PMEA.L Regulatory News (PMEA)

6 November 2015

PME African Infrastructure Opportunities plc

("PME" or the "Company")

(AIM: PMEA.L)

Notice of EGM, Circular and Current Tender Offer

PME African Infrastructure Opportunities plc confirms that a notice convening an Extraordinary General Meeting ("Notice") to be held at 10.00 a.m. hours (UK time) on 23 November 2015 at the offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, is to be sent to Shareholders today. 

Accompanying the Notice is a circular (the "Tender Offer Document") which sets out the Company's proposal ("Proposal") to renew Shareholder authority for the Company to return capital to Shareholders via a series of Tender Offers (which require approval under the Isle of Man Companies Acts 1931 to 2004 (as amended)) and sets out details of a current tender offer (the "Current Tender Offer"). The Tender Offer Document will shortly be available from the Company's website at www.pmeinfrastructure.com.

Under the Current Tender Offer, the Board is proposing to return up to US$7.7 million of cash through the purchase by the Company of up to 38,376,948 existing Ordinary Shares from Eligible Shareholders, representing 50.0 per cent. of the Ordinary Shares in issue at the Record Time at the Tender Offer Price of US$0.20 per Ordinary Share.

The Current Tender Offer is only available to Shareholders (other than certain Overseas Shareholders) on the Register on the Record Time, and only in respect of a maximum of 1 Ordinary Share for every 2 Ordinary Shares registered in their names at the Record Time.

Capitalised terms used in this announcement shall have the meanings given to them in the Tender Offer Document referred to above.

Background to and reasons for the Proposal

The Company's investing policy is to realise the remaining assets of the Company at a time and under such conditions as the Directors may determine in order to maximise value on behalf of the Shareholders of the Company, and to return both existing cash reserves and the proceeds of realisation of the remaining assets to Shareholders. Since 2012 the Company has returned a total of approximately US$19.6 million to Shareholders.

As first announced by the Company on 17 April 2015, the Company agreed the sale to PCF Investments of 100 per cent. of the equity of PME RSACO, the entity which held the Group's 50 per cent. interest in Sheltam, together with certain intercompany loans, and of seven C30 locomotives then owned by PME Locomotives, for an aggregate cash consideration of US$11.5 million (the "Disposal"). The Disposal completed on 5 May 2015.

Following the Disposal, the Group now owns three C30 locomotives and a commercial property in Dar-es-Salaam, Tanzania (the "Dar-es-Salaam Property").

The three C30 locomotives are held through the Company's wholly owned subsidiary PME Locomotives. PME Locomotives has a put option (the "Option") which, if exercised, would require the Company's former subsidiary, RSACO, to purchase one or more of the three locomotives for US$1,416,666 per locomotive at any point during a 90 day period commencing on 6 November 2016 (the "Option Period").

If PME Locomotives decides to exercise its Option with RSACO in respect of all three remaining C30 locomotives, it can expect proceeds of a further US$4.25 million.

The Dar-es-Salaam Property, which is managed by a local managing agent, is fully let and the investment continues to be profitable. In 2010, a subsidiary of PME acquired the Dar-es-Salaam Property from Dovetel (T) Limited ("Dovetel"), the Company's former telecommunication investee company in Tanzania. Dovetel is also a tenant of part of the Dar-es-Salaam Property.

The Directors of PME visited Tanzania in June 2015 and reviewed the legal strategy being pursued in relation to this investment. The Group will continue to follow the current court action to evict Dovetel for non-payment of rent. However, PME will no longer continue to seek the winding up of Dovetel as this has had the effect of restricting the eviction process. Since June 2015, PME's legal advisers have attended a number of status hearings on the withdrawal of the Dovetel winding up petition. The Directors expect the withdrawal of the winding up petition to be successful, but it remains dependent on the availability of a judge in Tanzania to hear the case.

Following the withdrawal of the winding up petition, the Directors will seek to progress the eviction of Dovetel, pursue the collection of outstanding debt due from Dovetel and seek the removal of the caveat from the land register which is currently prohibiting the sale of the Dar-es-Salaam Property.

Until there is clarity on the legal issues regarding the status of the Dar-es-Salaam Property, and as shown in the Company's unaudited interim results for the six months ended 30 June 2015, the Directors have valued the Dar-es-Salaam Property at US$3.8 million, which value takes account of the legal uncertainty regarding realisation of the property. However, the latest valuation obtained by the Company from a local expert on 17 April 2015 puts the open market value of the Dar-es-Salaam Property as at 31 December 2014 at US$6.5 million.

The Directors have recently considered the cash reserves required to be retained by the Company for foreseeable working capital purposes. As the period during which claims can be made under the agreements entered into in connection with the Disposal has now expired, and no such claims have been notified to the Company, the Directors now propose to carry out the Current Tender Offer in order to return the proceeds of the Disposal, less funds required to be retained for working capital purposes, to Shareholders.

The Board will continue to review on a regular basis the continuing requirements of the Company and to the extent that the Company holds cash in excess of anticipated requirements, the Directors will seek to return such cash to Shareholders by way of one or more further Tender Offers.

Details of the Current Tender Offer

The Board is proposing to return up to US$7.7 million of cash through the purchase by the Company of up to 38,376,948 existing Ordinary Shares from Eligible Shareholders. Once purchased by the Company, those Ordinary Shares will be cancelled so that such Ordinary Shares will no longer be in issue but the Company's authorised share capital will remain unchanged.

The Current Tender Offer is being made by the Company on the terms and subject to the conditions set out in the Tender Offer Document and the Tender Form, in respect of up to 38,376,948 Ordinary Shares, representing 50.0 per cent. of the Ordinary Shares in issue on the Record Time at the Tender Price of US$0.20 per Ordinary Share. The Tender Price represents a premium of approximately 73.9 per cent. over the middle market closing price (as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange) of US$0.115 per Ordinary Share on 5 November 2015, being the latest practicable date before the publication of the Tender Offer Document. The Tender Price has been calculated by reference to the Net Asset Value per Ordinary Share as at 30 June 2015 of US$0.22 and constitutes a discount to the Net Asset Value of the Company at that date.

The Current Tender Offer is only available to Shareholders (other than certain Overseas Shareholders) on the Register on the Record Time, and only in respect of a maximum of 1 Ordinary Share for every 2 Ordinary Shares registered in their names at the Record Time.

Risks relating to the Tender Offers

The risks described below should be carefully considered by Shareholders when deciding what action to take in relation to the Resolution to be proposed at the Extraordinary General Meeting.

· If any Ordinary Shares permitted to be tendered pursuant to the Tender Offers are tendered, the issued share capital of the Company will be reduced. As a result, (i) the fixed costs of the Company would be spread over fewer Ordinary Shares and the Company's total expense ratio may increase; and (ii) the ability to trade Ordinary Shares in the secondary market would be likely to be reduced as the Company's issued share capital becomes smaller through the execution of the Tender Offers.

· The Tender Offers would contribute to increased asset concentration and, therefore, increased portfolio risk. The amount that the Company would be able to return to Shareholders in future would, therefore, be significantly dependent on the performance of remaining investments and the proceeds realised from them.

· If the Current Tender Offer does not proceed for any reason, the Company would bear costs in relation to the Current Tender Offer.

· Although the taxation consequences of the Current Tender Offer are set out in the Tender Offer Document, such tax treatment may change as a result of changes in the law or HM Revenue & Customs custom and practice.

Recommendation

The Board unanimously considers that approval of the Resolution is in the best interests of the Company and its Shareholders as a whole. The Board unanimously recommends that Shareholders vote in favour of the Resolution as Lawrence Kearns (being the only Director who holds an interest in the Company) intends to do in respect of his own beneficial holding, which amounts to 74,000 Ordinary Shares, representing approximately 0.1 per cent. of the Company's issued ordinary share capital as at 5 November 2013, being the latest practicable date prior to the posting of the Tender Offer Document. 

Expected Timetable of Events

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