17 May 2016 07:00
Raven Russia Limited ("Raven Russia" or the "Company")
Proposed placing of new convertible redeemable preference shares, 2015 Annual Report, Notice of Annual General Meeting and dual listing on the Channel Islands Securities Exchange
Raven Russia announces a proposed fundraising of a minimum of £105.5 million1 by way of a placing of new convertible redeemable preference shares to be listed on the CISEA.
The Company has secured firm commitments from existing institutional investors and the EBT to subscribe for an aggregate amount of approximately £105.5 million Convertible Preference Shares and is in discussions with further investors to potentially increase the size of the Placing.
The Directors are also pleased to announce that alongside the proposed admission of the Convertible Preference Shares to the Official List of the CISEA, the Company has sought a dual listing on the CISEA for the Company's existing Ordinary Shares, Preference Shares and Warrants. As a result, the Ordinary Shares, Preference Shares and Warrants have today been admitted to the Official List of the CISEA in addition to the existing admission to the Official List of the FCA.
Raven Russia is also posting to its shareholders today a circular containing full details of the Tender Offer, the 2015 Annual Report and a notice of the Annual General Meeting convened for 11.00 a.m. on Wednesday 15 June 2016.
1On the basis that the Waiver Resolution and RPT Resolution are passed at the General Meeting. If either or both of them are not passed the minimum amount raised under the Placing will be £81,000,000.
Benefits of the Placing
Following consultation with a number of the Company's existing institutional shareholders, the Directors consider that the proposed issue of Convertible Preference Shares will deliver a number of significant benefits to the Company and its investors, including:
· together with existing cash balances, allowing the Group to take advantage of new investment opportunities and reduce outstanding amortising debt;
· allowing the Company to diversify its sources of funding whilst minimising dilution to Ordinary Shareholders; and
· improving the Group's debt amortisation profile.
Placing highlights
The Convertible Preference Shares will, on completion of the Placing, be issued by the Company at a subscription price of £1.00, have a 10 year period to maturity from the date of issue, have a cumulative preference dividend of 6.5 per cent. per annum on the subscription amount (payable in equal instalments quarterly in arrears) and will be redeemable at maturity at a price of £1.35. The Convertible Preference Shares will be convertible at a rate of 1.818 Ordinary Shares for each Convertible Preference Share (subject to certain adjustments) which is equivalent to approximately 55p per Ordinary Share, and represents a premium of 66.68 per cent. to the Company's Ordinary Share price as at the close of business on 16 May 2016 and 12.76 per cent. to the Group's latest published audited adjusted fully diluted net asset value per Ordinary Share.
The Company will apply for the Convertible Preference Shares to be admitted to the Official List of CISEA and to trading on the SETSqx platform of the London Stock Exchange. The Convertible Preference Shares will not be listed on the Official List of the FCA.
The Placing is conditional on, inter alia, Ordinary Shareholders and Preference Shareholders passing the resolutions necessary to constitute and authorise the issue of the Convertible Preference Shares and admission of the Convertible Preference Shares to the CISEA.
The Company intends to post circulars (including notices of meetings) to Ordinary Shareholders and Preference Shareholders in respect of the Placing in mid-June 2016 and a further announcement will be made at such time. Admission of the Convertible Preference Shares is expected in early July 2016.
Raven Russia's CEO, Glyn Hirsch commented:
"We are very grateful for this support from our shareholders. The market appears to be stabilising and these new funds strengthen our balance sheet and provide us flexibility to make attractive acquisitions."
Tender Offer
On 14 March 2016, the Board of Raven Russia announced in its results for the year ended 31 December 2015 that the Company intended to offer to purchase 1 in every 40 Ordinary Shares by way of a tender offer at a price of 40p per share. If the maximum number of 17,064,009 Ordinary Shares is acquired (assuming no valid exercise of the Warrants in the period), this will result in an amount of £6.83 million being paid by the Company to Ordinary Shareholders. It is intended that the Ordinary Shares purchased under the Tender Offer will be cancelled and not available for re-issue.
The Tender Offer is open to all holders of Ordinary Shares on the Company's register at 6.00 p.m. on Tuesday 14 June 2016, who may participate by tendering up to their pro rata entitlement of Ordinary Shares at 1 for 40 at 40p per share. Warrantholders who wish to participate in the Tender Offer will be required to exercise their warrants by 3 June 2016 in accordance with the terms of the Warrant Instrument. No Ordinary Shares will be purchased in relation to the Tender Offer unless the relevant resolution approving such Tender Offer to be proposed at the Annual General Meeting is passed.
Copies of the AGM Circular, Tender Offer forms, 2015 Annual Report and form of proxy for use at the AGM will be submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM. In addition, the documents will be available on the Company's website at www.ravenrussia.com and may also be obtained from the Company Secretary.
Further information
Raven Russia Limited Tel: +44 (0) 1481 712955
Anton Bilton
Glyn Hirsch
Novella Communications (PR Adviser) Tel: +44 (0) 20 3151 7008
Tim Robertson
Ben Heath
N+1 Singer (UK Sponsor, Financial Adviser and Broker) Tel: +44 (0) 20 7496 3000
Corporate Finance - James Maxwell / Liz Yong
Sales - Alan Geeves / James Waterlow
Ravenscroft (CISEA Sponsor) Tel: +44 (0) 1481 729100
Jon Ravenscroft
Proposed placing of Convertible Preference Shares
1. Introduction
The Company proposes to raise a minimum of £105.5 million2 through the issue of Convertible Preference Shares at a subscription price of £1.00 each.
The Company has appointed N+1 Singer as FCA sponsor, financial adviser and broker in connection with the Placing.
The Company has secured firm commitments from existing institutional investors and the EBT to subscribe for an aggregate amount of approximately 105.5 million Convertible Preference Shares (details of which are set out in Appendix 3 to this announcement), and is in discussions with further investors potentially to increase the size of the Placing.
The Placing is conditional on, inter alia, Ordinary Shareholders and Preference Shareholders passing all the necessary resolutions to constitute and issue the Convertible Preference Shares and admission of the Convertible Preference Shares to the CISEA.
2. Benefits of the Placing
Following consultation with a number of the Company's existing institutional shareholders, the Directors consider that the proposed issue of Convertible Preference Shares will deliver a number of significant benefits to the Company and its investors, including:
· together with existing cash balances, allowing the Group to take advantage of new investment opportunities and reduce outstanding amortising debt;
· allowing the Company to diversify its sources of funding whilst minimising dilution to Ordinary Shareholders; and
· improving the Group's debt amortisation profile.
3. Description of the Placing
Terms of the Convertible Preference Shares
The Convertible Preference Shares will, when issued, be subject to the Articles, be credited as fully paid and will rank pari passu in all respects with each other. The Convertible Preference Shares will be issued free of any encumbrance, lien or other security interest.
A summary of the material terms of the Convertible Preference Shares is set out in Appendix 1 to this announcement and certain risk factors in respect of the Convertible Preference Shares are set out in Appendix 2 to this announcement.
Placing Agreement
The Company has today entered into a placing agreement with N+1 Singer (the "Placing Agreement"). Pursuant to the Placing Agreement, N+1 Singer has, subject to the terms set out therein, agreed to use reasonable endeavours, as agent of the Company, to procure placees for the Convertible Preference Shares.
The obligations of N+1 Singer are conditional, inter alia, on Admission becoming effective by no later than 8.00 a.m. on 7 July 2016 (or such later time and/or date as the Company and N+1 Singer may agree, being no later than 8.00 a.m. on 26 August 2016), certain of the resolutions to be proposed at General Meeting and Class Meeting being passed and the Placing Agreement not having been terminated in accordance with its terms prior to Admission.
N+1 Singer shall be entitled to terminate the Placing Agreement by giving written notice to the Company if, at any time before Admission any of the warranties contained therein are or become untrue, inaccurate or misleading in any material respect or a force majeure event or material adverse change in respect of the Company occurs prior to Admission.
Application for listing and admission to trading
Application will be made to the CISEA for admission of the Convertible Preference Shares to the Official List of the CISEA and to the London Stock Exchange for admission of the Convertible Preference Shares to trading on the SETSqx platform. The Convertible Preference Shares will not be listed on the Official List of the FCA. The Company intends to apply for a listing of the Convertible Preference Shares on the Official List of the FCA if and when it satisfies the eligibility criteria.
Participation in the Placing
Members of the public are not eligible to participate in the Placing. To participate in the Placing, an investor must either (a) fall within the provisions of section (I) of Annex (II) to the Markets in Financial Instruments Directive and be (i) a person having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO"); or (ii) a high net worth company, unincorporated association or other person within Article 49(2) of the FPO; or (b) be a person who may otherwise lawfully participate. In addition, an investor must be "knowledgeable about investment matters" for the purposes of Chapter 8 of the CISEA Listing Rules.
The Company may (in its absolute discretion) accept subscriptions up to £125,000,000 through the Placing and the Directors will retain the ability to increase that amount in the event that there is excess demand.
4. Related Party Transaction/Rule 9 Waiver
The Invesco Funds are, taken together, substantial Ordinary Shareholders for the purposes of chapter 11 of the Listing Rules. The Invesco Funds are therefore considered to be related parties for the purposes of chapter 11 of the Listing Rules. As noted in paragraph 1 above (and as detailed in Appendix 3), IAML has committed to procure the participation by the Invesco Perpetual High Income Fund to subscribe for 24,575,001 Convertible Preference Shares in the Placing.
Under chapter 11 of the Listing Rules, the participation by the Invesco Perpetual High Income Fund in the Placing constitutes a related party transaction and will require the approval of Invesco Independent Shareholders.
On completion of the Placing, the Invesco Perpetual High Income Fund will be interested in a minimum of 24,575,001 Convertible Preference Shares. As at the date of this announcement, the Invesco Funds hold approximately 31.52 per cent. of the ordinary share capital.
Following Conversion, the Invesco Funds' aggregate interest in the Company's ordinary share capital would increase, which could have implications under the Takeover Code. Consequently, the Invesco Perpetual High Income Fund's participation in the Placing will require the Panel to waive any obligation of the Invesco concert party to make a general offer pursuant to Rule 9 of the Takeover Code on Conversion (which will also require the approval of Invesco Independent Shareholders on a poll).
Consequently, the participation of the Invesco Perpetual High Income Fund in the Placing is conditional upon (i) the approval of such participation by Invesco Independent Shareholders under Chapter 11 of the Listing Rules and (ii) the Panel waiver detailed above being granted on such basis (and the related relevant shareholder resolution being passed).
Under Listing Rule 11.1.10 R, the participation by the EBT in the Placing constitutes a "smaller" related party transaction and as such does not require the approval of independent Ordinary Shareholders.
5. Extraordinary General Meeting
The implementation of the Placing, the related requirement for a Rule 9 Waiver and the participation by the Invesco Perpetual High Income Fund in the Placing all require the approval of Ordinary Shareholders. It is anticipated that the resolutions to be proposed at the General Meeting will be as follows:
· A special resolution to amend the Articles to incorporate the rights of the Convertible Preference Shares.
· An ordinary resolution of the Invesco Independent Shareholders to approve the proposed participation by the Invesco Perpetual High Income Fund in the Placing for the purposes of Chapter 11 of the Listing Rules (as explained in paragraph 4 above) (the "RPT Resolution)".
· An ordinary resolution of the Invesco Independent Shareholders (taken on a poll) to approve the Rule 9 Waiver in connection with the additional Ordinary Shares that could be held by the Invesco Funds as a result of the participation by the Invesco Perpetual High Income Fund in the Placing and any subsequent Conversion of the Convertible Preference Shares (as explained in paragraph 4 above) (the "Waiver Resolution").
· An ordinary resolution to grant to the Directors the authority to issue (i) the Convertible Preference Shares and (ii) new Ordinary Shares upon Conversion.
· A special resolution to disapply the Company's pre-emption rights in respect of the issue of the Convertible Preference Shares pursuant to the Placing.
Each of IAML, Woodford Investment Management LLP, Old Mutual Global Investors (UK) Limited, the EBT and each of the Directors and certain of their connected persons has irrevocably undertaken to the Company to vote in favour of the above resolutions at the General Meeting, representing 54.70 per cent. of the ordinary share capital. Excluding the Invesco Funds which will not be permitted to vote on the RPT Resolution and the Waiver Resolution, this represents 33.85 per cent. of the ordinary share capital eligible to vote on the RPT Resolution and Waiver Resolution. IAML has irrevocably undertaken to the Company not to vote (and to take reasonable steps to ensure that no "associates" (such term having the meaning given to it in the Listing Rules) of the Invesco Funds will vote) on the RPT Resolution and the Waiver Resolution.
In the event that the RPT Resolution and/or the Waiver Resolution are not passed, the Placing will still proceed but the Invesco Perpetual High Income Fund will not participate in the Placing and its commitment to subscribe for Convertible Preference Shares will lapse.
The OS Circular, which will include a notice of General Meeting containing the full text of each resolution, is expected to be posted to Ordinary Shareholders around mid-June 2016. Completion of the Placing is currently anticipated to occur in early July 2016.
6. Class Meeting
The implementation of the Placing requires the consent of Preference Shareholders by special resolution, as the creation and issue of the Convertible Preference Shares will constitute a variation of the class rights attaching to the Preference Shares.
Each of IAML, Woodford Investment Management LLP, Old Mutual Global Investors (UK) Limited, the EBT and each of the Directors and certain of their connected persons has irrevocably undertaken to the Company to vote in favour of the above resolution at the Class Meeting, representing 63.30 per cent. of the preference share capital.
The PS Circular, which will include a notice of Class Meeting containing the full text of the resolution, is expected to be posted to Preference Shareholders around mid-June 2016.
Definitions used in this announcement
"Admission" | the admission of the Convertible Preference Shares to the Official List of the CISEA and to trading on the SETSqx platform of the London Stock Exchange |
"AGM" or "Annual General Meeting" | the 2016 annual general meeting of the Company |
"AGM Circular" | the circular to be sent to Ordinary Shareholders in connection with the AGM and including a notice of the AGM |
"Articles" | the articles of incorporation of the Company |
"CISEA" | the Channel Islands Securities Exchange Authority Limited |
"CISEA Listing Rules" | the listing rules produced by the CISEA for companies whose securities are listed on the Official List of the CISEA |
"Class Meeting" | the class meeting of Preference Shareholders to be held in relation to the Placing, notice of which will be set out in the PS Circular |
"Company" or "Raven Russia" | Raven Russia Limited |
"Conversion" | conversion of the Convertible Preference Shares to Ordinary Shares |
"Convertible Preference Shares" | 6.5 per cent. cumulative convertible redeemable preference shares of no par value each in the capital of the Company |
"Directors" | the directors of the Company |
"EBT" | the employee benefit trust of the Group |
"FCA" | the UK Financial Conduct Authority |
"FSMA" | Financial Services and Markets Act 2000, as amended |
"General Meeting" | the general meeting of the Company to be held in relation to the Placing, notice of which will be set out in the OS Circular |
"Group" | the Company and its subsidiary undertakings |
"IAML" | Invesco Asset Management Limited acting in its capacity as agent for and on behalf of the Invesco Funds |
"Invesco Funds" | Edinburgh Investment Trust, Invesco Perpetual High Income Fund, Invesco Perpetual Income Fund and Invesco Perpetual UK Equity Pension Fund |
"Invesco Independent Shareholders" | the holders of Ordinary Shares other than the Invesco Funds |
"Listing Rules" | the Listing Rules published by the FCA in accordance with section 73A(2) of FSMA |
London Stock Exchange | London Stock Exchange plc |
"N+1 Singer" | Nplus1 Singer Advisory LLP |
"Ordinary Shareholder" | a holder of Ordinary Shares |
"Ordinary Shares" | ordinary shares of £0.01 each in the capital of the Company |
"OS Circular" | the circular to be sent to Ordinary Shareholders in connection with the Placing and including a notice of the General Meeting |
"Panel" | the Panel on Takeovers and Mergers |
"Placing" | the proposed conditional placing by N+1 Singer, on behalf of the Company, of Convertible Preference Shares at the Subscription Amount pursuant to the terms of the Placing Agreement |
"Placing Agreement" | the agreement dated the same date as this announcement between the Company and N+1 Singer relating to the Placing |
"Preference Shareholder" | a holder of Preference Shares |
"Preference Shares" | 12 per cent. cumulative redeemable preference shares of £0.01 each in the capital of the Company |
"PS Circular" | the circular to be sent to Preference Shareholders in connection with the Placing and including a notice of the Class Meeting |
"RPT Resolution" | the ordinary resolution to be proposed at the General Meeting in relation to the participation by the Invesco Funds in the Placing |
"Rule 9 Waiver" | the waiver agreed by the Panel, conditional upon the approval by Invesco Independent Shareholders of the Waiver Resolution at the General Meeting, of the obligation of any member of the Invesco concert party to make a general offer under Rule 9 of the Takeover Code which would otherwise arise as a consequence of Conversion |
"Subscription Amount" | £1.00 per Convertible Preference Share |
"Takeover Code" | the City Code on Takeovers and Mergers issued by the Panel as amended or supplemented, from time to time |
"Tender Offer" | the offer by the Company to purchase 1 in every 40 Ordinary Shares by way of a tender offer at a price of 40p per share |
"Waiver Resolution" | the ordinary resolution to be proposed at the General Meeting in relation to the Rule 9 Waiver |
"Warrant Instrument" | the warrant instrument adopted by the Company constituting the Warrants |
"Warrantholder" | a holder of Warrants |
"Warrant" | a warrant to subscribe for 1 Ordinary Share at 25 pence per Ordinary Share pursuant to the terms of the Warrant Instrument |
Important notice
The information contained 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, fairness or completeness.
This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities of the Company in any jurisdiction, including the United States, Canada, Japan, Australia or South Africa or in any jurisdiction in which such offer or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. The Placing and the distribution of this announcement and other information in connection with the Placing in certain jurisdictions may be restricted by law and persons into whose possession this announcement, 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. Neither this announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
The Placing timetable may be influenced by a range of circumstances, including market conditions. There is no guarantee that the Placing will occur and you should not base your financial decisions on the Company's intentions in relation to the Placing at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing the entire 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 Placing. The value of the Company's shares can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of the Placing for the person concerned. Past performance cannot be relied upon as a guide to future performance.
This announcement is not for distribution, directly or indirectly, in whole or in part, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Japan, Australia or South Africa or any other jurisdiction where it is unlawful to distribute this announcement. In particular, this announcement is not an offer of securities for sale in the United States. The securities proposed to be sold have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any State or other jurisdiction of the United States, and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of the securities referred to herein in any jurisdiction, including in the United States, Canada, Japan, Australia or South Africa. The securities referred to herein have not been registered under the applicable securities laws of Canada, Japan, Australia or South Africa and, subject to certain exceptions, may not be offered or sold within Canada, Japan, Australia or South Africa or to any national, resident or citizen of Canada, Japan, Australia or South Africa.
The announcement contains forward-looking statements. These statements relate to the future prospects, developments and business strategies of the Company. Forward-looking statements are identified by the use of such terms as "believe", "could", "envisage", "estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the negative thereof. The forward-looking statements contained in the announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialise, or if underlying assumptions prove incorrect, the Company's actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, certain of which are beyond the Company's control, potential investors should not place any reliance on forward-looking statements. These forward-looking statements speak only as at the date of the announcement. Except as required by law, the Company undertakes no obligation to publicly release any update or revisions to the forward-looking statements contained in the announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made.
N+1 Singer, which is authorised and regulated in the United Kingdom by the FCA, is acting as sponsor (in respect of the related party transaction only), financial adviser and broker to the Company in connection with the matters referred to herein, and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the contents of this announcement or any transaction or arrangement referred to herein.
Apart from the responsibilities and liabilities, if any, which may be imposed on it by FSMA or the regulatory regime established thereunder, N+1 Singer accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, in relation to the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company, the directors or any other person in connection with the Company, the Placing, the shares or the matters referred to herein, and nothing in this announcement is or shall be relied upon as a promise or representation in this respect, whether as to the past or future. N+1 Singer accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this announcement or any such statement.
Appendix 1
Principal terms of the Convertible Preference Shares
A summary of the material terms of the Convertible Preference Shares is set out below:
Subscription Amount | £1.00 per Convertible Preference Share. |
Preference Dividends | Cumulative preferential dividends will accrue from day to day on the Convertible Preference Shares at a fixed rate of 6.5 per cent. per annum on the Subscription Amount from (and including) the date of issue and will be payable quarterly in equal instalments in arrears on 31 March, 30 June, 30 September and 31 December (or the next business day) in each year, save that the first dividend payment will be made on 30 September 2016 in respect of the period from the date of issue to (but excluding) 30 September 2016, calculated on a pro rata basis (the "Preference Dividend"). A Convertible Preference Share will cease to accrue Preference Dividends from and including the date it is redeemed, converted or repurchased. Dividends will be paid only to the extent that payment of the same can be made lawfully as at each dividend payment date. If the Preference Dividend is in arrears interest shall accrue on such unpaid sum at 8 per cent. per annum (not compounding) rising to 10 per cent. per annum (not compounding) in the event that such arrears shall remain unpaid for six months. Holders of the Convertible Preference Shares will rank as regards dividends in priority to the payment of any dividend to the holders of any other class of shares in the capital of the Company (including the Preference Shares). The holders of the Convertible Preference Shares shall not be entitled to participate in any further profits, dividends or bonus share issue of the Company. The holders of the Convertible Preference Shares shall rank for dividends in priority to the holders of any other class of shares of the Company and if there are any arrears of the Preference Dividend outstanding the Company may not pay any distribution (as defined in section 301 of The Companies (Guernsey) Law, 2008 (as amended) (the "Law") but excluding for these purposes distributions falling within sections 302(1)(a), (d) and (e) of the Law) in respect of the Ordinary Shares or any other shares ranking for distribution after the Convertible Preference Shares (including the Preference Shares). |
Scrip Preference Dividend | Holders of Convertible Preference Shares will not be offered the right to elect to receive further Convertible Preference Shares instead of cash in respect of all or part of the Preference Dividend. |
Takeovers | In the event of a takeover bid or merger transaction being proposed, made or effected, to which the Takeover Code applies, however effected, (but which for the avoidance of doubt will not include a subscription for or purchase of new shares or securities in the Company) including by means of an amalgamation under Part VI of the Law or an arrangement under Part VIII of the Law, as a result of which any person or persons acting in concert (as defined in the Takeover Code) would hold shares carrying in aggregate 50 per cent. or more of the voting rights (as defined in the Takeover Code) of the Company if the bid or transaction were completed or became effective (a "Potential Takeover"), the Company shall notify the holders of Convertible Preference Shares in writing of the Potential Takeover (a "Takeover Notice") no earlier than 40 business days before but not later than 20 business days before the expected date of it completing or becoming effective, and each holder of Convertible Preference Shares shall be entitled by no later than the 10th business day from the date the Takeover Notice is given to notify the Company that it requires all (but not part) of its Convertible Preference Shares to be converted into Ordinary Shares at the applicable Conversion Rate on the date that the Potential Takeover completes or becomes effective. A Potential Takeover effected (i) by way of a takeover offer shall be deemed to complete on the fourteenth day after such offer becomes unconditional in all respects; (ii) by way of an amalgamation under Part VI of the Law shall be deemed to complete on the fourteenth day after such amalgamation is recorded on the register of companies in Guernsey; and (iii) by way of an arrangement under Part VIII of the Law shall be deemed to complete on the fourteenth day after such scheme is sanctioned by the court. The Convertible Preference Shares that a holder has so required to be converted into Ordinary Shares will convert into Ordinary Shares on such completion. In the event that a Potential Takeover completes then the Convertible Preference Shares that remain in issue following such completion shall cease to be convertible into Ordinary Shares after such completion. |
Redemption | Subject to being permitted to do so by law, the Convertible Preference Shares shall be redeemed by the Company on the tenth anniversary of their issue (the "Redemption Date"). The amount to be paid per Convertible Preference Share on the Redemption Date will be £1.35 together with a sum equal to any arrears or accrual of the cumulative preferential dividend. Following completion of a Potential Takeover, the Company may, following such completion, redeem on a pro rata basis by notice all or any Convertible Preference Shares (that have not been converted into Ordinary Shares on or prior to such completion). The amount to be paid per Convertible Preference Share on such redemption will be the aggregate of £1.00 and an amount equal to 3.5 pence for each completed 12 month period (and pro-rated in respect of a part 12 month period) that has elapsed from the date of issue of the Convertible Preference Share until the redemption date, together with a sum equal to any arrears or accrual of the cumulative preferential dividend. Save as set out above, the Convertible Preference Shares will not be capable of being redeemed although the Company will have the ability to buy back the Convertible Preference Shares in the usual manner. |
Capital | On a winding-up or other return of capital (other than a redemption, purchase or conversion by the Company of any of its share capital permitted by its Articles and under applicable law), each Convertible Preference Share shall confer on the holder thereof the right to receive out of assets of the Company, in priority to other shareholders (including the holders of Preference Shares), in respect of each Convertible Preference Share held an amount equal to the Subscription Amount plus an additional amount of 3.5 pence for each completed 12 month period (and pro-rated in respect of a part 12 month period) that has elapsed from the date of issue of the Convertible Preference Shares until the date of commencement of the winding up or other return of capital, together with a sum equal to any arrears or accruals of the Preference Dividend. The Convertible Preference Shares shall not have any further right to participate in the assets of the Company on any such return of capital. |
Voting Rights | Holders of Convertible Preference Shares will be entitled to receive notice of and to attend any general meeting of shareholders of the Company but not to speak or vote upon any resolution proposed at such meeting unless: (i) the Preference Dividend payable on his Convertible Preference Shares or any part thereof shall be in arrears; or (ii) the business of the meeting includes a resolution varying, abrogating or modifying any of the rights attached to the Convertible Preference Shares or to wind-up the Company pursuant to Part XXII of the Law (and then the holders of the Preference Shares shall only have the right to speak and vote upon any such resolution). In circumstances where the Convertible Preference Shares shall entitle the holders to vote on a show of hands, every holder shall have one vote and on a poll every holder shall have one vote for each Ordinary Share he would hold if the Convertible Preference Shares of which he is the holder had been converted into Ordinary Shares at the Conversion Rate applicable on the business day immediately preceding the record date for such meeting. |
Variation of Rights | If applicable law permits, the rights attached to the Convertible Preference Shares may be varied or abrogated only with the written consent of the holders of 75 per cent. in number of the outstanding Convertible Preference Shares or with the sanction of a resolution passed at a separate class meeting of the holders of the outstanding Convertible Preference Shares carried with a majority of not less than 75 per cent. by number of those voting in person or by proxy. The written consent of the holders of 75 per cent. in number of the outstanding Convertible Preference Shares or the sanction of a resolution passed at a separate class meeting of holders of the outstanding Convertible Preference Shares carried with a majority of not less than 75 per cent. of those voting in person or by proxy will be required if the board of directors propose to authorise, create or increase the amount of any shares of any class or any security convertible into shares of any class ranking, as regards rights to participate in the Company's profits or assets, in priority to the Convertible Preference Shares. However, the Company may from time to time create and issue further Convertible Preference Shares (with similar variations to those set out in Article 2.6.2 of the Articles) without the consent of the Convertible Preference Shareholders. |
Form | The Convertible Preference Shares will be issued in certificated form or uncertificated form in CREST. |
Listing | If the Ordinary Shares are listed on a stock exchange at the point of Conversion of Convertible Preference Shares the Company will use reasonable endeavours to have the resulting Ordinary Shares admitted to trading on such exchange. |
Transfer | The Convertible Preference Shares may be transferred on the same basis as the Ordinary Shares. |
Conversion | A holder of Convertible Preference Shares may at any time (other than (i) within 30 business days prior to the Redemption Date and (ii) where the Conversion right has lapsed following completion of a Potential Takeover) on giving written notice to the Company convert in whole or in part its holding of the Convertible Preference Shares into Ordinary Shares at a rate of 1.818 Ordinary Shares for each Convertible Preference Share (subject to adjustment in accordance with the rights attaching to the Convertible Preference Shares (such rate as adjusted from time to time being the "Conversion Rate")). The right to convert Convertible Preference Shares into Ordinary Shares shall lapse and cease to apply on completion of a Potential Takeover. Fractions of Ordinary Shares will not be issued on Conversion and a holder's entitlement to Ordinary Shares on Conversion will be rounded down to nearest Ordinary Share. Ordinary Shares issued upon Conversion will be credited as fully paid and will in all respects rank equally with the Ordinary Shares in issue on the relevant Conversion date except that Ordinary Shares so issued will not rank for any dividend or other distribution which has been announced, declared, recommended or resolved prior to the Conversion date by the Directors or by the Company in general meeting to be paid or made if the record date for such dividend or other distribution is on or prior to the Conversion date. |
Conversion Rate Adjustments | The Articles will contain provisions allowing for the adjustment of the Conversion Rate for the Convertible Preference Shares to reflect the economic effect on the Convertible Preference Shares of certain matters relating to the Ordinary Shares in addition to the specific event highlighted in the next paragraph (including subdivision or consolidation of the Ordinary Shares, any scrip dividend in respect of the Ordinary Shares, future issues of Ordinary Shares such as bonus issues or issues of Ordinary Shares at a material discount to (i.e. less than 90 per cent. of) the then prevailing market price of Ordinary Shares and in which the holders of the Convertible Preference Shares have not been invited to participate (such as a discounted rights issue) and a general discretion for the Company to adjust the Conversion Rate upon the occurrence of one or more events or circumstances not falling within any of the specified adjustments, such general discretion being subject to an investment bank or stockbroker determining that such adjustment is fair and reasonable). Rather than pay dividends on the Ordinary Shares, the Company currently distributes the amounts it would pay as dividends by way of buy-back tenders offers made available to the holders of Ordinary Shares. Such methodology would unduly benefit the holders of the Convertible Preference Shares. Consequently, the Conversion Rate will be adjusted following completion of each of such tender offers so as to ensure that the holders of the Convertible Preference Shares as a class would on an "as converted basis" hold the same proportion of the aggregate net asset value of the Company attributable to the holders of the Ordinary Shares as a class as if the aggregate amount paid to the holders of Ordinary Shares through each such tender offer had been paid as a dividend to the holders of the Ordinary Shares. The Company will publish any such adjustment to the Conversion Rate on its website and for as long as the Convertible Preference Shares are traded on a stock exchange the Company will in addition publish any such adjustment through the usual channel for making Company announcements on such exchange. No adjustment will be made to the Conversion Rate where such adjustment (rounded down as provided for in this paragraph) would be less than one per cent of the Conversion Rate then applicable. On any adjustment the relevant Conversion Rate then applicable will be rounded down to the nearest two decimal places. No adjustment will be made to the Conversion Rate where Ordinary Shares or other securities of the Company are issued to employees (including Directors holding executive office) of the Company or any of its subsidiary undertakings or any associated company of the Company or its subsidiary undertakings pursuant to any employee share scheme (as defined in Section 1166 of the UK Companies Act 2006). If any doubt or dispute arises concerning an adjustment of the Conversion Rate, the board shall refer the matter to an investment bank or stockbroker whose opinion as to the amount of the adjustment to the Conversion Rate shall be conclusive and binding. |
Restrictions | Without the consent or sanction of the requisite majority of holders of the Convertible Preference Shares as is required for a variation of the rights attached to them: (i) the Company will not to pass a voluntary winding up resolution; (ii) there shall not take place a conversion/migration or voluntary strike off of the Company under Guernsey law; (iii) no shares ranking ahead of the Convertible Preference Shares will be issued; and (iv) the Company shall not make a distribution (as defined in section 301 of the Law but excluding a distribution falling within sections 302(1)(a), (d) and (e) of the Law) in respect of Ordinary Shares or any other shares ranking for distribution after the Convertible Preference Shares (including the Preference Shares) (a "Qualifying Distribution") which, either itself or when taken together with the aggregate amount of Qualifying Distributions in the previous 12 month period, would exceed 10 per cent. of the consolidated net asset value of the Company at the point in time the Company proposes to make the relevant Qualifying Distribution. In order for the Company to be able to determine at a particular point in time whether it is permitted to make a Qualifying Distribution without the consent or sanction of the holders of the Convertible Preference Shares as detailed above, the consolidated net asset value of the Company at such time will be deemed to be the consolidated net asset value of the Company as shown in its latest published consolidated audited accounts or (if such accounts have been published since the publication of the Company's last consolidated audited accounts) the latest consolidated interim half yearly unaudited accounts of the Company. The Company will also send to holders of Convertible Preference Shares the annual report and accounts of the Company and the 6 monthly interim unaudited financial statements of the Company and such other Company information that is sent to the holders of Ordinary Shares. For the avoidance of doubt the rights and privileges attached to the Convertible Preference Shares shall be deemed not to be affected, modified, dealt with or abrogated by: (i) the creation or issue of additional Convertible Preference Shares or of any other preference shares ranking pari passu thereto; (ii) any redemption or purchase by the Company of its own shares of any class; or (iii) any resolution for the disapplication of the pre-emption rights applying on the issue of equity securities as detailed in Article 5 of the Articles. |
Appendix 2
Risk factors
Prospective investors should carefully consider the risk factors set out below, together with the general risk factors pertaining to the Company set out in the 2015 results announcement released by the Company on 14 March 2016 (which is also on the Company's website at www.ravenrussia.com), the other information in this announcement and their own personal circumstances, before deciding whether or not to invest in Convertible Preference Shares. The risks and uncertainties described below relate specifically to the Convertible Preference Shares, and are not the only ones faced by the Company. Additional risks and uncertainties not presently known or which are deemed immaterial may also have a material adverse effect on the Company's results of operations, financial condition or business prospects.
CISEA Listing and SETSqx trading
Application will be made for the Convertible Preference Shares to be admitted to the Official List of the CISEA and to trading on the SETSqx platform of the London Stock Exchange. An investment in shares on the CISEA may be less liquid than an investment in shares listed on the Official List of the FCA. Securities admitted to trading on SETSqx can either be traded through market makers or traded electronically. If at any time there were no market makers in the Convertible Preference Shares, the Convertible Preference Shares would have to trade electronically, which would mean that a London Stock Exchange member firm would have to make an order on behalf of a holder of Convertible Preference Shares wanting to sell such securities and wait for it to match electronically.
An active and liquid trading market for the Convertible Preference Shares may not develop
The Company cannot predict the extent to which investor interest will lead to the development of an active and liquid trading market for the Convertible Preference Shares or, if such a market develops, whether it will be maintained. In addition, a substantial number of Convertible Preference Shares will be issued to a limited number of investors, which could adversely affect the development or maintenance of an active and liquid market for the Convertible Preference Shares.
In addition, if a liquid and active trading market for the Convertible Preference Shares does not develop or is not maintained, relatively small sales of the Convertible Preference Shares may have a significant impact on the price of Convertible Preference Shares, whilst sales of a significant number of Convertible Preference Shares may be difficult to execute at a stable price close to or at the prevailing market price at that time.
Value and volatility
The market price of the Convertible Preference Shares may not reflect the value of the Company and may go down as well as up. It could be subject to significant fluctuations due to a change in sentiment in the market regarding the Convertible Preference Shares or in response to various factors and events, including legal or regulatory changes affecting the Group's operations, variations in the Group's operating results or property valuation and any further downturn in the broader Russian property market.
Dividends
The ability of the Company to pay out dividends on the Convertible Preference Shares will depend on, inter alia, rental and capital value growth in the underlying assets. Under Guernsey law, the directors of a company are required to carry out a liquidity or cash flow test and a balance sheet solvency test before any dividend or distribution payment can be made. The test requires the board to make a future assessment by making reference to the solvency test being satisfied immediately after a distribution or dividend payment is made. If at the time a dividend or distribution payment is to be made the directors believe that the solvency test cannot be passed, then no payment may be made to holders of the Convertible Preference Shares. Payment of the Preference Dividend on the Convertible Preference Shares will be subject to the Company satisfying this legal requirement.
Absence of voting rights
Holders of Convertible Preference Shares will only be entitled to receive notice of and to attend any general meetings of Ordinary Shareholders and to speak or vote upon any resolution proposed at such meeting if a resolution is proposed either varying or abrogating any of the rights and restrictions attached to the Convertible Preference Shares or to wind-up the Company (and only then in each case to speak and vote upon any such resolution) or in the event that any of the dividends on the Convertible Preference Shares are in arrears subject to certain terms and conditions as more particularly described in the relevant sections of Appendix 1 of this announcement.
Winding up
On a return of capital on a winding-up, holders of Convertible Preference Shares will be entitled to be paid out of the assets of the Company available to members (and in priority to other classes of shares) only after the claims of all creditors of the Company have been settled.
Appendix 3
Placing commitments
Name | Number of Convertible Preference Shares |
Woodford Investment Management LLP | 50,000,000 |
Invesco Perpetual High Income Fund | 24,575,001 |
Old Mutual Global Investors (UK) Limited | 20,000,000 |
Raven Russia Employment Benefit Trust | 8,000,000 |
Brooks Macdonald Asset Management Limited | 3,000,000 |