per cent. of the amount invested by the Company and the terms and circumstances of the investment by the Company would be no less favourable than those applying to the investment by Jay Jordan and David Zalaznick.

Since any such co-investments are expected to happen after the Company's move to the SFM, after which the Company will voluntarily comply with the requirements of the Listing Rules set out in paragraph l of Part III of the Circular, the Board, in place of the FSA, will determine whether the co-investments fall within the above terms. Any co-investment which does fall within the above terms will be classified by the Board as being exempt from the related party transaction rules, although, as is the case with the Fund B arrangement, Ordinary Shareholders should note that the Board does not intend to seek a written confirmation from an independent adviser in relation to the ''no less favourable'' requirement mentioned above. The Board will update shareholders in due course to the extent that further joint real estate investments are entered into. In any event, following admission of the Ordinary Shares and ZDP Shares to listing on the CISX, the Company will be required to comply with the CISX Listing Rules in respect of connected transactions.

7. Dividend Policy

Historically it has been the policy to distribute as regular interim and final dividends the majority of JZCP's net cash income and as special dividends non-cash income, largely Paid in Kind interest, when it is converted into cash. Whilst recently the Board has been able to say that conditions are tending to be such as to allow the payment of special dividends, their payment has been irregular in terms of amount and timing and, at the same time as a result of low interest rates, net cash income is tending to reduce. Accordingly Shareholders have had no certainty of yield or progression.

The distribution for the year ended 29 February 2012 has been determined on the historic basis. But for the current financial year and thereafter the dividend will be calculated as 3 per cent. of Net Asset Value per year, 1.5 per cent. at each of the interim and final stages implying a yield at the discount as at 16 May 2012 of approximately 4 per cent.

8. Meetings

Notices convening the Limited Voting Ordinary Shares Class Meeting, the First General Meeting and the

Second General Meeting are set out at the end of the Circular.

Limited Voting Ordinary Shares Class Meeting

At the Limited Voting Ordinary Shares Class Meeting, a resolution will be proposed to approve the form of the General Meeting Resolutions and sanction any variation or abrogation of the rights for the time being attached to the Limited Voting Ordinary Shares which may result from the passing of the General Meeting Resolutions. Such resolution is proposed as a special resolution and as such requires a vote in favour by a majority of not less than 75 per cent. of the votes cast at the Limited Voting Ordinary Shares Class Meeting.

General Meetings

The General Meeting Resolutions will be proposed at the First General Meeting and the Second General Meeting to be held at 10.30 a.m. and 2.30 p.m. respectively on 3 July 2012 at 2nd Floor, Regency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 3NQ. The full text of the General Meeting Resolutions are set out in those notices.

First General Meeting Resolution- Conversion of Limited Voting Ordinary Shares into Ordinary Shares

The First General Meeting Resolution, which is proposed as an ordinary resolution and as such requires a vote in favour by a majority of the votes cast at the First General Meeting, seeks Ordinary Shareholder and Limited Voting Ordinary Shareholder approval for the conversion of all of the Limited Voting Ordinary Shares into Ordinary Shares on the basis that one Limited Voting Ordinary Share will convert into one Ordinary Share.

A consequence of the conversion of the Limited Voting Ordinary Shares into Ordinary Shares would be the dilution of current Ordinary Shareholders' voting rights by approximately 43 per cent. in relation only to those matters where holders of Limited Voting Ordinary Shares have no right to vote under the Current Articles. Accordingly, Ordinary Shareholders should note that if they vote in favour of the First General Meeting Resolution, their voting rights will be diluted in respect of Second General Meeting Resolutions 1, 3 and 4.

Second General Meeting Resolution 1 - Cancellation of listing on the premium segment of the Official List and admission to trading on the SFM and to listing on the CISX

Second General Meeting Resolution 1, which is proposed as a special resolution and as such requires a vote in favour by a majority of not less than 75 per cent. of the votes cast at the Second General Meeting, seeks Ordinary Shareholder approval for (i) the cancellation of the listing of the Ordinary Shares on the premium segment of the Official List and from trading on the London Stock Exchange's main market, and (ii) the application for the admission of the Ordinary Shares to trading on the SFM and to listing on the CISX and authorisation for the Directors to take all such steps which are necessary or desirable in order to effect such cancellation and application.

Second General Meeting Resolution 2 - Amendments to the Current Articles

Second General Meeting Resolution 2, which is conditional on and takes effect from the admission of the Ordinary Shares to trading on the SFM, is proposed as a special resolution and as such requires a vote in favour by a majority of not less than 75 per cent. of the votes cast at the Second General Meeting, and seeks Ordinary Shareholder to adopt the New Articles in substitution for the Company's Current Articles.

Second General Meeting Resolution 3 - Approval of amendment to investment policy of the Company

Second General Meeting Resolution 3, which is proposed as an ordinary resolution and as such requires a vote in favour by a majority of the votes cast at the Second General Meeting, seeks the approval of the Ordinary Shareholders for the proposed amendment to the investment policy of the Company and the approval and adoption of the amended and restated investment policy set out on pages 17 and 18 of the Circular

Second General Meeting Resolution 4 - Approval of Related Party Transaction

Second General Meeting Resolution 4, which is proposed as an ordinary resolution and as such requires a vote in favour by a majority of the votes cast at the Second General Meeting, seeks the approval of the Ordinary Shareholders for the Related Party Transaction. David Zalaznick and Jay Jordan will not vote on Second General Meeting Resolution 4 and they have undertaken to take all reasonable steps to ensure that their associates will not vote on Second General Meeting Resolution 4.

9. Action to be taken

Holders of Limited Voting Ordinary Shares will find enclosed with the Circular a blue Form of Proxy for use at the Limited Voting Ordinary Shares Class Meeting, a yellow form of proxy for use at the First General Meeting and a pink form of proxy for use at the Second General Meeting. Ordinary Shareholders will find enclosed with the Circular a green Form of Proxy for use at the First General Meeting and a pink form of proxy for use at the Second General Meeting.

Limited Voting Ordinary Shareholders should note that they are being sent a pink form of proxy in respect of the Second General Meeting on the basis that the Class Resolution and the First General Meeting Resolution will be passed and that by the time of the Second General Meeting the Limited Voting Ordinary Shares will have been converted into Ordinary Shares and the Limited Voting Ordinary Shareholders will be entered on the register of members of the Company as holders of Ordinary Shares. In such circumstances, as holders of Ordinary Shares, the Limited Voting Ordinary Shareholders will be entitled to vote on all of the Second General Meeting Resolutions. However, Limited Voting Ordinary Shareholders should note that if the Class Resolution and/or the First General Meeting Resolution are not passed, they will be entitled to vote on Second General Meeting Resolution 2 only and not on Second General Meeting Resolutions 1, 3 or 4.

Shareholders are requested to complete and return the Form(s) of Proxy in accordance with the instructions printed thereon, whether or not they intend to be present at the relevant meeting and to return it as soon as possible and in any event so as to be received by the Transfer Agent no later than 10.00 a.m. on 29 June 2012 in respect of the blue Form of Proxy, no later than 10.30 a.m. on 29 June 2012 in respect of the yellow and green Forms of Proxy and no later than 2.30 p.m. on 29 June 2012 in respect of the pink Form of Proxy. Completion and return of the Form(s) of Proxy will not preclude Shareholders from attending and voting at the relevant meeting(s) in person if they so wish.

10. Shareholder Intentions

Certain Shareholders have irrevocably undertaken to vote in favour of the Class Resolution with respect to Limited Voting Ordinary Shares representing in aggregate 100 per cent. of the Company's total Limited Voting Ordinary Share capital.

Certain Shareholders have irrevocably undertaken to vote in favour of the First General Meeting Resolution and, in the event that each of the Class Resolution and the First General Meeting Resolution is passed, to vote in favour of Second General Meeting Resolutions 1, 2 and 3, with respect to shares representing approximately 70 per cent. of the Company's total ordinary share capital as at 9 May 2012 (being the latest practicable date prior to publication of the Circular).

In addition, certain Shareholders (not including David Zalaznick and Jay Jordan who, as related parties, will not vote) have irrevocably undertaken to vote in favour of Second General Meeting Resolution 4, with respect to Ordinary Shares representing in aggregate approximately 60 per cent. of the Company's total number of Ordinary Shares entitled to vote (assuming that the First General Meeting Resolution is passed), and approximately 39 per cent. of the Company's total number of Ordinary Shares entitled to vote (assuming that the First General Meeting Resolution is not passed), in each case as at 9 May 2012 (being the latest practicable date prior to the publication of the Circular).

11. Recommendation

The Board has received financial advice from J.P. Morgan Cazenove in relation to the Restructuring. In providing its financial advice to the Board, J.P. Morgan Cazenove has relied on the Board's commercial assessment of the Restructuring.

In addition, the Board, which has been so advised by J.P. Morgan Cazenove, considers the terms of the Related Party Transaction to be fair and reasonable so far as the Ordinary Shareholders as a whole are concerned. In providing their advice to the Board, J.P. Morgan Cazenove has taken into account the Board's commercial assessment of the Related Party Transaction.

Furthermore, the Board considers that: (i) the proposed Class Resolution, the General Meeting Resolutions and the Restructuring are in the best interests of Limited Voting Ordinary Shareholders as a whole; and (ii) the proposed Restructuring and the General Meeting Resolutions are in the best interests of Ordinary Shareholders as a whole. Accordingly, the Board unanimously recommends that the Limited Voting Ordinary Shareholders vote in favour of the Class Resolution and the General Meeting Resolutions, and that the Ordinary Shareholders vote in favour of the General Meeting Resolutions, in the case of the General Meeting Resolutions as the Directors intend to do in respect of their own beneficial holdings, representing 0.2 per cent. of the voting rights of the Ordinary Shares and 0.1 per cent of the total voting rights of the Ordinary Shares and the Limited Voting Ordinary Shares.

expected timetable of events

For further information:

Neil Doyle/ Ed Berry +44 (0)20 7269 7237 /7297FTI Consulting

William Simmonds +44 (0)20 7155 4579

J.P. Morgan Cazenove

David Zalaznick +1 212 572 0800 Jordan/Zalaznick Advisers, Inc.

About JZCP

JZCP is a London listed private equity fund which invests in high quality US and European micro cap companies. Our objective is to achieve a superior overall return comprised of a current yield and significant capital appreciation. JZCP receives investment advice from Jordan/Zalaznick Advisers, Inc ("JZAI") which is led by David Zalaznick and Jay Jordan. They have worked together for 30 years and are supported by teams of investment professionals in New York, Chicago, London and Madrid. JZAI's experts work with the existing management of micro cap companies to help build better businesses, create value and deliver strong returns to our investors. JZCP also invests in mezzanine loans, first and second lien investments and other publicly traded securities. For more information please visit our website at www.jzcp.com

This announcement has been issued by the Company.

This announcement contains (or may contain) certain forward-looking statements with respect to the Company's current expectations and projections about future events. These statements, which sometimes use, but are not limited to, words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, neither the Company nor J.P. Morgan Cazenove assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

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